Taiwan is a world-renowned shoemaking kingdom. According to estimates, one out of every three pairs of shoes in the world is manufactured by Taiwanese companies. In the past two decades, it has become a machine for producing billionaires with a net worth of tens of billions of yuan, adding more mystery to this low-key industry.
The Global Industry Analysts (GIA) estimates that the global footwear industry will have a compound annual growth rate of 2.4% from 2012 to 2015, and the market value will reach US$195 billion in 2015. Lucintel Research estimates that the sports shoe market will expand at a compound annual growth rate of 5% by 2017, with a market value of US$46.2 billion.
In fact, Taiwan's shoemaking industry reached its peak in 1986, but it also faced a crisis of survival and development under the rapid changes in the domestic and international business environment. Since the 1990s, a large number of shoe factories have moved to mainland China to set up factories and take root, continuing Taiwan's position as the global leader in the shoemaking industry on the other side of the strait. At this time, they have established closer cooperative relationships with international brands, which also laid the foundation for the strong wealth of these OEM factories.
Venture capitalists pointed out that Taiwan's footwear industry has strong R&D, manufacturing and technical management capabilities. Like the laptop OEM industry, it is an oligopolistic market, with large manufacturers dominating the main market. In terms of the supply chain, Taiwanese companies account for 70% of the global export volume of the top ten shoe manufacturers in the world, including Pou Chen, Fengtai, Qinglu, Longdian, Jiuxing, and Tongjia. In addition, shoe orders are stable, so large shoe manufacturers do not need to invest high capital expenditures every year. As long as the machinery and equipment are depreciated and recovered, they will have good cash flow and return on investment. This is also the reason why there are so many wealthy people in the shoe industry.
Being low-key and not ostentatious, conservative and not in the limelight, can be said to be the common characteristics of Taiwan's shoemakers. They always quietly play the role of invisible promoters behind the brands, making it difficult for the outside world to find out. Among these shoe tycoons, there is an invisible rich man worth mentioning, he is Huang Zhenyuan of Longdian Industrial, which started in Taichung.
President shoes have a good reputation, and they are happy to share profits with their employees. Longdian was originally just a New Balance upper OEM factory. Due to the good production quality, customers also entrusted them with lathe work, so the production capacity gradually expanded. The company's scale can be said to have grown along with the performance of customers. It has successfully contracted international sports shoe brands such as Asics and K-SWISS, becoming a core factory. In 2007, it won the OEM factory order and became the world's third largest shoe manufacturer.
As the founder of Longdian passed away at a young age, the company's business philosophy is to pass on the business to the talented rather than to his son, so CEO Huang Zhenyuan took over the position of chairman. Huang Zhenyuan, who graduated from the Department of Engineering Management of Taipei Institute of Technology (now upgraded to Taipei University of Technology), has a unique management style, which is to review the employee turnover rate every week and even ask the reasons for leaving.
The secret to stabilizing the turnover rate in Chinese factories: For a while, the company paid for the travel expenses for returning home, and there was a large wave of resignations in factories in mainland China before the Chinese New Year. It turned out that they were workers from the countryside. Because they had not been home for two or three years, they simply quit their jobs in order to stay in the countryside for two or three months. After Huang Zhenyuan learned about this, he stipulated that the company would pay for all the travel expenses for returning home during the Chinese New Year in the future, which stabilized the turnover rate.
Since shoe factories must rely on a large number of manpower to maintain a stable shipment volume, Longdian attaches great importance to the quality of employee meals and dormitories. In factories in mainland China and Vietnam, nearly one hundred dishes are offered every month for employees to vote on for next month's menu. As long as there are slight complaints about the dishes by employees, the kitchen will immediately make improvements. The purpose is to make employees enjoy their work.
"Salary is no longer the most important thing for Longdian employees, because making money is not a problem. The most important thing is humane management, which is the key to Longdian's continued profitability." A supervisor who once worked in Longdian said that the wealth distribution in general shoe factories is a pointed pyramid, and only the major shareholders or senior managers at the top of the pyramid are rich. However, Longdian has leveled the classes and is willing to share profits with employees, so those with stronger abilities earn more.
Long Dian is known for his flexibility and speed. Although he has only 19 years of experience in the shoe industry, he has a strong ambition as a business owner. Huang Zhenyuan once returned to his alma mater to share his experience in school and mentioned that "the bigger a person's mind is, the bigger his success will be." Therefore, he also believes that "successful people look for methods, while unsuccessful people look for excuses." It is not enough to have a broad mind, and one must be proactive to achieve the goal.
As his wealth accumulated rapidly, in 2010 Huang Zhenyuan also bought Taichung Private Li Ren High School and became the chairman of the school, demonstrating his astonishing financial strength.
Longdian has an annual revenue of 30 to 40 billion yuan. Because of the good profits, Huang Zhenyuan directly imports the red wine for the cadres' dinner from California. He is also a VIP customer of the five major wineries in France. People in the shoe industry in Taichung revealed that unlike other shoemaking peers who are popular in buying luxury houses in Phase 7, Huang Zhenyuan bought land in Taichung to build a luxury villa. The land area alone is nearly 1,000 square meters. He also often invites peers to his home for parties. "Looking out from the top floor of his house, you can see the high-speed rail running on one side and the sunset on the other side. Everyone who has been to his home is impressed." Because of the emphasis on taste and quality, his windows use bulletproof glass imported from Germany, and the cost alone cost more than 20 million yuan.
