Youngor History
Date: 2011-01-01

From “Beilun Port” to “Youngor”

Youth Garment Factory was established in 1979 in Shiqi Town’s Yinzhou District (then named Yinxian). It began as a small workshop in a theater basement, and was equipped with a small number of household sewing machines purchased with a 20,000 RMB (USD$3,000) “Zhiqing” resettlement fee, given to city-educated youth who were transferred to rural areas for re-education during the Chinese Cultural Revolution. The factory mainly produced vests, shorts, and sleeve covers.

In the Early 1980’s, Li Rucheng, a Shanghai “Zhiqing” who had been assigned to Yinxian to work as farmer for fifteen years, was reassigned to work for Youth Garment Factory. Starting as a laborer shipping bricks in a dray wagon, Li Rucheng would later be appointed as the head of the cutting department for the garment factory. Soon after, the factory faced going out of business, so Li Rucheng travelled to far-away North-Eastern China and returned with a processing order for twelve tons of fabric, rescuing the factory from impending closure. His role in saving the factory was noted and Li Rucheng was recognized for his potential leadership capabilities. The workers subsequently chose Li Rucheng to be the director of the factory.

In 1983, Li Rucheng was thrilled when he received word that Shanghai’s Kaikai Shirts Company was looking for an outsourcing manufacturer. Since Kaikai was a famous Shanghai brand, Li Rucheng asked himself, “Why not use this opportunity to convince Kaikai to open up its brand to Youth Garment Factory?” After some intense negotiations the two parties reached an agreement. Kaikai agreed to allow Ningbo Youth Garment Factory to pay for the use of Kaikai’s brand name and relevant technology. This meant that Youth Garment Factory, acting as a branch of Kaikai, could produce and sell its own products under the Kaikai name.

Following the deal, Ningbo Youth Garment Factory experienced significant profit increases. Annual profits surged from 400,000 RMB (USD$58,800) to one million RMB (USD$147,000) within the first year after the deal. By the second year after the deal, sales volume reached 10-million RMB (USD$1.47 million) and the factory’s profits doubled.

After striking gold with their deal with Kaikai, Youth Garment would no longer be satisfied hiring itself out to other companies. In 1986, Youth Garment launched its first major brand under the name of “Beilun Port.” By 1989, the factory had sold three million Beilun Port shirts.

Just as “Beilun Port” reached what seemed to be the height of its success, Youth Garment made a bold decision to abandon the seasoned brand and set up a joint venture with Macao Nam Kwong Company Limited. Li Rucheng’s insight stemmed from his belief that the Beilun Port brand had by picked up too much of the local color, limiting its future appeal to a broader audience. If the company was to avoid a plateau and reach its full potential, its brand would need to be reborn from its ashes.

In August of 1990, Sino-Foreign Youngor Garment Company Limited was established under the “Youngor” registered trademark. This name resembled the English word “younger” as well as being derived from the village name “Yadu,” wherefrom Li Rucheng, the company’s founder, spent fifteen years farming. People would later refer to this reform as “Youngor’s Nirvana.”

Youngor has continued to scale new heights since then. In 1993, it became a joint-stock company and established its property rights. On November 19, 1998, 55,000,000 tradable shares of Youngor Group Company Limited were listed on the Shanghai Stock Exchange. By the time the exchange closed that day, Youngor shares were valued at 26 RMB (USD$3.28), a price 1.38 times higher than their initial offer price.

Youngor Clothing Industry: Thriving on Innovation

Many garment businesses have an easy start that is characterized by excessive early involvement but success that soon fades away. Many people therefore feel that the garment business resembles an industry much akin to a sunset, bright and dazzling in the beginning but destined to fade into darkness. However, this would not be the case with Youngor and the people of Ningbo, who have ensured the company’s continued prosperity through innovation. Youngor shirts are an excellent example of such innovation.

Youngor Garments Company Limited, a Sino-foreign joint venture, was founded in 1990. The company invested millions of US dollars into the purchase of 300 sets of world-class equipment from Germany, Japan, United States, and other countries. High-quality Youngor shirts came into favor within the market in no time and Youngor thus earned its place within the middle and high-end clothing industry.

