Wensli Poached CEO of Hermes

In a press conference held by Wensli Group on July 2, a Frenchman became the focus of media attention and the silk industry, not only because he was the newly appointed chief executive officer of Wensli Silk Culture, but also because of his previous position as CEO of Hermes Textile Holdings. As a private silk producer based in China, hiring a former Hermes executive can help generate considerable publicity for Wensli and is widely regarded as a move of the company to pursue a globalization strategy.

Patrick Bonnefond graduated from the University of Lyon and has a work experience of more than 20 years. He was appointed as CEO of Hermes Textile Holdings in 2009, in charge of the silk and textile division. Being ranked second among the 14 product divisions within Hermes’ business portfolio, Hermes silk and textile division is the number 1 silk brand in the international arena. During his five-year tenure, the revenue and margin of Hermes silk and textile division increased by 2 fold and 3 fold respectively, which won him the reputation of “introducing the nobleness and luxury of French silk to the world.”

It is said that Patrick Bonnefond became attached to Wensli in March 2014 when he met with Wensli CEO Li Jianhua in Paris. In May the same year, he was invited to China for a visit to Wensli. When it comes to the underlying reason behind his decision to join Wensli, Bonnefond noted, “The global luxury market is changing. With the world’s luxury market increasingly focused on Asia, Chinese market is undergoing rapid development. Chinese brands are evolving from ordinary brands to high-end and luxury ones. China should not be merely a manufacturer of silk products. Instead, it should have its own luxury silk brands. Among the many Chinese silk companies, I see Wensli as the top candidate.”

The International executive facilitated the smooth succession

Upon joining Wensli, Patrick Bonnefond will lead Wensli's silk division, focusing on talent development, brand architecture, formulation and implementation of the globalization strategy for its silk brands. He will also bring in a first-class team of European designers to promote the company's high-end “Made in France” silk brands by rebuilding its product identity system. “Some of the designers are former members of Hermes’ design team, and others are world’s leading designers from other high-end brands,” Li Jianhua explained.

In addition, Bonnefond will serve as CEO of Marc Rozier, a century-old French silk band previously acquired by Wensli, and take charge of marketing and advertising of the brand in both Chinese and European markets. Therefore, he will be based in France and make regular visits to Hangzhou, where Wensli’s headquarters is located. Bonnefond admitted that acquiring and developing strategic partnership with Marc Rozier is one of the major reasons that he has great confidence in Wensli’s future.

The successful recruitment of Bonnefond can be largely attributed to the efforts made by Ms. Tu Hongyan, Chairwoman of Wensli Group and a second-generation entrepreneur who has been committed to building China's own world-class silk brands and China's No. 1 silk brand. So far, Wensli has established its own brand system, developed its brand culture by exploring and reviving Chinese traditional silk culture, and entered into partnership with world’s leading luxury brands through acquisition of French companies.

For many second-generation entrepreneurs, one of the most formidable challenges after they take the helm is how to upgrade and lead the family businesses to achieve a significant breakthrough by improving the first generation’s approaches to operation and management. This is also a criterion for successful succession. A close look at Wensli’s brand marketing and globalization strategy implemented by Ms. Tu since 2008 may help reveal the company’s road map with regard to industrial upgrading and brand building.

From OEM to brand building

Though in a growth industry, many Chinese silk manufacturers have been suffering from lack of proprietary brands. Despite the fact that 90% of raw silk and 80% of silks fabrics all over the world come from China, 99% of Chinese silk companies can only engage in original equipment manufacturing or original design manufacturing for foreign brands. Chinese companies merely earn a small processing fee, though the finished product may be priced at a thousand yuan. It was not until 2008 that silk products began to attract the attention of some luxury brands. According to statistics, there is no strong brand in China’s silk industry because the majority of the 3,500 silk companies are manufacturing enterprises. Roughly 100 companies have established their own brands, mainly providing OEM services, while the number of companies engaging in technological innovation and product development is fewer than 20.

Wensli typifies the development of Chinese silk manufacturers. In 1975, Ms. Shen Aiqin, Tu’s mother, took over Hangzhou Jianqiao Silk Company, a silk fabric manufacturing plant and the predecessor of Wensli Group. In 1999, the then township enterprise was restructured to a private enterprise (i.e. Wensli Group), embarking on a journey of OEM service and brand building. After taking the helm from her mother, Ms. Tu has achieved considerable progress in transforming Wensli from a manufacturing enterprise to a brand company and has taken important steps towards globalization. After engaging in OEM service for 16 years, Wensli began to establish its own brands in 2008 and has created a clear brand architecture in 2014 with 3 brands targeting at high-, middle- and low-end markets respectively. They are the century-old French silk scarf brand “Marc Rozier”, the “Made in France” high-end proprietary brand “Wensli” and the e-commerce brand “Xinlan”.

