While promoting his own menswear brand, Shi Xiaodong says he will not give up the OEM business that is the bread-and-butter for Dayang.
"We will still make clothes for international brands while creating new value for them," says Shi, president of Dalian Dayang Trands Co Ltd, China's largest exporter of men's suits.
He believes domestic clothing manufacturers have huge opportunities as Europe and the United States look for new production capacity and sources in countries like China.
But to avoid frenzied competition in the crowded "red ocean", Shi says Dayang must take advantage of the open seas of a "blue ocean" by "expanding its role in the value chain".
Blue Ocean Strategy, a business book written by W Chan Kim and Rene Mauborgne from the INSEAD business school, describes how successful businesses captured uncontested market space and made competition irrelevant. "Blue oceans" are untapped markets, while saturated markets are characterized as "red oceans" in which there is fierce competition.
To be sure, the 28-year-old company is no longer simply a factory for international brands. Its services range from sourcing fabrics to designing, from producing to managing orders, and from quality control to customs clearance.
Dayang is also expanding into logistics. It recently built a 40,000-sq-m warehouse near Dalian that mostly serves its Japanese clients to lower their costs by cutting out the need for storage in Japan. Dayang can directly deliver the products to its customers' retail outlets in Japan.
"Such value-added service is something our competitors cannot do and is what we are proud of," Shi says.