In 1994, Youngor acquired the processing technique for non-iron shirts from Japan and began producing HP non-iron shirts. Demand for the shirts surged as soon as they appeared within the domestic market. By October of the same year, the National Science and Technology Commission and four other ministries jointly labeled Youngor’s non-iron cotton shirts as a “National New Product,” the first time the title had been given to an item in the shirt industry. Since that time, dozens of domestic factories have introduced HP technology and subsequently their popularity has progressed at a rate greater than that of Japan’s.

In 1997, three years after the launch of the HP shirt, Youngor launched the VP shirt. The shirt is made with the use of resin-free, high-purity cross-linking technology, micro-computer controlled steam sprayers, rapid heating, and fine temperature control to enable the application of product into every part of the shirt skin, thereby achieving wrinkle-resistance and eliminating the need for ironing. The treatment confers several properties to the shirts, making them wrinkle-free, shrink-proof, soft to the touch, easy to dry, moisture absorbent, easy to clean, color-fast, air permeable, and durably shaped.

In 2004, Youngor’s Nano VP shirt entered the market.

After 2005, Youngor introduced the DP shirt, a next-generation upgraded shirt. The shirt is made using high-quality, high-count pure-cotton fabric developed by Youngor. After processing with iron-press technology, the fabric maintains an outstanding wrinkle-free effect even after multiple washings. Meanwhile, its permeability and water absorption become more favorable without harming the fabric’s surface gloss. These shirts are perfect for young, upper-crust members of society living comfortable lifestyles who wish to show off their modern style and exude a sense of accomplishment.

In March of 2006, Youngor’s marketing of the new DP shirt was carried out full swing throughout China. News conferences and other promotional activities for the non-iron DP cotton shirt were held in Beijing, Hangzhou, Nanjing, Wuhan, Xi’an, and thirteen other cities. This promotion was meant to further increase the popularity and reputation of the DP shirt, as well as consolidate brand loyalty for the shirt and expand its market share. Despite a sales price of over 500 RMB (over USD$75), the shirt is still favored by members of the upper-class after six months in the market. Though relatively new, it has already become a major item of profit for Youngor.

In November of 2006, the State Science and Technology Commission awarded the DP non-iron cotton shirt the honor of “National Key New Product.” Youngor is now applying for a national invention patent for the shirt.

Following its success in the shirt business, Youngor began to produce suits as well. In 1994, after its shirts won a spot amongst China’s “Top 10 Shirts,” Youngor imported and began operating modern suit production lines from Germany, Italy, Japan, and other countries, as well as introducing suit patterns and production techniques from Italy’s most highly regarded suit company. Within one year, the underdog achieved victory as Youngor’s loose-fit, Italian-style suits became a phenomenal success within the suit market.

In order to ensure it possessed optimal suit material selection, cutting accuracy, and cutting speed, Youngor implemented world-class automatic pre-shrinking and CAD systems, and established the most world’s most advanced suit-pattern center of its time. The center’s equipment and technology guaranteed high-quality suits and shorter development times (from one month down to one week) which greatly bolstered the competitiveness of Youngor within the suit market. Now, after years of effort, Youngor suits have become so popular that they lead the industry in terms of their share of the domestic market.

In 2001, Youngor International Garment City was created on a USD$100 million budget, covering an area of nearly 500 Chinese Mu (82 acres). With an annual output of ten million shirts, two million sets of suits, and twenty million casualwear items and trousers, the city has become the world’s largest comprehensive clothing production base, operating the finest equipment and offering a complete array of functions. With these facilities, Youngor’s production line is fully armed. During his visit to Youngor’s grounds, Pierre Cardin, renowned within the world’s clothing industry, gave the following comment: “I have travelled the globe and seen the world’s major clothing companies. In terms of size, you top them all.”

