ACE Group (China) Co., Ltd., joint ventured with the renowned Japanese bag & suitcase producer ACE Corporation, has a total assets of RMB700,000,000 Yuan, more than ten manufacturers of bags and suitcases or their material, and one big modern logistic center. It has the full capacity of developing, manufacturing, circulating and business transaction. Its products include famous brands like ACE, ADIDAS, ELLE, OPPERMAAN. The annual revenue of the year 2003 reaches RMB 1 billion Yuan.

ACE Group has a strong force of design and renovation, staffed by over 50 senior designers in Japan and Shanghai. The category of its products covers a wide scope of bags and suitcases for traveling, sports, leisure, business, fashion and special allocation for students, all forming to an ACE bag &suitcase system. The Group is export-oriented and has been authorized to do direct export business. Over 70% products are exported to more than 30 countries or regions like Japan, other parts of Asia, Middle East, Europe and the USA. Over 100 large or middle-sized cities see the opening of over 500 distributors and the completion of ACE distribution network in China.

ACE Group was born in the bloom of Reform and Opening to the outside world, matured in the market competition, braved through its way by means of renovation so as to succeed in fulfilling the market potential and becoming one of the biggest bases for bag &suitcase design, manufacture and distribution. It has won honors like “National Outstanding Foreign Investment”, “Shanghai Excellent Company”, “Model for Shanghai Industrial Company”, and the brand “ACE” has also been crowned as one of the most popular brands in several consecutive years.

  Looking back, we find the development of ACE Group fully embodies the popular saying “development is an absolute principle”. The growing process can be classified into stages as follows:

I.                    First to change management system, and opens up a new perspective

Friendship Bag &suitcase Company, the former of ACE Group, was founded by a score of well-educated young people in 1979. With unrelenting ambition and perseverance, the company, although faced with difficulties in its infant period like lack of capital, equipment and technology, and a market dominated by large or middle-sized companies, actually survived, and even prospered. In the year 1988, the company had 300 staff members, gained an annual sales income of RMB15,000,000 Yuan and profit of over RMB1,500,000 Yuan, on the top of community-owned companies.

 “Reform and Opening to the outside world” opened the channel for introducing foreign investment to China and bettering the developing environment. The Company timely seized the opportunity and joined ACE Cooperation, Japan, in investing RMB 17,000,000 Yuan in the newly founded Shanghai Traveling Outfit Company in November, 1988, which became the first joint-venture in Shanghai.

After that, the company was re-vitalized. The Company was among the first to introduce the advanced technology and equipment, assembling line, as well as the managing method from Japan to upgrade the company. The jointed effort saw the surging of the company—the producing scale was now 5.5 times over the previous, annual sales income, revenue and foreign reserves grew with the rate of 50%, 40% and 30% respectively. In between, the two parties of the joint venture superadded twice until the final investment reached $9,400,000 dollars. The year 1996 set a new record of annual sales income RMB500,000,000 Yuan and profit RMB50,000,000 Yuan.

ACE Group has never asked government for investment. Instead, it’s fully complied with the policy of “Reform and Opening to the outside world”, as well as “Focus on the central task of economic construction”, which helped to break away from the mode of surviving on a merger investment, and open up to a new prospect of developing with both economic and social benefits.

II.                  Form intensified group cooperation, develop large-scale production

    Gaining profits through large-scale production is a “sesame word” for large companies in market competition. With years of development, although the Company had already forged some competitiveness, the producing capacity, however, had become almost saturated. Then the idea of “operation of the capital” emerged. Starting from the second half of the year 1996, the company embarked on investing in other countries and extending the operation of the capital. Radiating from Hongkou District, Shanghai, the Company set up 6 plants manufacturing bags, suitcases, and their supplement material and accessories in Songjiang, Baoshan, Jiading and Pudong, with a total input of RMB82,000,000 Yuan and foreign investment over $ 11,000,000 dollars. The producing site was enlarged by 65,000 square meters, and 1,000 more staff members joined the work force. The material and supplement material was no longer imported from other countries, which helped to pave the way for the founding of ACE Group.

With the aim to enhancing the competitiveness, Shanghai ACE Traveling Outfit Co. Ltd and ACE Corporation, Japan, again injected $10,000,000 dollars to corporate ACE Group (China) Co. Ltd in1997. The Group followed a uniform managing system to place order, manufacture and distribute, making full use of mass-production, and enhancing the ability to withstand risks. Instead of trying to hawk for the produced goods, the company spared no effort to diversify its sales channels. First, compelled by distributors, the Group was steered to produce market-oriented goods and accordingly develop subsidiary companies and associates. Second, goods were distributed to selected market, its circulation accelerated and circulating period shortened. Third, the stock was controlled within a reasonable bracket, and the capital was made into fuller and better use.

The unprecedented Southeast Asia Financial Crisis at the end of 1997 had a great impact on China’s export, and the soft market hindered the development of small and mid-sized companies. Thanks to the timely founding of the Group and the intensified management, ACE Group was able to weather through the crisis by developing goods targeted at Europe and the US market, and the export to these two regions increased. Meanwhile, the domestic market was emphasized. The above-mentioned measures succeeded in offsetting the negative effect, and the sales income of the year 1997 was RMB560,000,000 Yuan. It took some time before the aftermath of Financial Crisis died down, but the Group managed to evade risks by production on a large scale. While steadily pulling through the difficulties, the Group was also marching on the way to becoming the largest nationwide base for designing, producing and distributing bags and suitcases.

