President & CEO Dorel Juvenile, Jean-Claude Jacomin • Dorel Juvenile: Front runner in the industry • The foundation: collaboration and integration • Organizational blueprint: ongoing efficiencies • Elevated R&D capabilities Chief Operations Officer Dorel Juvenile, Dave Reilly Responsible to drive the operations activities of Dorel Juvenile China • Driving our global operating capabilities • Realizing consolidation, efficiencies, and a Manufacturing Center of Excellence President & CEO Dorel Juvenile China, George Huang Responsible for unlocking the potential of the Chinese market • Committed to establish a strong market presence • Driving growth of the domestic sales • Offering a broad and relevant brand portfolio, leveraging global capacities
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Juvenile Segment, China Analyst Presentation October 2015
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President & CEO Dorel Juvenile, Jean-Claude Jacomin • Dorel Juvenile: Front runner in the industry
• The foundation: collaboration and integration
• Organizational blueprint: ongoing efficiencies
• Elevated R&D capabilities
Chief Operations Officer Dorel Juvenile, Dave Reilly Responsible to drive the operations activities of Dorel Juvenile China
• Driving our global operating capabilities
• Realizing consolidation, efficiencies, and a Manufacturing Center of Excellence
President & CEO Dorel Juvenile China, George Huang Responsible for unlocking the potential of the Chinese market
• Committed to establish a strong market presence
• Driving growth of the domestic sales
• Offering a broad and relevant brand portfolio, leveraging global capacities
1
Dorel Juvenile segment overview
Zhongshan,
October 28
2
3
All over the world
4
5
We care for
the future generation
6
Front runner in the industry
8
Always one step ahead
9
Establishing our own division
in China
10
Acquisition of the
juvenile business
of the Lerado Group
o Transaction closing date: 3rd of November 2014
o Scope of acquisition:
o Over 4500 employees;
o 6 sites
o China: Manufacturing, Domestic Sales, R&D
o Taiwan: R&D Center
Realizing a vertically integrated value chain
11
• Mastering our destiny
• Taking control of our supply chain
• Opening up the Chinese market
• Increasing our global innovation power
Dorel Juvenile China
Strengthening our global leadership, extending our
world-leading brands and competitive advantage
12
Global operating
capabilities Expansion into
Chinese market
Elevated R&D
capabilities
13
- Operations footprint
- Employee base (from 3,500 to 7,500)
- - R&D center in Taiwan
- Presence in the Chinese market
Adding Angel as strong local brand
14
Global brands
Regional and local brands
Status of organizational integration
Established a skilled leadership team
16
Seng Ming Lim
VP Operations
Sam Wu
VP HR &
Communications
Fan Mingfeng,
VP R&D
Scott Chen
VP Program
management & 3rd Party Sales
Rick Feener
VP Quality
Gary Kao
CFO
Harrison Cheng
GM Domestic
Sales
George Huang President & CEO
Building a Dorel Juvenile identity
19
Visible presence
Website: Building online presence in China
Care for Precious Life 呵护新生命
A unified culture: Adapted functional work wear enforcing our identity
and visual control
Integrating company cultures
20
Exchange of knowledge: European employee
working in Taiwan for dedicated period
Dorel Juvenile China competing in Dragon
Boat Race
USA celebrating first products shipped from
Dorel Juvenile China
Welcoming a new division: celebrations
across the world
21
Informing and engaging employees
Informing and engaging employees
Implementing global systems and processes
• Upgrading IT infrastructure and integration into Dorel Juvenile IT eco-system
• Established a tool life database and total productive maintenance system for proactive equipment and tool maintenance.
• Converted all manual welding:
• 8 robotic welders
• steel and aluminum
• Individual incentive system now accounts for non-conforming parts and finished goods.
• Harmonization of quality inspections / testing underway.
48
49
Supplier consolidation
and leveraging Competency
assessment and
development
Quality controls and
process improvements Centre of Excellence
approach
Global operating capabilities Objectives DJC
Manufacturing Centers of Excellence
• Evaluation of manufacturing landscape to integrate the role of Dorel Juvenile China
• Selection of Manufacturing Centers of Excellence based on:
• Competency / expertise level
• Cost effectiveness
• Ability to control manufacturability and quality
• IP protection
• Investment in both equipment and people are necessary to establish manufacturing leadership and competitive differentiation.