Innovation: Endlessly Nurturing Youngor’s Vitality

Creating a Vertically Integrated Industrial Chain

Li Chengru, the president of Youngor Group, described modern business competition with a vivid metaphor: “It’s like a war. In the past, the army was most powerful, and then the air force. What about now? Not the Navy, but rather a joint force, combining air, ground, and sea forces, synchronized with information technology to win in battle.” Following the wisdom of the president, Youngor has spent a tremendous amount of capital building its large-scale, vertically integrated industrial chain. Youngor manages fabric-weaving, dyeing and finishing, garment-making, marketing, and sales. Such diversification has greatly elevated the value of Youngor’s brand.

Fabrics and Textiles: The Starting-Blocks of the Garment Industry

In June of 2002, Youngor’s newest project attracted attention within the industry and skepticism from outside of it. The company began construction of the Youngor Textile City, which brought the company towards its goal of vertically integrating fabric-making, garment-manufacturing, and end-user sales. Youngor Textile City would come to cover an area of nearly 500 Chinese Mu (about 82 acres), and was completed in 2003. It is now a major production base for high-end textiles and fabrics in China. It is composed of four companies: Youngor Knitting, Dyeing & Finishing Co., Ltd., Youngor Sino-Japan Textile Printing & Dyeing Co., Ltd, Ningbo Jinsheng Wool Textile Co., Ltd., and Youngor Huangli Rinsing Co., Ltd.

While other companies continue to downsize, Youngor is avoiding this trend by expanding. This may appear to be counterintuitive to some, but company President Li Chengru has made his thoughts on the issue clear: “We must remain in the textile and fabrics business, firstly because of the quality gap between domestic and international fabrics and prohibitive import tariffs, and secondly because many domestic enterprises have extended their business into downstream manufacturing sectors, creating much competition for us in those areas. Both these facts demand we take this course of action.”

China imports USD$5 billion worth of fabric per year, of which Youngor alone imports 500 to 600 million RMB (USD$73 to 88 million) worth. Some fabrics cannot be produced in domestic factories, and even if they can, their quality and delivery time cannot be guaranteed. A slow delivery time (usually around two months for fabric imports) can be a major limiting factor in a company’s ability to respond to shifts in market demand. Thus, Li Rucheng made the following decision: “Let us start producing fabrics, so that we may guarantee that the quality of our clothes meets the expectations of our customers. Doing so will also allow us to profit from fabric sales.”

Given that the power of China’s research and development within the textile and clothing industry remains weak, increasing the strength of our innovative abilities is vital to the industry. The textile industry relies not only on labor, but also on technique and technology and therefore it exhibits more robustness than the garment manufacturing industry. In view of these concerns, Youngor is determined to perpetuate an industrial chain of the highest quality. By joining forces with world-renowned enterprises, recruiting critical talent, implementing state-of-the-art equipment, and working with a budget of USD$100 million, Youngor has succeeded in achieving this dream.
 
Youngor Textile City began turning a profit the same year it was completed.

In the increasingly competitive manufacturing world, controlling up-stream supply has become critical to any enterprise wishing to sustain its development. Now that Youngor is involved in the textile industry, the company can easily and rapidly obtain fabrics with world-class quality and patterns. In addition, supplying fabrics has become a new source of revenue for Youngor. Through the development of fabrics, Youngor has been able to elevate its entire industrial chain and bring innovation to Youngor garments.

In 2006, Youngor Sino-Japan Knitting Wear and Youngor Shirts jointly launched the DP shirt, which received a warm welcome by the market. Over time, these shirts have generated great amounts of sales revenue and have become a new selling point within Youngor’s garment repertoire.

Distribution Channels: The Framework of Youngor’s Future

In the 1980’s, Youngor developed business relations with 4,000 state-owned commercial department stores around the nation, but during the mid-1990’s many state owned department stores collapsed as a result of changes within the social institution of China. In an unfortunate turn of events for Youngor, the sales network that Youngor had maintained for years collapsed. To add insult to injury, even after they reorganized and restructured, the new department stores, including joint ventures and those running on outside investments, seemed reluctant to stock Youngor goods due to the fact that they perceived the brand as too local and low in grade.

Even under such difficult economic conditions, Youngor Group established Youngor Garments Co., Ltd. in 1995. This company is designed to operate as a modern marketing center, specializing in building brand awareness, promotional marketing, and profit maximization. Thus began Youngor’s transformation from an industrial enterprise to a commercial enterprise. In 1997, the company began to purchase a large number of shops and opened a series of autonomous retail chain stores to increase the availability and exposure of its retail to consumers.