This group of Taiwanese shoe industry tycoons hidden in the central part of Taiwan witnessed the era when Taiwan's shoe industry kingdom took off. With the continuous improvement of shoemaking industry technology, the trend of the shoe industry is not only to focus on shape design and popularity, but also function and comfort have become one of the key points. Especially in the sole part, major brand shoe manufacturers have spared no effort in research and development and innovation. In order to achieve the requirements of free-form surface changes in shoe shapes, shorten product life cycles, and improve quality, sole mold factories must significantly improve the design, manufacturing and management technology of sole molds.
The rise of Taiwan's shoe industry has also made Taiwan's sole mold management software brilliant. As a leader in developing shoe mold ERP management systems for the world's top 50 shoe factories and mold companies, Taiwan Fangtian Software Company can provide a full set of mold management software solutions from customer orders, contract signing, deposit payment, shoe mold design, material procurement, production arrangements, wood mold processing (after the shoe mold is designed, a full-size wood mold is usually processed with substitute wood as raw material to confirm and compare the finished product later), casting, mechanical processing including grinders, milling machines, CNC, etc., until mold closing, mold repair, mold trial, biting, mold delivery, online production, payment collection, etc. It has also accumulated rich cross-regional shoe mold ERP implementation experience to meet the needs of Taiwanese businessmen for information management in Taiwan, mainland China, Southeast Asia and other places.
The stars were shining brightly last night. I believe their legendary stories will continue to be passed down.
Appendix: Top 10 Taiwanese Shoe Tycoons
The world's largest shoe manufacturer: Pou Chen
Annual output: 313 million pairs
Person in charge: Cai Qirui
Place of Origin: Lukang, Changhua
The world's second largest shoe manufacturer: Fengtai
Annual output: 79.15 million pairs
Person in charge: Wang Qiuxiong
Place of Origin: Douliu, Yunlin
The world's second largest sports shoe OEM manufacturer: Ching Lu
Annual output: 75 million pairs
Person in charge: Su Qinglu
Place of Origin: Tainan
The world's third largest shoe manufacturer: Long Dian
Annual output: 43.2 million pairs
Person in charge: Huang Zhenyuan
Place of Origin: Taichung Taiping
Global Footwear 50: Diamond
Annual output: 16 million pairs
Person in charge: Chen Lizong
Origin: Blue Mountain, Hunan
The world's largest outdoor functional shoes OEM factory: Yuqi
Annual output: 11 million pairs
Person in charge: Lin Wenzhi
Place of Origin: Quanzhou, Fujian
The world's largest women's shoe manufacturer: Hengfeng
Annual output: 50 million pairs
Person in charge: Wang Zhengan
Place of Origin: Sanchong, New Taipei City
The world's largest luxury shoe manufacturer: Jiuxing
Annual output: 53.1 million pairs
Person in charge: Jiang Zhigang
Place of Origin: Huwei, Yunlin
The world's largest vulcanized shoe manufacturer: Hongfu
Annual output: 82 million pairs
Person in charge: Zhang Congyuan
Place of Origin: Douliu, Yunlin
The world's largest manufacturer of special shoes: Tongjia
Annual output: 1 million pairs
Person in charge: Cai Chaojia
Place of Origin: Taichung
Supply chain: Taiwan's four largest shoe manufacturers handle 75% of the supply
Upstream: Shoe material suppliers
Longchang: Textiles, cloth
Miyoshi: Leather
Liqin: shoe mesh, breathable fabric
TSRC: Adhesive, rubber foam base
Bangtai: Composite materials for soles
Baihe: Velcro, elastic band
Fusheng: Shoelaces
Downstream: Shoe factories
Yueyuan/Pou Chen Fengtai Qinglu Longdian Xinxing Chuangxin
OEM ratio
45% Baocheng Fengtai
30% Takanori Seiroku
25% Other
Dismantling the global sports shoe brand supply chain
Global Market Share
31% Pou Chen, Fengtai, Longdian, Qinglu. 16% Pou Chen, Qinglu, Longdian, Wanbang, Chuangxin. 7% Puma Pou Chen, Dasheng. 6% Reebok Pou Chen, Qinglu. 6% New Balance Pou Chen, Longdian. 5% Asics Pou Chen, Xiangxinbao. 5% Skechers Xinxing, Dalibu. 4% Converse Pou Chen, Fengtai, Hongfu Industrial. 20% Others
Three waves of migration
Creating Taiwanese Footwear Tycoons
The earliest development of Taiwan's footwear industry began in the 1970s. Shoes that were originally manufactured in Japan were moved to Taiwan in search of cheaper labor. At that time, shoe factories were mainly concentrated in central counties and cities, which nurtured a large number of shoe factories. In the 1990s, Taiwan's labor became expensive, and Taiwan's footwear industry moved to China, making money on China's fertile soil for another 20 years.
As labor costs in mainland China continue to rise year by year, Taiwanese businessmen began to settle in Southeast Asian countries such as Vietnam and Indonesia around 2005. The process of Taiwanese businessmen's two major migrations to set up factories is a history of the development of Taiwan's footwear industry. It is also because of the constant migration in search of more profitable places that a large number of footwear industry tycoons have been created over the past few decades.
The constant pursuit of cheap labor costs can be said to be the fate that the shoemaking industry cannot escape. Therefore, a shoe industry veteran lamented, "The shoemaking industry has always been developed in the poorest countries. It has migrated from the mainland to Southeast Asia in the early days. In the future, the only country left for it to go is Africa."
Phase 1: 1960-1970
● Taiwan (Taichung, Changhua, Nantou, Tainan, Yunlin)
Second stage: 1970 to 1987
● Guangdong, China (Guangzhou, Dongguan, Pearl River)
● Fujian
Phase III: 1992
● Vietnam, Indonesia, India
Phase 4: 2004
● Cambodia, Bangladesh, Africa