Securities Times Deputy Editor-in-Chief Conversation Sofia Chairman Jiang Yan: Crossing the "speed speed" to become the "all-round champion" in the home industry

Securities Times reporter Li Yingquan

From a start-up furniture company to a custom-made wardrobe industry leader and successful listing, Sophia only took 8 years; from the beginning of the listing, there were less than 3 billion market-value "small companies", which became the "consumer white horse" of the current 30 billion market value. Sophia only took seven years. Sophia, established 15 years ago, staged a wonderful scene of the "fast speed" of the Chinese home furnishing industry.

A few days ago, the Securities Times "high-quality development of listed companies in action" interview group went to Sofia, the deputy editor-in-chief of the Securities Times, the dialogue with Sophia chairman Jiang Yan.

Listing brings a leap in growth

“After the listing, the company raised a large amount of funds and built four new production bases (Chengdu, Jiashan, Langfang, Huanggang), which greatly improved our services.”

Peak: Sofia's continued high growth over the past few years has been amazed by the capital market. From 2008 to the present, net profit has increased by about 40 times. Looking back ten years ago, did you think of Sophia's current size?

Jiang Yan: To be honest, in 2008, I did not expect to have the scale of today, and I dare not think so big. The company's sales scale has been 100 million from 0, and it took 5 years to go through a long period of product introduction and gradually cultivate consumer spending habits.

But in 2011, I thought that I had “thought to think” at that time, because since 2009, custom consumption has started to break out, with a growth rate of 30%-50% every year, and the market structure has also changed a lot. Our family promoted it alone and pushed it to many companies across the industry. At that time, I thought that this business could be tens of billions.

Peak: In 2011, Sofia led all peer companies to the first A-share market. What do you think the capital market brought to Sofia's development over the years?

Jiang Yan: We are the first A-share listed company in the custom furniture industry. The listing has indeed brought us a big dividend. To do manufacturing, if the company's profit growth is difficult, the profit we earned before the listing is far from the funds needed for scale expansion. The development speed at that time is also very slow.

After the listing, the company raised a large amount of funds and built four new production bases (Chengdu, Jiashan, Langfang, Huanggang), which greatly improved our services. In the past, a foreign customer, we have to transport goods from the Guangzhou headquarters in the past few days, and now several major key consumption areas in the country have coverage of our production capacity: Chengdu factory in the southwest, Langfang factory in Beijing and Tianjin, Jiashan factory in the Yangtze River Delta There is a Huanggang factory in Central China, which has a very obvious improvement in the timeliness of our product supply.

On the other hand, with the support of the capital market, we have enough funds to develop design software and informatize the factory. Nowadays, the company's production automation is already very high, and information construction has also made a big leap than in the past, and it is also in a leading position in the industry.

Do it as an "all-round champion"

“I don’t think it’s time to compare other companies in certain individual areas, but to focus on the comprehensive strength.”

Peak: The custom furniture industry has added a lot of A-share listed companies in the past year, such as European-style homes, Shangpin homes, etc. Compared with these peer companies, what do you think is the most unique place in Sofia's industry?

Jiang Yan: There were a lot of peer companies listed last year, which also made the capital market see the huge potential of the custom furniture industry. However, as more and more companies share this market, market competition is also growing.

When it comes to what we are different from other companies, I don’t think we should compare other companies in certain individual areas, but rather focus on the comprehensive strength competition. We don’t do “single champions” but “do” All-round champion."

Now many of our peers are listed, the information is very transparent, and you can do what others do, there is no "single skill". It is difficult to say that we are much stronger than others in a certain aspect. It is better than comprehensive comprehensive strength, not only manufacturing, marketing, and service, but also the balanced and coordinated development of organizational structure and management capabilities.

Peak: Some people think that Sofia's past rapid growth in the past is mainly due to the brutal growth of China's real estate market. What do you think about the relationship between the company's growth and the development of the real estate industry?

Jiang Yan: Our customized enterprises, including furniture companies, have a close relationship with the development of real estate, but it is not a strict positive correlation. Real estate development is good, our business will naturally be good; but real estate will also encounter bad times, such as in 2009, 2013, 2014, are the downturn of real estate, but our development in the past few years is still very smooth.