Over the last several years, Youngor has invested a total two billion RMB (USD$300 million) into the opening of self-run retail chain stores. In 2001, Youngor opened its giant flagship store in Shanghai’s Nanjing Road, China’s first commercial street. It remains the largest store of its kind in China, with a total shopping floor area of 4,800 square meters.

More recently, Youngor has adopted a strategy to integrate sales channels and consolidate sales outlets. It has reduced its number of retail terminals from 3,000 down to around 1,500, thereby concentrating loosely organized chain stores into a tighter network of commercial business centers within China.

At present, Youngor owns over 400 self-run stores, about 900 retail shops in shopping malls, and over 200 franchise stores. Youngor’s recent consolidations have been aimed at gradually shutting down small-scale stores in remote locations and stores that are deemed non-profitable. At the same time, Youngor has been investing more heavily into large-scale flagship stores in major cities. It is in these metropolitan locations where Younger stores can best serve to raise the value of the Youngor brand by showcasing the brand culture and image.

Zhang Bin, a researcher from Sinolink Securities whose research focuses on the textile and garment industry, believes that Youngor’s move characterizes its determination to follow the strategy it outlined in the previous year, and thus the company is making a bold sacrifice to move forward.

“Youngor brand’s target audience remains somewhat fuzzy,” Zhang Bin once remarked, “You can observe this by noticing that all sorts of people—from every class, city, small town, and rural area—are seen wearing the brand. Consequently, the pricing system is chaotic. That’s the main reason Youngor hasn’t been making significant progress despite renovating its sales terminals in 2001.”

As Youngor became aware of this problem last year, the company began to rework its definition of its target customers. It defined its quintessential target customers as middle-aged, city-dwelling men with stable jobs, including civil servants in government agencies, senior staff in enterprises, teachers in high schools and colleges, doctors, and other educated individuals.

With this new strategy in mind for its brand and marketing position, Youngor must obey the “do’s and don’ts” of sales channel building and clearly define how it will position its shops. Looking at cities in terms of being first, second, and third tier, Youngor established the following general guidelines: in first-tier cities, place second-class and third-class shops; in second-tier cites, place first-class and second class shops, and in third-tier cities, place first-class shops.

Another major task for Youngor this year has come as part of our efforts to consolidate and integrate our sales channels. As sales outlets are reduced, those remaining must perform better. Youngor has been working towards improving the efficiency of each and every one of its shops and strengthening its control over sales terminals. Currently, Youngor’s retail shops have uneven sales performances, as calculated by sales volume per square meter. In order to improve overall sales volume, the company has set a bottom line for sales. So far, 60 shops are operating below this line, and thus will undergo adjustment.

Youngor decided to shut down a number of smaller self-run retail shops in order to improve final sales and promote its brand strategy. “When we open a new self-run shop, its size shall not be less than 100 square meters if it is located in a prefecture city, nor be less than 200 square meters in a first-tier city,” outlined Youngor Garment Company’s president, Li Rugang.

Youngor’s self-run shops and shopping-mall stores generate 80% of the company’s total sales revenue. After years of effort, Youngor has obtained a firm grasp on critical sales terminals, which have become a major resource for promoting the brand and perpetuating Youngor’s competitive edge.

Youngor: Moving On and Moving Forward

During the 1980’s, at a time when Youth Garment Factory was in its infancy, China was experiencing an economic shortage in which demand outpaced supply. Trucks lined up outside the Youth Garment Factory to pick up garment deliveries while the garments were still under production. During his business relations with Kaikai Shirts Company, Li Rucheng was envisioning a new brand. In 1986, the company released “Beilun Port” under his direction, a move which signaled both a breakthrough for a business that was previously only a sub-contracting manufacturer and a sense of brand identity coming from the company’s leadership. Although the brand’s marketing position had not been defined at that point, “Beilun Port” remained a quality shirt brand that stood out from more average shirts in the market. The shirts were priced at 39 to 49 RMB (USD$5.70 to 7.20), which was a moderate to slightly above moderate price for a shirt at the time. Consumers welcomed the shirts at this price.