50
Global Manufacturing capabilities of Dorel Juvenile
51
Key milestones: Moving existing product platforms and launching new platforms
Moved existing platforms, NA:
• Travel Systems, Play-yards, High Chairs, Walkers
• 2 million umbrella strollers
New platforms, EU
• July: Manufacturing of premium stroller Stella of Maxi- Cosi/Bébé Confort using progressive cell manufacturing concepts.
• September: Manufacturing of premium stroller Dana of Maxi- Cosi/Bébé Confort
52
Stella Dana
January 2015: Shipment of Safety 1st Step ‘N Go
Umbrella stroller
53
2016
1. Manufacturing Centers of Excellence for strollers in Zhongshan, Huangshi (umbrellas), and Portugal
54
2. Car seats Centers of Excellence in Columbus, Portugal, Helmond, Zhongshan and Brazil
55
3. Transform Dorel Juvenile China’s operations into an established and lean organization
56
• Rationalize injection molding (wheels, small parts) • Improve capacity and capability • Establish good balance of insourcing and outsourcing • Operate with high quality systems, labs, and testing • Commit to 95+% on-time deliveries • Commit to 95 +% quality
4. Realize solid global processes and ownership
• Align business strategy with operations processes:
Stroller & Car Seat Market in China Total Retailing Sales of Stroller & Car Seats in China: • 2014: US$ 1.8 Billion • Estimation 2018: US$ 3.3 Billion • The sales of billing from the brands in 2014: US$ 862 Million
New Borns
• The number of new born babies developed rapidly
68
15,7
15,8
15,9
16
16,1
16,2
16,3
16,4
16,5
2008 2009 2010 2011 2012 2013
New borns Millions
Source: National Bureau of Statistics of PROC
Competitive landscape
69
Premium
HPP
MPP
OPP+
OPP
• Strollers: +/- 160 brands
• Car seats: +/- 90 brands
China market channel overview
70
KA
Hypermarket
(20%)
Wholesale
(5%)
Specialty
Store
(12%)
E-Commerce(11%)
Importer National Agents
Brand Owner
Consumer
Area/Provincial Distributor
In-house Sales Team
Baby Shop
(36%)
Department
Store
(16%)
Key Account Hypermarket
71
Baby Shop
72
Specific E-commerce channel China Tmall.com
• Tmall.com is a Chinese-language website for (B2C) online retail.
• A platform for local Chinese and international businesses to sell brand name goods to consumers in mainland China.
• It allows foreign brands to enjoy the Chinese market without having an actual presence.
73
Key success factors
Brand awareness, company image &
reputation
Channel coverage & relationship
with channels
Product innovation & fashion design
Logistics & after-sales services
Product quality, 3C compliance & guarantee
China local manufacturing
74
75
Objectives
• To realize a sustainable growth
• To offer a brand portfolio with a full range of
products
• To lead the way in the market by offering omni-
channel solutions
Overview Strategic Implementation
1. To realize a sustainable growth
• Scale down unprofitable KA Hypermarket
• Have closed own stores
• Introduce new car seats, strollers and small furniture
• Gain market share via Pincer Attack strategy
2. To offer a brand portfolio with a full range of products
• Follow the Halo Effect strategy, driven by brand equity, to strengthen the brand positioning of the other brands
• Introduce:
• Bébé Confort (High-end Feeding & Home Equipment)
• Safety 1st (Medium-end whole product range)
• Leverage Dorel Juvenile product platforms to benefit the development of specific products for China
76
Overview Strategic Implementation
3. To lead the way in the market by offering omni-channel solutions
• Focus on Baby Shops and e-commerce channel.
• Grow online sales
• Develop new channels
• Set up partnership program for the O-to-O (On-line& Off-line) strategy
77
78
Objective
• To realize a sustainable growth
• To offer a brand portfolio with a full range of
products
• To lead the way in the market by offering omni-
channel solutions
Dorel Juvenile China – Price point & Channel overview
79
Department stores
National baby chain stores
Community baby chain stores
Wholesale market in major market
Regional baby chain stores
Wholesale market In minor market
Hypermarkets
Premium
HPP
MPP
OPP+
OPP
80
Quality
high
low
Price
high low
OPP
Local brand
Pincer Attack
Strategy
• Quinny
-Premium
-Stroller
• Maxi Cosi
-High-end
-Car Seat & Stroller
• Bébé Confort
-High-end
-Feeding & Home Equipment
• Safety 1st
-MPP
-Whole range
• Angel
-OPP+
-Whole range
81
Objective
• To realize a sustainable growth
• To offer a brand portfolio with a full range of
products
• To lead the way in the market by offering omni-
channel solutions
Brand and product strategy
Brand portfolio strategy
83
84
Shanghai CBME Fair
Introducing,
Bébé Confort, & Safety 1st
Expanding Quinny, Maxi-Cosi
85
Shanghai CBME Fair
Re-positioning Angel
Car seats • Chinese consumers buy one car seat for their child from 1 year to 6 years old.
