Tradition Goes Modern

2019-09-09 16:01:20 Beijing Review 2019年36期

By Zhang Shasha

The Chinese used to say they have two pairs of scissors: Wangmazi in the north and Zhang Xiao Quan in the south.

These are two time-honored scissor brands that can trace their history back to the 17th century. Both are named after their founders. Wangmazi grew from a small shop near an ancient execution ground in Beijing, owned by a man surnamed Wang. Since he had a pockmarked face, mazi in Chinese, people called him Wang Mazi. Wang didnt make the scissors himself but had them manufactured at local workshops, giving them strict standards to ensure their quality.

Zhang Xiao Quan derives its name from a blacksmith who opened his shop in a busy business district in Hangzhou, Zhejiang Province in east China, where his scissors became a household name because of their exquisite design, sharpness and durability.

The two brands enjoyed a golden era with business expanding but after over 300 years of thriving, their fates became divergent. Wangmazi declared bankruptcy in 2013 due to lack of innovation, but Zhang Xiao Quan is still scaling new heights with a wide variety of scissors and knives used for different purposes. According to the Hangzhou Municipal Bureau of Commerce, its sales crossed 500 million yuan ($69.8 million) in 2018 and its online sales in overseas markets increased from just a few orders to 2.4 million yuan ($334,800).

The two brands story is also the story of most time-honored Chinese brands. Many like Wangmazi are facing diffi culties, unable to evolve with the times due to lack of innovation, brand protection and inheritors who would carry on with the complicated production process. A few like Zhang Xiao Quan have accelerated innovation in products and reform in operations and management to swim with the new tide.

“Currently, among all the 1,128 registered time-honored Chinese brands, only 10 percent have maintained a robust growth momentum, and 40 percent can make ends meet. The remaining 50 percent are either struggling or running up debts,” Ju Jinwen, a researcher with the Institute of Economics at the Chinese Academy of Social Science, told 21st Century Business Herald.

The brands are exploring new ways such as embracing new retail formats and the social media, cooperation with other brands, and launching new products to woo the younger generations and return to the frontline of consumption.

Selling like hot cakes

The traditional brands are selling on online platforms besides keeping their offl ine counters.

“According to an annual survey by our association, more than 100 time-honored brands in Beijing are marketing products on the Internet. A total of 67 enterprises have opened stores on the retail marketplaces of e-commerce giant Alibaba Group and 33 on JD.com,” Ma Yutai, head of the Beijing Time-Honored Brands Association, said at a forum on August 14.

Dao Xiang Cun, a Beijing brand of local snacks and cakes with 124 years of history, has seen its sales jump by over 80 percent every year since 2014, when it first started selling online. Since its debut on the Internet, Caibai Jewelry, a gold and jewelry store in Beijing founded in 1956, has registered annual sales growth of more than 100 million yuan ($14 million) each year, Ma said.

“Big data can help the time-honored brands to analyze consumer behavior and provide statistical support for their research and development of products, improving packaging and specifi c promotions,” Liu Lizhen, a manager of JD.coms Consumer Products Division, said, adding that they are working with Dao Xiang Cun to produce vacuum packs.

The time-honored brands are also tapping the potential of social media marketing, promoting their products on platforms including Weibo, WeChat and Douyin.

Bao Feng, a liquor brand in central Chinas Henan Province going back to 1948, launched an innovative brand promotion on Douyin in 2018, asking users to upload short videos about joyful moments in their lives, a tacit reference to the brands association with celebrations. The marketing campaign was included by Peoples Daily in its list of the top 10 innovative short video series for the promotion of the timehonored brands.

In addition, the time-honored brands are developing new products in cooperation with other companies. Dao Xiang Cun, for example, launched new cakes representing the 24 Chinese solar terms. The solar terms were coined by farmers in ancient China to mark different positions of the sun in the zodiac, according to which they planted different crops, ate different food and wore different clothes. This mixing culture with cuisine was a smash hit and 2,000 boxes of the cakes sold out the day the product was launched in 2018. Dao Xiang Cun made the innovative cakes with the Palace Museum, the former royal palace in Beijing that is one of the major tourist destinations in the city.

Chen Fei, a representative of the Cultural Products and Services Department at the Palace Museum, said at the forum that the popularity of the museum is attributable to it abandoning its previous mode of outsourcing products. They now design and develop their own products.

According to a report by Ali Research Institute, a think tank subsidiary of Alibaba, in May, the time-honored brands developed 220,000 products with other companies in 2018 and their sales increased by 44 percent.

Overcoming difficulties

“While facing market competition, the merits and demerits of the time-honored brands both lie in one word—time,” Bi Guocai, President of Dao Xiang Cun, said at the forum. “On one hand, traditional products cannot meet contemporary needs to some extent; on the other hand, time means they have massive expertise and experience.”

It is crucial to utilize this experience while innovating. Ju said many time-honored brands still use a mixed way of production, combining delicate, intricate work by hand with machine manufacturing. Pure mechanical products account for only 18.1 percent of their production and handmade items 21.5 percent. The rest use both the processes. The time-honored brands should refi ne their products, and use mechanization and automation, he said.

Tu Wen, Deputy Director of the Research Office of the All-China Federation of Industry and Commerce, said while some time-honored brands were pioneers and role models of self-innovation, the way they are run is restraining their growth. The traditional enterprises started out as family businesses; later some became wholly owned by individuals or had collective ownership; only a few of them became joint-stock companies.

Ju said the time-honored brands, especially small and medium-sized ones, urgently need to adopt a modern corporate management system to deal with market competition, fundraising and brand promotion.

The Qing-Feng Steamed Dumpling Shop, a state-owned company in Beijing with over 70 years of history, hit the headlines in 2013 when Chinese President Xi Jinping sampled its buns during a surprise visit to one of its franchised restaurants. In August 2018, it was in the news again when it accepted private investment and underwent restructuring to become a mixedownership company with plans for a public listing. Its President Jia Feiyue told the media that the reform is an effective stimulus which will help the companys listing on the stock market.

“The whole management system should support the innovation of the time-honored brands,” Sun Peng, Deputy General Manager of Dao Xiang Cun, said. “I can feel they wish to reform, but the key issue is whether they can accept new things.”

Satisfying the younger generation of customers is also very important. According to a report by Taobao.com, an e-commerce platform under Alibaba, in January, people born in the 1980s are the backbone of the time-honored brands sales, accounting for 39 percent of the total consumption. Those born in the 1990s contribute 32 percent, and their orders have increased by 50 percent, indicating they will become the main consumers of the time-honored brands recognized as intangible cultural heritage.

Neiliansheng, a traditional shoemaker founded in 1853 and its products recognized as an intangible cultural heritage of China, has opened a store at Sanlitun, one of the most bustling fashion landmarks in Beijing, to promote its brand among young people.

“Young peoples love of traditional madein-China goods is rooted in their aspiration to embrace traditional culture, which could be the new growth driver of consumption,” Yang Yueming, Vice President of the Beijing Institute of Culture Innovation and Communication, Beijing Normal University, told 21st Century Business Herald. “The time-honored brands should take the opportunity to let more people know the stories behind their brands to stimulate their consumption.”