As others celebrated the success of “Beilun Port,” Li Rucheng pondered the brand’s innate limitations. He realized that the brand was too regional and lacked deeper cultural significance, both of which impeded on its potential to grow. In August of 1990, Li Rucheng guided the creation of Youngor Garment Company Limited., a Sino-foreign joint venture. “Youngor” was born, reminiscent English word “younger,” hinting at the company’s roots as a youth clothing factory, and personifying the company as young and expectant of further growth and maturation.

As company president, Li Rucheng immediately began to work towards establishing Youngor as a world-class brand. Production techniques, work flow, and quality inspection were all required to meet the same standards as other world-class businesses under his corporate vision. As a result, the Youngor brand experienced great success.

Soon, Youngor’s goods became so popular that suppliers across China were flooded with orders for the products. “Unsolicited orders were simply unquenchable,” Mr. Li recalled later. By 1991, Youngor was awarded the title of a “Chinese Well-Known Trademark,” making it one of only two recipients of this title within the Chinese clothing industry.

Over the next few years, Youngor diversified its brand by creating “Gold Youngor” and “Green Youngor.” This move helped target consumers, appealing to three distinct categories: executive administration, international business, and urban leisure. More recently, Youngor launched another similar campaign with the introduction of its “Green Brand, “Blue Brand,” and “Gold Brand,” thus further capitalizing on its market segmentation analysis.

After successively launching its HP, VP, and DP shirts, the price range for Youngor shirts rose from 30-40 RMB (USD$5) to the present 300-400 RMB (USD$55), and in some cases prices reached as high as 1,000 RMB (USD$150). In accord with the increased quality and price of its shirts, Youngor’s self-run retail stores are upgrading by increasing in both scale and class. Consequently, Youngor’s brand name continues to increase in value.

Youngor’s branding process continues to move at a steady yet solid pace.

Youngor: On the Road to Internationalization

Youngor’s dream has always been to create an internationally respected brand.

The market share occupied by Youngor’s shirts and suits exceeded those of the Shanshan brand by 1995 and 2000, respectively. Shanshan’s shirts and suits had previously been leading the market, commanding the greatest percentage of its share until the company’s brand was usurped by Youngor. Since that time, Youngor has remained the leader in terms of its command of the market share of both shirts and suits.

However, Youngor’s president has remained clear: “While our brand may hold the title of a “Chinese Well-Known Brand,” it remains in its developing stages. Brands that hold this title do not necessarily possess the true qualities of a good brand. Earning the title of a “Chinese Well-Known Brand” depends largely on factors such as abundant advertising, building social relationships, and of course, sales performance and market share. A true brand, however, depends also on recognition from the consumers, and must embody rich content, fine taste, and distinctive character. By these criteria, Youngor may be considered a famous Chinese brand, but it is not yet an enterprising brand, let alone an international one.

Positioning itself within the high-end market and pursuing a path towards internationalization has been Youngor’s primary goal for years. From the 1990’s onwards, Youngor has used multiple resources to raise funds and has acquired modern clothing production lines from Germany, Italy, Japan, and other nations at the frontiers of the fashion industry. Among its purchases have been world-class automatic pre-shrinking equipment, CAD systems, hanging systems, and automated ironing equipment. One group of experts who visited the Chinese National Garment Association remarked: “We don’t need to go abroad for clothing technology and equipment research. Right here, at Youngor, we have the best research base dedicated to clothing facilities and technology.”

“When an enterprise reaches a certain stage in its development, decision-makers within that enterprise must begin to act like chess masters and focus on planning and calculating the details of their vision. That is to say, an enterprise’s future relies on its plan and set-up,” said one analyst. “The first goal in battle is to occupy the fortress. Such is the marketing strategy of an enterprise. The most refined strategy aims to win over the consumer’s mind through its advertising, marketing, sales, and follow-through.”