• Maxi-Cosi and Safety 1st are set-up to serve these consumers with convertible/ multi-group car seat solutions
• The various product launches are therefore aimed at convertible solutions
86
Convertible solutions
• Launched in 2015 (Maxi-Cosi):
• the Group 0+ /1 and Group 0+/1/2 MiloFix and Opal
• Launched in 2015 (Safety 1st)
• Group 0+/1, Group 0+/1/2 Simply Safe
87
MiloFiX Opal
Simply Safe
Broad range of stroller portfolio
For the affluent consumers of China:
From affordable Angel, to Safety 1st, Max-Cosi, and premium Quinny:
88
Adding Angel as strong local brand
89
Global brands
Regional and local brands
• A diverse range of affordable juvenile products in line with the needs of Chinese parents.
• Product categories:
• strollers and home equipment
• 2016: Introducing car seats
• Reinforcing Angel by leveraging global capacities of other Dorel Juvenile brands
• Wide distribution channel across wholesale and hypermarkets enabling parents to shop Angel in many cities across China.
90
'Where there are children, there is Angel'.
Re-positioning strollers
91
3 key stroller categories in China:
Handle reversible | Car seat reversible |Buggy
92
Objective
• To realize a sustainable growth
• To offer a brand portfolio with a full range of
products
• To lead the way in the market by offering
omni-channel solutions
93
Omni-
channel
strategy
Channel strategy
• Focusing on realizing growth in baby stores and online sales (tmall.com)
• Scale down unprofitable KA hypermarket stores and department stores
• Closed 5KA channels, and 600 stores
• Closed owned stores and shop-in-shop stores
• Reaching generation Y parents
• Focus on social networks and online communication
• Websites, Weibo, Wechat
• In-store-communication (trade marketing and consumer promotion
• Brand websites, online flagship stores
94
Market Channel Strategy
95
KA
Hypermarket
(20%)
Wholesale
(5%)
Specialty
Store
(12%)
E-Commerce(11%)
Importer National Agents
Brand Owner
Consumer
Area/Provincial Distributor
In-house Sales Team
Baby Shop
(36%)
Department
Store
(16%)
Focus
Focus
Channel development
96
0
200
400
600
800
1000
1200
1400
Baby Chain store Baby Shop (Wholesalers) KA Hypermarket
2015 2016
Number of stores % of Net Sales
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Specialist Mass Market Distributor Retail Online Sales
2015
2016
97
Online
approach
Specific Chinese Channels: WeChat – free messaging and call app
• Supports different ways of instant message
• Supports users to register as a public account, which enables them to interact with subscribers and provide them with service.
• Public accounts have become a common service or promotion platform for government,media and companies.
98
Specific Chinese Channels: Weibo- microblogging platform
99
• Weibo" (微博) is the Chinese word for "microblog“ and is increasingly being used in China
• Similar functionalities to Twitter, using 140 (Chinese) characters
• Western companies are utilizing Weibo to gain access to the Chinese market
Online Marketing 2016
• Quinny, Maxi Cosi, SF1, & BBC
• 4 Websites & Translation
• Weibo/ Wechat communication
• Angel
• Redesign Angel website & Photography
• Weibo/ Wechat communication
• Tmall flagship stores for all brands
100
Weibo & WeChat
Specific marketing approach China: Online micro-movies
• Micro movies have become increasingly popular
• In China’s vast metropolises long commute times mean millions spend hours watching content on their smartphones
• Micro-movies are shot over a short period of time, last from three to thirty minutes
• One reason for the growing popularity of micro-movies is that they are streamed on video sites with built in social media features that make them easier to share further.
101
Dorel Juvenile China: Including micro-movie in marketing • Develop a series of micro-movies to
promote online and offline sales
• Include consumers in defining the narrative of the story
• Introduce brand and products
• Engage with consumers via local marketing forum and WeChat
• Use of well-known blog sites and key opinion leaders