Moderator: Recently Jiangnan Mansion has been expanding its business area, and opening a new business - the Agricultural Exhibition Distribution Center. But from a macro perspective, 2009 was a special year, many companies chose to "downsize" during the winter. With such a background, why did you choose am expansion of Jiangnan Mansion?
Zhu Zhaoming: Jiangnan Mansion has laid a strong foundation with several yeas’ of hard work. We seized the financial crisis to expand our own business. One is for our own development, another is lowering cost in the background of the financial crisis comparatively. First, we expanded the sports sector, and made some adjustments. Second, through a cooperation with Jiaxing Suppliers and Marketing Cooperatives, we built an Agricultural Exhibition Distribution Center and in the long run, I will also increase the registered capital to 10 million yuan to provide residents fresh vegetables.
Moderator: Looking back at the incremental expansion of these initiatives, what effect has it had?
Zhu Zhaoming: The benefits and taxes paid increased last year, especially the revenue increased by more than 30%, profits increased by more than 20%. The reason why Jiangnan Mansion can grow stronger is that we do not stop, making adjustments, ensuring growth. By focusing on laying the foundation, we were ready for economic recovery.
Moderator: After the department stores having been expanded, the most intuitive feelings for the consumers are the larger scale of stores and more brands. Maybe there exists some advantages in cost of expansion under the financial crisis. For department stores, is there more possible to introduce more big brands?
Zhu Zhaoming: By adjusting to introduce many brands, it is both the requirements of upgrading the mall, and the reflection of Jiaxing's consumption level. After the financial crisis, the brands met big challenges in selling, and were eager to find new opportunities, such as some consumer outlets that have huge consumption potential. Jiaxing belongs to this emerging consumer city. We want to seize this opportunity.
Moderator: Convenient transportation is an advantage or disadvantage for Jiaxing business? In 2001, you entered into Jiangnan Mansion, when did you realize the challenge of the diversion of purchasing power in Shanghai and Hangzhou?
Zhu Zhaoming: The more developed the traffic, the more possible to flow out. But every coin has two sides. For example, with the construction of livable city in Jiaxing, the additional people from Shanghai settled in Jiaxing. They must consume and that is a reaction. In addition, there exists convenient transportation between Jiaxing and its contiguous counties and provides possibility to purchase goods in the grassroots unit. Therefore, the key is the adsorption capacity.
In the second half of 2001,the consumption buying in Jiaxing flowed out until 2005. Even though there is a gap compared with Hangzhou and Shanghai, the gap is narrowing.
Moderator: Your experience is extremely simple. After graduation, you worked as a teacher in a private school. The school you engaged in for further study was related to business. You almost witnessed the full changes of China from an material deprivation exuberant era to the era of greater demands. Has such a change brought any new requirements?
Zhu Zhaoming: After graduating from high school, I was a rural teacher in a private school for 2 years. In 1977, Gaokao returned and in 1978, I was admitted to Zhejiang Business School (now Zhejiang Industry and Commerce University). After working four to five years, I went to Zhejiang Supply Academy (now Zhejiang Economic and Trade Institute). From profession, schools to work, I spent most of my time in supply and marketing cooperatives. But the demands are greater now. Previously everything was easy to sell at the time because demand exceeded supply. Many people queued up along the streets for per kilogram of 5.8 yuan oranges and at the opening of Jiangnan Mansion, wool, refrigerators and fans sold out immediately. Now it is impossible. Now if you do not meet the needs of consumers, you will go bankrupt.
Moderator: Jaingnan Mansion is a diversified mall that is not a single department stores, as well as chains and center of agricultural products distribution. Does such a position relate to your own experience or to the original background of supply and marketing cooperatives?
Zhu Zhaoming: It should be said that the supply and marketing cooperatives are our executive leadership units, but also our shareholders. The business we are doing indeed associates with the background of NCMS to a certain degree. But from the perspective of market, it is also the need of development. In 2008 the total sales value had reached more than 700 million yuan. Thus, when we made the strategy of conversion, the one goal was the transition to a modern, stronger and bigger department store, the another goal was the development of a chain that brings our brand, reputation and quality products to the rural areas and communities. Until now, we have more than 40 directly managed stores and supermarkets that generated 160 million yuan last year. And we strive to expand business, build the Agricultural Exhibition Distribution Center. "Three pillars" will reinforce the growth of Jiangnan Mansion.
Moderator: You belong to the "old supply", and you never leave the system of supply. At present, between department stores, chain industry and agriculture exhibition, which one do you think is easiest to handle? And which one is the biggest challenge?
Zhu Zhaoming: They are all challenge-able, but the biggest challenge is the department stores. We are now very confident in the agricultural sector that mainly satisfies the consumers and farmers. But with the growing competition in department stores, the challenges will be greater.
Moderator: From the opening in 1988 to now, although many people have said that the Jiaxing business competition was inadequate, the ITC, commercial buildings, and the Red House became the history after several rounds of elimination. Jiangnan Mansion survived and developed very well, so do you have any experience?
Moderator: In1980, you went to Pinghu Huanggu supply and marketing cooperatives, and now you acquire agricultural products from farmers directly. Now you build an agricultural exhibition and distribution center, and sell agricultural products to urban residents. Is there any similarity between them?
Zhu Zhaoming: The main functions of supply and marketing cooperatives are agricultural acquisition, agricultural and household supplies, the so-called "old three". The business we are doing is indeed what we called " old three". But the difference is bigger in terms of scope, connotation and coverage.
Moderator: 2001 is a transition year for you personally. You moved to do city business from the rural business. What were the main problems at the beginning?
Zhu Zhaoming: One was reform pressure that related to the vital interests of many workers; the second was the prospect of business was not good. Jiangnan Mansion was heavily in debt because of the acquisition of Hualian. Actually, the enterprise was at a loss.
Moderator: According to the files, in the face of such a dilemma, you chose to manage goods and stores.
Zhu Zhaoming: It should be said that I took these measurements as soon as I was in charge of Jiangnan Mansion. Dealing in goods means selling brands by myself, and operating stores means upgrading the brands. After several years of efforts, we not only paid off the Shanghai Hualian debt and loans, but also we began to have deposits.
Moderator: In accordance with the development of Jiangnan Mansion now, it is in a point where it will convert into a modern mall. But you are a traditional businessman, do you think you need some changes and innovation or not?
Zhu Zhaoming: It should be said that I came from a planned economy and never was engaged in the department store industry. Such a big shopping mall is a challenge for me, and the pressure is relatively large. It is necessary for me to study and learn more experience from other cities, such as in addition to the surrounding cities, Shenzhen, Wuhan. I should be familiar with the internal situation. And make the most use of the needed personnel.
Moderator: From 2001 to now, nine years, from a supply and marketing director to chairman of the department stores, do you think you have completed the transformation of the identity?
Zhu Zhaoming: It should be said that people are constantly changing, constantly absorbing new things. For me, I should keep changing and absorbing good things.