Ms. Tu has realized that Wensli cannot survive on the small processing fee any longer. It has to build its core competitiveness through industrial restructuring and upgrading and building strong bands. According to her, one of the long-term objectives of Wensli is to formulate an effective brand strategy. Any strategic plan of the company should be centered on its silk brands. In her eyes, as a company headquartered in the birthplace of silk, one of the major missions of Wensli is to promote silk culture and increase the popularity of silk products.

Wensli has endeavored to transform and upgrade the traditional silk industry by embedding history and culture elements into its silk products. The success of its brand proves that products with distinctive ethic flavor can enjoy widespread popularity across the world. Thanks to the four influential international events held in China, namely, the APEC, Beijing Olympic Games, Shanghai World Expo and Guangzhou Asian Games, Wensli became better known in international arena. In 2008, Wensli presented the world a gorgeous medal ceremony costume (a “blue and white porcelain” series and a “pink” series) for Beijing Olympics Games, which is a perfect demonstration of the traditional weaving and embroidery crafts widely applied in Ancient Chinese palaces. In 2010, the “Metal, Stone and Seal Albums of Senior Politicians of 2010 Shanghai World Expo Exhibitors” designed by Wensli for 2010 Shanghai World Expo were presented to 195 heads of state as gifts, which was unprecedented in the history of the company. Later on, in an effort to further explore, inherit and promote Chinese silk culture, Wensli produced a documentary TV series entitled “Chinese Characters and Silk Culture” and a large TV series entitled “Silk Culture in China”, and held China Silk Culture Forum for 3 years in a row. In addition, Mr. Li Jianhua, CEO of Wensli Group and an expert in silk culture studies, presented a popular TV program “Lecture Room” to promote Chinese silk culture. In 2013, in order to bring home overseas Chinese silk artworks, Li Jianhua made several visits to France and managed to get the e-photos of 12 lost ancient silk paintings, which were originally kept in Dunhuang Library Cave. With Wensli’s unique patented high technology, the company duplicated the millennium-old Dunhuang silk paintings and donated them to Dunhuang Museum for exhibition and research purposes.

Globalization strategy——Building world-class silk brands

“To create genuinely distinctive products, Chinese companies should first develop a global vision, and then combine traditional Chinese culture elements with world’s leading design and high manufacturing quality,” said Ms. Tu. “There is no other way to build a China-based international brand.”

Wensli has embarked on its globalization initiative since 2013 by making three major moves. The first move was acquiring Marc Rozier, a century-long French silk company. As a family business founded in Lyon, France in 1890, Marc Rozier had a history of silk scarf production 50 years longer than that of Hermes and made products for more than 40 world’s leading luxury brands. “Today, we are the owner of this company. It will do original equipment manufacturing for Wensli and other world’s leading brands, but Wensli will have the say,” said Li Jianhua. “In the past, Chinese manufacturers were proud of offering OEM service for top-tier brands. But now foreign companies are our OEMs. This marks a significant change.”

Offering Chinese brand products made in France has provided Wensli an opportunity to enter global market. According to Mr. Li, despite the high cost of manufacturing in Europe, French people still appreciate and are protecting silk manufacturing crafts.“They also expect the revival of manufacturing industry and lay great emphasis on silk manufacturing, for ‘Made in France’ is a sign of premium quality and delicacy. Wensli chose to cooperate with Marc Rozier because it had a long history and strong manufacturing crafts. In the future, Wensli will continue to create silk products with cultural flavor, striving to gain global visibility with its unique cultural heritage and become China's Hermes,” Mr. Li added.

Wensli also has gone into partnership with Italian luxury brand in such fields as fabrics and apparels. So far, it has sold approximately 500,000 meters of fabrics to its Italian partners. It is now making efforts to build up strategic partnerships with more leading luxury brands across the globe.