III.                Diversify the sales channel

In the fierce market competition, how to handle the selling channel plays an important role. ACE Group chooses the diversification strategy.

1. Stick to the brand. Brand is an intangible asset for a company, and it also symbolizes high credit, market share and economic returns. As customers are becoming more and more brand-conscious and the concept of consumption undergoes a noticeable change, ACE sticks to invent a solid brand and develop products with a high starting point, taste and added-value to satisfy the market need.

Following the international practice, ACE introduced famous brands like ADIDAS, ELLE and OFFERMANN. Besides learning from the originality and essence of these big names, ACE made great efforts to enrich its own brand connotation so as to become a “big name” itself.

In the recent years, a strategic change has been underway in which the ACE brand itself rather than other famous brands is more and more putting on the shelf. ACE GENE, ZERO HOUR and PROGRES are developed and now gaining popularity.

The brand strategy is very effective in enhancing the company’s fame and widening the selling market.

2. Characteristic ACE Bag &suitcase system

The well-off of material life urges the change of people’s consumption concept. The utility of the goods is no longer the only element taken into consideration when purchasing, the conceptual value and cultural value embodied by the goods are more and more emphasized. The maturing of market and the customer’s new demand open up a new horizon for the Group. The resourceful design staff observed the trend that bags were becoming indivisible accessory to the fashion clothing, and embodied this notion in their chic leisure design. As more people participate in sports and exercises, there comes the sports design. The foldable, wheeled rucksack is convenient to carry, thus good for traveling. And business bag is specifically made for white collars. The Group has been always observing the trend and potential demand of the customers and taking this information into their annual 1,000 plus new designs. The goods for domestic market have 8 categories, 400 series and 2,000 designs. So a characteristic ACE system has come into being.

3. Multi-sales systems co-exist

ACE adopts a multi-sales system including distributor, agent, subsidiary company, incorporated stock, and also sets up special counter, office or store according to selling features of different regions so as to grab more market shares. Since the buying force of customers differs, segmentation of market is worked out and different special stores are targeted at different customers so that varied goods with varied functions and pricing are arranged at their right stores to reach their targeted customers.

Multi-sales system is very effective in widening sales channels. ACE Group now has 4 subsidiary companies, 50 agents, 500 offices in 100 cities of China’s mainland. The value of yearly new products occupies 80%, sales rate reaches 98% and the major products occupy 20% share of Shanghai’s bag &suitcase market.

IV.                Drawing Sustainable the Blueprint of Development and ACE Mansion

As China’s entry into the WTO and the trend of global economy growing indivisible, with the aim to enhancing the competitiveness and maintaining a sustainable development, the two parties of China and Japan agreed on the construction of ACE Mansion, which is located on Hanning Rd. of Hongkou District neighbouring North Bund Development Area with a total investment of RMB95,000,000 Yuan. The project started in June, 2001. Two years later, a splendid modern building was erected, which has 16 stories above ground and 1 underground with a total coverage of 11,500 square meters, which is equipped with optic fibre communications. The building was put to use in July, 2003, which symbolizes a new phase for leaping forward of ACE Group.

1.      Overseas headquarter moved from Osaka to ACE Mansion

After the completion of ACE Mansion, it becomes the headquarter of ACE China. However, the overseas headquarter which used to be in Osaka, Japan, also moved in, which signifies the center of overseas trade has also shifted. The overseas trade is based upon Shanghai, relied on Japan, radiated to Southeast Asia, Middle East, even international markets like Europe and the USA, which extends ACE’ overseas business.

2.      Set up design center in Shanghai

ACE Mansion provides a unique workshop for talented designers from China and Japan. They discuss and change opinions on the fashion trend with a global view. The design center, which now comes into operating, has become the hinge of information accumulation and transmission. As the cooperation matures, its significance will soon be recognized by senior insiders.

This spring, 2004 ACE new arrival show was put up in ACE Mansion, on which noted department stores both at home and abroad, bag &suitcase dealers and agents were invited to visit and negotiate. 2,000 well-designed new arrivals were well-received, some even placed order or showed great interest in doing business.

3.      Lay down a solid foundation for sustainable development

ACE Mansion is an incarnation of ACE’ strength, image and sustainable development, also a proof of the capacity to design, manufacture, distribute and circulate. We Chinese emphasize time, geography and popularity. As we have mentioned above, ACE Mansion is neighbored with North Bund Development Area; China has succeeded in bidding for 2010 World Expo. Both serve as a favorable factor for ACE’ future.

The development of ACE Group is a struggling legend, in which ACE seizes the opportunity of Reform and Opening to the outside world, focusing on the central task of economic construction. It is among the first to change the traditional idea about economic development, introduce foreign investment as well as technology for self-expansion. Therefore, ACE Group has always been among the frontiers of bag &suitcase producers. The rising of ACE Group was phrased as the “model” of Sino-Japan cooperation by the media. Officials of Shanghai municipal government like Wu Bangguo, Huang Ju and Xu Kuangdi inspected ACE Group in succession and said highly of its struggle. Facing the new economic boom of Shanghai, ACE stands at a new starting point, expecting another leaping forward and doing its share to contribute to the prosperity of Shanghai.