Zheng Laili, vice-president of Kangnai Group and daughter of its founder, Zheng Xiukang. [Photo / China Daily]
Daughter and son learn the ropes from the shop floor upward
SHANGHAI - After formally announcing his daughter and son as successors of the family enterprise last year, Zheng Xiukang, the founder of shoe maker Kangnai Group Co Ltd in Wenzhou, East China's Zhejiang province, looked forward to leading a quiet and relaxed life in his family compound.
Unlike many other first-generation entrepreneurs in his hometown, a hotbed of private enterprise in one of the most prosperous provinces, Zheng had been preparing for the succession for many years. Indeed, he has led the drive to move up the value-added chain from a traditional original equipment manufacturer (OEM) to a modern enterprise with its own branded products and sales channels.
The company, with fixed assets of 400 million yuan ($61 million), has more than 2,500 chain stores throughout China, and more than 100 shops in 10 countries in Europe and the United States.
Zheng believes it is the high value of his products and good service that have cultivated widespread brand awareness.
Through brand building and innovation, the company has achieved huge market success. Last year, despite a gloomy global economy, Kangnai's sales saw an increase of more than 30 percent in France, its key market in Europe.
"I've been working in the shoe industry for nearly 30 years but my elder daughter is just over 30 years old and hasn't earned enough management experience, so I urged her to start in the business as an ordinary worker," said 65-year-old Zheng.
Before entering the shoe manufacturing industry, Zheng used to be the deputy manager of a State-owned factory producing mechanical goods. This furnished him with professional technical knowledge and management skills.
Although the shoes made by Kangnai were more expensive than competitors' brands, the quality was much higher, making them hugely popular with customers.
"I was keen to focus on producing high quality and high-end shoe brands at the very start of running this business," said Zheng.
Zheng experienced the toughest period for shoe manufacturers in Wenzhou in the 1980s when many shopping malls went out of business and forced many makers of poor quality shoes in Wenzhou into bankruptcy. Sales of Kangnai shoes were also affected by the downturn.
"I suffered problems with dramatically declining orders during that period. I'm not sure the next generation will be able to handle similar difficulties in the future," said Zheng.
Zheng introduced a mechanized production flow line into his factory in 1990. This represented the modernized and industrialized era of shoe production in Wenzhou.
Since then, Kangnai Group has been at the forefront of shoe manufacturers in Wenzhou, helping to make the city the capital of shoe production in China.
Five years ago, Zheng decided to pass his enterprise on to his daughter and son, Laili and Laiyi, by appointing both of them as vice-presidents of Kangnai Group.
"I am one of the so-called rich second generation but I don't agree with the biased definition of us being spoiled and spending money lavishly," said Zheng Laili, Zheng Xiukang's daughter.
She added that she had experienced being an ordinary worker making shoes by hand and later being a team leader supervising other workers at her father's enterprise.
Currently, Zheng Laili is in charge of the commercial real estate projects and international investments of the group. She graduated from Tianjin University of Finance and Economics and took the executive master of business administration (EMBA) course at Cheung Kong Graduate School of Business, which enabled her to make detailed plans for the group.
"The most important thing I learned from my EMBA course was that the goal of turning Kangnai into a globally known shoe brand should be planned as soon as possible as a matter of urgency," said Zheng Laili.
She discussed her thoughts with her father and started recruiting professional designers and setting up overseas branches to develop an international reputation.
Thanks to Zheng Laili's efforts, Kangnai's overseas business surged by 45 percent year-on-year in 2008 and the overseas stores contributed $21 million to the group in 2009, more than a 10 percent increase compared with the previous year.
The two-pronged strategy of catering to domestic markets as well as setting up overseas has played an important role in guaranteeing sustainable growth.
Now, nearly 90 percent of Kangnai's sales revenues are from the domestic market.
"We will make more efforts to consolidate our advantages in the domestic market as well as expanding our international market all over the world," said Zheng Laili.
Zheng added that her next step is to get the company listed on the Shenzhen Stock Exchange within two years.
Like his elder sister, Zheng Laiyi studied abroad, majoring in a footwear course at Leicester College, in the United Kingdom. He also started out as an ordinary worker in the company and now is responsible for the management of the enterprise.
"I think that the best management technique is to give staff members respect, opportunities and options throughout their time with the company," he said.
Zheng Xiukang says he is very proud that his daughter is taking over the business and acting as a model for his younger son to follow.
"Both of my children have shown they are capable of handling my business and moving it into a bright future on the world stage, which is a great relief for me as I think about enjoying my retirement," said Zheng.