I think this is mainly due to a few points:

First of all, in addition to the new home decoration market, we have done a good job in the second-hand housing decoration market, especially in the mature first-line market of Beishangguangshen, the proportion of second-hand house decoration customers can reach 50%.

On the other hand, in addition to the large-scale development of real estate, the custom furniture industry has a huge replacement space for traditional finished furniture. Custom furniture is a new sector in the furniture industry. Many young people now want to tailor themselves. Housing, the pursuit of personalization. At present, the penetration of custom furniture in the entire furniture market is not high, and it is still in a period of continuous explosion.

Seize the customer's psychology to win word of mouth

“E-commerce has brought us a lot of passenger flow. Last year’s 'Double 11', the company’s flagship store in Tmall had sales of more than 500 million.”

Peak: We often see Sofia's stores in the mall, and the business is hot. Why should the company make great efforts to make new retail? What changes will the new retail bring to the industry?

Jiang Yan: In the past, we usually bought furniture to go to home stores and building materials stores. But now we are talking about new retail refers to omni-channel sales. We have to put our products in the most passengers, including e-commerce and supermarkets. ,Mall.

From the traditional point of view, furniture stores should not be opened in these places (e-commerce, supermarkets, shopping plazas), but after our practice, it is effective to open stores in these places. E-commerce has brought us a lot of passenger flow. Last year's "Double 11", the company's flagship store in Tmall had sales of more than 500 million; the shopping plaza also had passenger flow, and many of our shopping malls sold very well.

We believe that as a merchant, we should expand channels and obtain customers in a way that is more convenient for customers to consume. The new retail is to identify the psychology and behavior of consumers, to study how to make them easier to consume, from the perspective of sales, this essence has not changed.

Peak: Sofia's brand has a good reputation in the country, behind the word of mouth is the user experience. What kind of work does the company have in terms of user experience?

Jiang Yan: The key to doing a custom industry is word of mouth and service. There are seven or eight links in the whole customization process. If there is a problem in any one of the links, the product may not be installed, and it cannot be the product that the customer needs.

From the designer's door-to-door measuring scale to production to installation, we have spent a lot of effort on training in each link. We hope that our employees can understand the needs of customers, design and produce the products that customers need, and let customers Satisfaction, accumulation of word of mouth, through word of mouth propaganda, can win a broader market in the future.

Fully decentralized to share growth

“Now our company is on a high-speed development track. At this time, equity incentives will enable employees and distributors to share the dividends of corporate growth.”

Peak: Sophia has completed two equity incentives since its listing, and the third equity incentive is also underway. The first two employees and partners involved in equity incentives can be said to have gained a lot. What do you think of the company's incentives and attractiveness for talents and partners? Tell us about the company's corporate culture and your management philosophy?

Jiang Yan: Our corporate culture is “innovation and sharing”, and equity incentives are mainly based on “sharing”. The premise of doing equity incentives is to be optimistic about the rapid growth of this enterprise. Now our company is on a high-speed development track. At this time, equity incentives can enable employees and distributors to share the dividends of corporate growth. Everyone is more careful to make their career bigger. If the company has already ended high growth and entered a stable period, then when it is doing equity incentives, it will be difficult for employees and dealers to make more money, and it will not share the dividend of enterprise development.

For me personally, I am more trusting in the use of people. The following authorizations are sufficient, and the system of rules and regulations is not too strict, mainly relying on everyone's self-consciousness. I value the results-oriented, more tolerant to everyone, willing to give the opportunity to let everyone try and error. The management team and employees often comment on me like this: They are the soldiers who are on the battlefield, and I am the "logistics minister" of everyone. At present, the team strength of the company is relatively strong, and employees have a sense of belonging.

The most successful choice is to make a wardrobe first.

"When you do 1 billion, you will find that you can still make 10 billion. When you do 10 billion, you will even find a market of 100 billion."

Peak: Sophia has been developing very smoothly since its listing. Have you experienced any difficult stages at the beginning of your business? How did you get into the wardrobe industry?