Youngor continues to accelerate the pace of its internationalization process. As early as 1998, Youngor acquired a Japanese company. This company acted as Youngor’s window into Japan, engaging in garment trading and developing major international sales channels. In accordance with Li Rucheng’s plan, this Japanese company can be seen as an “advancing troop,” as can Youngor’s overseas agencies in France, Italy, and other nations, all of which march Youngor towards internationalization.

In 2001, Youngor’s OEM suits entered the United States’ market for the first time by way of Itochu Trading Company. By December of 2004, Youngor had opened a brand office in the United States and Youngor gradually took its first true steps towards becoming an international company.

After building its reputation as a strong manufacturer of items “Made in China,” Youngor’s newest move represents a breakthrough for Chinese domestic garment companies. Youngor now embarks on a brand-building mission in the international market.

In February of 2005, Youngor made a deal with US Kellwood, an industrial giant within the clothing business. The two agreed to establish a joint-venture they would call Yaxin Shirts Company Limited. This new company would be an export-oriented producer of shirts.

On December 8, 2005, the internationally renowned textile and garment enterprises of China’s Youngor Group, Japan’s Itochu Corporation, and Italy’s Marzotto, signed a deal in Ningbo city. The three parties agreed to completely collaborate on technology, finance, employee training, and marketing so that together they may improve the world’s high-end textile and garment industry.

This relationship was modeled after the original joint venture between Itochu and Youngor. By including Marzotto, the Itochi-Youngor partnership gained capital, technology, marketing power, and coveted techniques and technology. All three of these clothing industry giants enhance their overall competitiveness in the world market through their cooperation. As a result, Youngor has entered a new competitive arena.

In 2007, two major events occurred in relation to Youngor’s internationalization efforts. The first occurred on March 18, as Youngor Garment became the Chinese regional agent for Hartmarx Company’s well-known brand Hart Schaffner. President Rugang Li stated, “Hart Schaffner has a long history as well as valuable experience in the area of asset management. While Chinese brands have seen much development in recent years, there remains a gap between Chinese brands and high-end foreign brands. Working with Hart Schaffner offers us an opportunity to gain exposure to their mature market management techniques and refined concept of brand building. This is an excellent opportunity for Chinese enterprises to gain valuable insight by learning from international top brands.”

The second major event occurred near the end of 2007, as Youngor came upon good fortune once again by acquiring Xinma Group, a menswear business and subsidiary of US Kellwood, one of the top five clothing companies in the United States. This represented by far the largest cross-border M&A (Merger and Acquisition) event in the history of China’s clothing industry. The move represents a major step forward for the Chinese garment industry’s global competitiveness.

Xinma Group was established in 1956 out of a partnership between Smart Company and Xinma Company, both subsidiaries of the US Kellwood company. An international company, Xinma Group Incorporated operates six production bases and thirteen factories in Ningbo, Shenzhen, Sri Lanka, and the Philippines, as well as a logistics system throughout the United States. With over 26,000 employees, the group has an annual production output of 39-million garments as well as 500-million dollars worth of annual sales, making it one of the world’s largest shirt manufacturers.

Xinma Group’s areas of focus include original equipment manufacturing (OEM), US domestic sales, clothing design, logistics management, and goods distribution. The group’s core focus is in original design manufacture (ODM), serving twenty brands, including Polo and Calvin Klein; as well as being an authorized dealer for five companies, including Nautica and Perry Ellis. Meanwhile, the group has several teams experienced in design and international management positioned in cities such as Italy, New York, and Hong Kong. All of these teams are well versed in international management and the design concepts behind international brands.

Following its seamless integration with Xinma Group, Youngor Group and the five or more entities below it reached an annual production capacity of 80 million garments and an annual sales total of over USD$1.19 billion. These figures solidify the company’s standing as an industry giant and one of the world’s leading clothing companies.

Meanwhile, Youngor’s entry into the US market has been significantly hastened thanks to utilizing its vast array of resources, including design centers in cities such as Italy, New York, Shanghai, Hong Kong, and Ningbo. Youngor’s distribution networks throughout regions in countries such as China and the United States and the internationally qualified team that manages Youngor’s branding strategy have each brought Youngor one step closer to internationalization.

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