Rapidly Developing "Clean" Winning Industry of Chain Laundry and Dyeing

Driven by chain operations, the laundry and dyeing industry has developed rapidly in recent years

Driven by chain operations, the laundry and dyeing industry has developed rapidly in recent years
 

On July 1, 2007, the "Laundry and Dyeing Industry Management Measures" jointly issued by the Ministry of Commerce, the State Administration for Industry and Commerce, and the State Environmental Protection Administration officially came into effect. This first national regulation concerning the laundry and dyeing industry jointly issued by three departments has also attracted public attention to this nearby industry.

This industry, with 600,000 related enterprises and workshops, 4 million practitioners, and an annual turnover of about 40 to 50 billion RMB, has developed rapidly in recent years due to the promotion of chain operations. While helping people wash away their stains, it has also gradually established its own pace.

A "win-win" measure

"Currently, the laundry industry is in a period that requires regulation and integration. The introduction of the 'Measures' will definitely regulate many malicious competition behaviors in the industry and guide the industry towards an orderly direction; at the same time, it will protect consumers' rights and interests, avoiding many disputes between consumers and laundry shops, providing a basis when problems arise; it will also strengthen industry self-discipline, benefiting all parties." Pan Wei, Secretary-General of the Laundry Professional Committee of the China General Chamber of Commerce, told China Business Reporter.

Secretary-General Pan introduced that due to the rapid development of the industry, competition among stores has become increasingly fierce, with significant differences in technology and equipment causing varying laundry costs. However, many non-standard enterprises often engage in malicious competition by adopting ultra-low prices, seriously affecting the industry's development order. Some laundry shops even offer "one yuan laundry" prices, which disrupt the market and reduce laundry quality in practice, such as using water washing for dry cleaning or even fake washing. These seriously affect the industry's image and harm consumer interests.

At the same time, in the service field, the complaint rate for laundry services has remained high for many years. Besides people's lack of understanding of the laundry industry and overly high expectations for laundry effects, the irregular upstream clothing market and weak technical strength of some laundry shops are also important causes of disputes.

"The 'Measures' have been revised multiple times and consulted with various parties, clearly stipulating the qualifications of laundry shops, handling methods for disputes, and avoiding some malicious fraud behaviors. This greatly promotes industry self-discipline and overall service quality; but for the industry, this is only a beginning. With a good start, more specific regulations still need to be supplemented by industry associations or relevant departments in other forms," Secretary-General Pan frankly said.

Chain operations flourish in the laundry industry

As an important expansion model, chain operations have developed rapidly since their inception in China. At the same time, the chain operation model has been quickly applied in the laundry industry, and this convenient front-shop, back-factory service store form has developed to a considerable scale.

"Franchise operations in the laundry industry began in the 1990s. Some enterprises introduced foreign laundry brands or management models, bringing advanced business concepts, technology, and management to China's laundry and dyeing industry, sparking a franchise chain boom and producing many brands," Secretary-General Pan said. For example, Beijing Funait, Rongchang·Yiersa, Shanghai Elephant King, etc., all expand their markets through franchise models.

At the same time, with changes in the industry's development model, some traditional laundry and dyeing enterprises are actively adjusting their business models and adopting franchise operations. "Laundry shops are a service industry, very suitable for individuals to open stores," summarized Zhang Kebin, manager of Beijing Plandefangxing Laundry Equipment Co., Ltd.

Industry insiders also point out that the competition focus between existing standardized brands and future national brands is not the ability of rapid expansion but the support and completeness of the franchise management system, as well as the ability to manage franchisees and brands.

Additionally, although chain operations are widely adopted in the industry, small-scale, independently operated single stores in various communities still occupy a considerable part of the market. These stores often lack scale, have relatively outdated equipment, and irregular services, becoming targets for industry integration. "I believe these single stores will not disappear because they have their fixed markets, although they need regulation," Secretary-General Pan pointed out.

The bumpy road of franchising

"Enterprises using franchise chains as an expansion model have relatively unified brand images, management models, and service forms, mostly focusing on customer clothing (mainly daily consumers) washing. The key to this model is to maintain brand consistency and continuity, not just chain for the sake of chaining," Secretary-General Pan emphasized.

It is understood that franchise chains have been vigorously promoted in the laundry industry, but many irregular behaviors still exist. Many brands in the market, besides providing equipment and so-called models to investors during franchising, cannot offer operational guidance, brand promotion, and training support during franchisees' operations. Worse, some brands use extensive brand promotion and marketing to increase brand awareness, then "disappear" after collecting considerable franchise fees.

"In such cases, franchisees suffer losses. Some brands were created just to make money," Manager Zhang lamented. Additionally, some irregular enterprises register trademarks abroad and then return to China to operate franchises, collecting franchise fees and equipment fees.

"Actually, franchising is like raising a child. Parents are responsible for the child's food, clothing, use, and education. Only in this way can the child grow up healthily," Manager Zhang vividly compared.

In response to this situation, the "Commercial Franchise Regulations" implemented on May 1 this year seem to bring sunshine to the industry. The regulations on franchisors have standardized the franchise chain model to some extent, reducing risks for franchisees while regulating franchisors.

The industry awaits further regulation

"From the industry's development perspective, the laundry industry should focus on refinement and quality rather than blindly pursuing scale and strength," Secretary-General Pan pointed out. He believes that due to different consumer demands, different brands will provide different levels of service. Brands will segment in competition and survive and develop in segmentation. For example, differences in charging standards will definitely be reflected in service quality. Meanwhile, the industry will gradually segment in service items, service methods, service concepts, and target groups.

"With the improvement of people's living standards and changes in consumption concepts, the laundry and dyeing industry will have great development potential, but it still faces many problems that have become important factors restricting industry development," Secretary-General Pan told reporters.

First of all, the industry standards and management regulations are lagging behind. The entry barrier for the laundry and dyeing industry is relatively low, and the national or industry standards are still in the initial stages. Although the introduction of the "Laundry Industry Management Measures" will become a guiding regulation for the industry, many specific standards and regulations involved in practical operations are still incomplete.

In addition, it is an undeniable fact that the cultural quality and technical level of practitioners in the laundry industry are relatively low. At the same time, it is understood that currently there is no nationally authorized, relatively independent, and authoritative laundry quality inspection agency in China, and there is a lack of authoritative standards and criteria for the appraisal of laundry accidents.

(Excerpted from China Commerce and Trade, with omissions)
2007-7-30