Seeking opportunity in the midst of the epidemic: An interview with Tang Feng, President of Wanxin Optics Group, by 21st Century Business Herald

Release time:2020-04-08 10:45:38 sources:The 21st Century Business Herald Reading times: second

Recently, Tang Feng, President of Jiangsu Wanxin Optical Group, accepted the exclusive interview of nanfang Press Group's authoritative commercial media "21st Century Economic Report". In the interview, Tang Feng deeply analyzed the crisis and opportunity faced by the development of enterprises under the epidemic environment, and stressed that under the current situation of the downward economic trend, enterprises pay more attention to the investment in research and development, introduce senior talents, and actively climb up the world value chain.

Danyang city, which is under the jurisdiction of Zhenjiang, Jiangsu Province, is the world's largest production base for eyeglass lenses. Due to an outbreak of COVID-19, the entire market is facing unprecedented operating pressure.

Since 1986, Danyang, a county-level city with a permanent population of less than one million, has gradually developed into the world's largest lens production base, Asia's largest eyewear distribution center and China's eyewear production base. According to data provided by local economic authorities, more than 50,000 people are engaged in the glasses-related industry, with an annual output of nearly 200 million sets of glass frames, accounting for about one-third of the country's total. The annual output of optical and glass lenses is nearly 300 million sets, accounting for 75% of the domestic total and 50% of the world total.

21st Century Business Herald understands in a recent interview, on the one hand, the domestic market is struggling to recover, due to local policy differences, many glasses manufacturers have temporarily lowered their sales forecast for 2020, and reduced spending; On the other hand, as the epidemic spread internationally, the number of foreign orders fell off a cliff, and some customers cancelled their orders. According to the preliminary calculation by the local economic authority, it is estimated that the lens orders in May and June 2020 are only about 15% of those in the same period in 2019.

But policymakers at the industry's leading companies are on the move, communicating and changing.

"The epidemic has brought us closer than ever to our partners, both at home and upstream." Tang Feng, President of Wanxin Optics, told 21st Century Business Herald that this consensus has won the company opportunities to develop in the world value chain.

Wanxin optics was founded in 1973 and achieved sales of 1.23 billion yuan in 2019. At present, Wanxin is the weather vane and leader of Danyang, the eyewear capital of the world. Its annual output of eyewear has exceeded 100 million pieces, accounting for 1/12 of the global shipment, ranking the first in the world, and it is also the most important production base of resin lenses in the world. Its export products cover more than 40 countries on 7 continents with 45 million pieces per year.

China has made initial progress in epidemic prevention and control. Since the outbreak of the epidemic, the key economic towns in southern Jiangsu, including Zhenjiang, have adopted policies as soon as possible, taking the lead in promoting economic recovery. Currently, the industrial resumption rate has reached 100%.

The glasses industry is an important part of the 13 advanced manufacturing clusters in Jiangsu Province, whose particularity determines that the development does not depend on the advantage of scale. In response to the epidemic, the glasses industry has become a representative industry that integrates the two tasks of climbing the value chain and cultivating world-class advanced manufacturing clusters.

Raw material inventory is sufficient to allow retail store payment

"For every two people in the world wearing glasses, one of them is made in Danyang." In the local people, this has been the "industry story" of Danyang glasses.

At present, the pressure of the glasses industry and domestic epidemic trend in sync.

In the domestic market, it was basically frozen in February, and wanxin's more than 30,000 stores cooperating in the country hardly sold. In March, with the resumption of work and production throughout the region, sales gradually recovered, and by the end of March had recovered nearly 80 percent. A wave of domestic consumption is expected to peak from April to June.

"Since the outbreak, our phone and video system has hardly been turned off. Whenever we have an idea, we immediately go online to communicate and seek solutions."

Tang told 21st Century Business Herald that more often than not, upstream and downstream partners are pinning their hopes on leading enterprises in the industry chain to mitigate the impact of the epidemic.

"Taking advantage of channels and foreign trade, we have donated a large number of epidemic prevention materials to domestic and foreign customers, laying a deeper trust and foundation for future cooperation." Shang Feng said.

Can upstream raw materials be guaranteed?

Tang Feng introduced that under the communication of the 24-hour mechanism, raw materials and auxiliary materials in the upstream of the industrial chain have been prepared in stock. However, due to the different measures taken by different regions and countries, the transportation cycle has been prolonged and the transportation cost has been increased. However, due to the early response and many measures, the impact on the current production is limited.

The pressure downstream of the industry chain is greater and more obvious.