The third move was to establish an international team of professional managers by inviting Patrick Bonnefond to lead Wensli’s silk division. Mr. Li said hiring the former executive of a world’s leading luxury brand can help change the deep-rooted business strategic thinking of traditional Chinese silk companies and enable Wensli to establish an international presence by narrowing the gap between Wensli and top-tier brands.

A Long Journey Ahead

Ms. Tu attributed the rapid growth of Wensli’s brands during the past years to the great efforts the company put into product design. It not only entrusted world-renowned artists with the task of training their designers, but also invited designers based in France and Hong Kong to join their design team. “Without core technologies, a brand can never succeed no matter how many efforts you put into marketing. Home to the only National Enterprise Technology Center in the silk industry, Wensli employed a number of professorial and academician-level researchers, and introduced the state-of-art dyeing and finishing equipment from abroad. However, the leading foreign brands still enjoy significant technological superiority over us,” she explained.

Talking about the outlook for the company’s development, Patrick Bonnefond noted, “In France, we never refer to ‘Hermes’ or ‘Louis Vuitton’ by the word ‘Group’. We use the word ‘Mansion’ instead, which equals to ‘Shijia’ (世家) in Chinese. I hope we can build Wensli Group into ‘Wensli Mansion’.”

Even a global professional manager like Patrick Bonnefond still need some time to fully adapt to the Chinese market. There is no doubt that Ms. Tu, after building up Wensli’s strength by acquiring Mark Rozier, expects to implement the company's globalization strategy with Patrick Bonnefond’s international impact. It is said that a specific plan designed for Bonnefond’s new position will be announced this October. It is believed that Bonnefond will not have great difficulty in managing Marc Rozier as the news of his appointment with Wensli has already produced positive effect on the brand.

In the future, Patrick Bonnefond will help Wensli with the transition from a manufacturer to an original designer and bring a new vigor and style to the brands. More importantly, he has to effectively market and advertise Wensli’s brands based on cross-border teamwork and handle the cultural conflict and mélange between Chinese and French family businesses. Meanwhile, it remains to be seen if he can build a real luxury brand by achieving full integration of management and design philosophy of the two sides.

Considering Wensli is a second-generation Chinese family business undergoing a transformation and striving for greater success, can Bonnefond adapt to the new corporate culture and market environment while drawing on his work experience in Hermes, a leading French family business with its sixth-generation owner at the helm? The answer to this question will have a direct bearing on the performance of the man under the spotlights. As the role of professional managers in family business remains to be proved in China, there seems to be a widespread concern about whether the international team of professional managers could acclimatize to local business environment. The result of Wensli’s efforts in brand promotion and international expansion is largely dependent on the integration of different cultures and philosophy. We are looking forward to the success of Bonnefond and Wensli.

Case Analysis

Jean Lee, Director of CEIBS Kaifeng Centre for Family Heritage

Considering the different social environment and educational background, the second-generation entrepreneurs enjoy advantages over their parents in three aspects: the first lies in helping the family business achieve the transition from rational management to professional management; the second lies in driving the family business to go global through restructuring and upgrading; and the third lies in capital operation and Internet market. After taking over the helm from her mother, Ms. Tu has repositioned the brands of the family business, and incorporated the vision of revitalizing silk culture. She also achieved considerable progress towards globalization by taking three specific strategic moves. She is admired for her courage to appoint a foreign professional manager to lead the company’s core business unit.

The recognition of traditional culture and a deep sense of national pride are the driving force behind Wensli’s globalization initiative. Meanwhile, they might become obstacles on its road to globalization. For Chinese entrepreneurs, they need to go beyond national sentiment, and understand the international market from a global perspective. Otherwise, they are likely to make a wrong strategic choice. In order to survive the changes in the international market, Chinese companies should be more open-minded and develop a genuinely global perspective.

Is it really true that “a prophet is not without honor save in his own country”? For Patrick Bonnefond, upon taking his new role in Wensli, he will bring a high caliber of executives and designers with him. More importantly, he is expected to bring in new design philosophies and management models and make adjustments to the operation of its brands. The most formidable challenge in the process is the mélange of the two cultures.

The arrival of the foreign professional manager also poses a challenge for Wensli, which has to make appropriate adjustments internally. The gradual integration of new brands, new ideas and new executives into a family business requires company-level coordination and adjustment. During the process, the key lies in how much authorization and what resources the company can grant the professional manager. In order to help the foreign CEO assimilate into the community and successfully implement the globalization strategy, business owners should be psychologically prepared for changing their mindsets and embracing disruptive transformation.