Jiang Yan: Entrepreneurship is hard, but it is not too difficult. At first, my goal was not to be a listed company. When we started our business, we were doing flooring, cabinets, etc. At that time, I felt that in addition to these, I could sell other products in the store, so I wanted to make a wardrobe to increase some income.

After a few months, we found that the wardrobe business was very good, even surpassing the previously sold products, so we focused on the sales of the wardrobe, but did not expect the wardrobe to become such a large industry.

By the time of 2011, we really discovered that the wardrobe can be made into a big industry. At that time, my idea was that a family could buy more wardrobes than an air conditioner. The Gree and the beauty of air conditioners can be scaled up to hundreds of billions. Why can't we? At present, there are few companies with a scale of more than 10 billion in the entire furniture industry, but I believe that the leading enterprises in the future are likely to move closer to the scale of Gree and Midea.

Looking back now, I think that when we chose to make wardrobes instead of cabinets, it was the most successful choice I have ever made. The development of the cabinet industry was earlier than the wardrobe. When we did it, the first-line cabinet brand had more than 600 stores across the country. We chose to make the wardrobe, which can be said to avoid competing with the peers on the most intense track.

Gao Feng: I chose Sophia in the wardrobe instead of the cabinet. Now you are returning to the cabinet market through the brand of Smy. How do you see the opportunities in the cabinet market today?

Jiang Yan: The cabinet industry has been developing in China for more than 20 years, and the competition has been fierce. But when an industry develops to a certain extent, there will be a lot of production resources and consumer resources can be extended horizontally. The same is a customizable product. We have the production resources and service resources of the wardrobe. Why can we not make cabinets, wooden doors and curtains?

As long as consumers have demand, we can grasp the original customers. Even if only 50% of the wardrobe customers buy cabinets or other products, the consumption of individual customers will increase, and the cost of acquisition for individual customers will be reduced. This is a resource. Comprehensive utilization. In fact, the entire industry is the same, the original cabinet companies will now also do wardrobes, including wooden doors, curtains and other products, the industry has also formed a concept called "full house customization."

At present, the new product lines of cabinets and wooden doors have great room for growth in the future. In the cabinet, we chose to cooperate with the old brand Smy, who has been in France for more than 80 years, in order to develop on a higher platform. Simi cabinets achieved sales of 600 million in three years, and opened more than 600 stores. The speed is still very fast. When we closed the wardrobe from 0 to 600 million, it took 10 years.

Frankly speaking, we have also made mistakes in the development of cabinets: we could have achieved 800 million yuan last year, but because we wrongly judged the price increase of raw materials at the beginning of the year, we raised the ex-factory price and affected the achievement of the annual target.

At present, the loss of our cabinet business is mainly due to the large investment in equipment and systems in the early stage, and the low utilization rate of capacity. I believe that after this year, the utilization rate of cabinet factories will rise, the price of products will become more and more competitive, and the advantages of dealers at the front end will emerge. In the next five years, cabinets, wooden doors and curtains will bring new growth points to the company.

Peak: How do you understand the whole house customization?

Jiang Yan: The concept of whole house customization was proposed in previous years. It is not difficult to put forward this concept, but it is not easy to do it well. The whole house customization covers almost everything in the home improvement, including cabinets, porch, tatami, to the curtains, dining table... all test purchases and sales.

We do the whole house customization, mainly because we hope that these accessory products can meet the needs of customers. The sofas provided are professional, the beds provided are also professional, and the style of the whole house can be consistent. Currently, a process is needed. We are also constantly adjusting the categories to meet the requirements of dealers and consumers.

Peak: Do you think there is a competitive barrier in the custom furniture industry?

Jiang Yan: I think there is. It is not as easy as a new business to enter this industry. In 2005, there were a lot of companies that started out in the market without entering the wardrobe. After more than a decade of exploration, they just started.

Even if you have strong financial strength, you must buy a factory, buy equipment, hire personnel, do training, establish a sales network, and train and install. Just like climbing a mountain, you can see a mountaintop. When you climb up, you will find a higher mountain. The same is true for companies. When you do 1 billion, you will find that you can still make 10 billion. When you do 10 billion, you will even find a market of 100 billion.