In the early stage of the epidemic, the majority of domestic eyewear retail stores were greatly affected by the epidemic in the early stage, so they could not sell the glasses normally and their funds were not functioning properly.

Faced with the common experience of more than 30,000 cooperative retail stores in China, wanxin's board of directors decided at the first time that the payment for goods due from retail stores should be delayed for one month. For stores with special circumstances such as severe epidemic situation and remote location, the payment could be delayed again after the review of the headquarters, so as to tide over the difficulties together with the retail enterprises.

Many countermeasures in advance, especially the structural adjustment of products after market analysis through big data and other means, Wanxin also caught the market opportunity of "anti-Blue ray lens".

Tang Feng told the 21st Century Business Report that e-commerce sales have bucked the trend during the epidemic, especially for anti-blue ray lenses, which were the first in China to realize the "new national standard of anti-Blue Ray" and meet the demand for blue ray protection in digital life at home. The sales volume has exploded, with a year-on-year growth of 130% so far.

In response to the adjustment and growth of youth myopia management lens products, anti-fog lens products wearing masks, also helped retailers to seize new demand and reduce losses.

Now, with the outbreak under control in China, business is clearly recovering for retailers.

Accelerate innovation and climb the global value chain

Wanxin is the first private enterprise to realize internationalization in the production and manufacturing market of spectacles, and the impact of the epidemic is also testing its international influence.

Data provided to 21st Century Business Herald by the economic department of the management committee of the local development zone and the industry association show that Europe is the hardest hit by the epidemic, and most of the retail stores have been closed. In Germany, Austria and other countries, retail terminal sales have been almost zero in the past week. Although the outbreak in eastern Europe has been less severe than in Western Europe, clients have also mostly worked from home.

Affected by the epidemic, the sales of a leading glasses chain chain cooperated with Wanxin in Germany fell by 10% in the first week of March, by 50% in the second week, and by 90% in the third week, losing 100% of the glasses frame business.

According to Tang Feng, the European market accounted for more than 40% of the new export volume, has been frozen trend. In South America, about 20%, previous orders were unaffected, but retail terminal sales fell sharply and new orders stagnated. In addition, customers in Canada also temporarily closed stores because there were no sales.

"One of the most obvious pressures is that orders for customised lenses, which are important to companies, in overseas car houses have virtually gone to zero." Tang said another general impact is the large-scale shutdown of cross-border transport.

In fact, Wanxin's earliest response was to strengthen the import of some raw materials from abroad, and the stock could be supplied by the original conventional shipments until August 2020.

"On the one hand, we should share China's epidemic prevention experience with foreign customers in a timely manner and actively respond to the epidemic together. On the other hand, in the face of the shortage of foreign protective materials, the company also made donations and took advantage of the company's advantages in China to help customers purchase protective materials at home." These measures have won high approval from foreign customers and increased confidence in China, Tang said.

In the face of the decrease of demand in the regions with severe epidemic, Wanxin actively develops customers in the regions less affected by the epidemic. The latest to win a Japanese customer, initially expected to bring $1 million in sales, and the recent domestic many new customers have taken the initiative to negotiate the car room customized lens.

Tang told reporters that the current focus is to find "opportunities" amid the "crisis" of the epidemic. In the current situation of the downward economic trend, enterprises pay more attention to investment in RESEARCH and development, introduce senior talents, and actively climb up the world value chain.

In late March, senior officials from Jiangsu Province visited Danyang to investigate the eyewear industry and focused on wanxin's globally competitive r&d project of high-end membrane technology, encouraging enterprises to speed up innovation in the face of the epidemic, enhance competitiveness and actively seize the commanding heights of the industry. Membrane technology is one of the three most important elements in the composition of lens. The development and innovation of membrane technology determine the quality, function and comfort of lens.

Many people in the eyewear industry believe that the epidemic has a great impact on the upstream and downstream of the global eyewear industry, and the industry will accelerate the reshuffle, so that lens suppliers will become more concentrated and stronger. This may usher in new development opportunities for leading enterprises in the industrial chain in the crisis brought by the current epidemic.

A scholar told 21st Century Business Report that a major impact of coVID-19 is that Chinese companies can rely on their huge domestic demand market to integrate global suppliers into their own division of labor network and build a global value chain driven by demand or technology.

Although the glasses industry does not win by scale, the practice of Jiangsu province, a big manufacturing province, shows that the glasses industry is a representative manufacturing industry that integrates the two tasks of climbing the value chain and cultivating the world-class advanced manufacturing cluster.
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