The "socket king" Bull Group (SH603195) is an industry giant that has grown out of a niche category.

Through this company, we can also see the shadow of the rise of China's manufacturing industry, from nothing to something, from products to brands, from small workshops to industry giants.

Industry giants that have grown out of niche categories

Bull Group was founded in 1995 by Ruan Liping, a civilian electrical company. In the early days, it positioned itself as a company that "manufactures indestructible sockets". It stood out in the competition for sockets and became China's "socket king". The "2022 China IT Brand Market Share Survey Report" reveals the strong position of Bull Group in the socket market, with a market share of more than 60%. Whether it is industry insiders or ordinary consumers, they can use this sentence to describe Bull: "There are two types of sockets in China, Bull and other brands."

In February 2020, the Bull Group was listed on the A-share market. In just 9 days, its market value increased from around 50 billion yuan to 100 billion yuan, with its peak market value exceeding 150 billion yuan.

As a socket leader with a revenue of 10 billion and a market value of 100 billion, Bull follows the pace of China's manufacturing industry development and starts to diversify its product extensions. From 2014 to 2016, Bull Group successively entered the LED field, digital accessories field, and charger product field. In 2021, Bull Group will deploy charging pile business, hoping to find its own opportunities in the wave of new energy vehicle development.

Background of the times: Opportunities for the development of industrial clusters in the early stages of China's manufacturing industry

The birthplace of Bull is Cixi, which is China's small home appliance capital. Cixi is located in Zhejiang Province, with an area of 1,361 square kilometers and a permanent population of about 1.86 million. But Cixi is only a county-level administrative unit. It may be easier for you to understand this "small place" by describing Cixi in this way. As of the end of 2020, there are 2,862 county-level administrative units in China, and Cixi is just one of them.

Let's go back to the 1980s, when China's urbanization process had just started. The rapid development of urban construction and housing construction greatly promoted the growth of electrical appliances. On the eve of the outbreak of this wave of home appliance industry, a group of private enterprises engaged in hardware and plastic production in Cixi had already taken the lead in emerging. Sockets, as a sub-product of the hardware industry, were particularly prominent in Cixi at that time, and there were hundreds of family workshops producing sockets alone.

In China at that time, there were many forces competing in the socket market, including local enterprises reformed from state-owned factories, foreign-funded enterprises and joint ventures, and small and medium-sized enterprises that mainly engaged in workshop-style production.

In the early days of China's manufacturing industry, small and medium-sized enterprises gradually became one of the mainstream forces in the market, making huge contributions to the development of China's manufacturing industry and creating many industry giants from small to large. Anker is a representative of the rise of small and medium-sized enterprises, which seized the opportunities of the times.

At present, Cixi's small home appliance industry accounts for about 50% of China's market share, and the region is home to more than 10,000 home appliance parts factories. From the design, development and processing of parts to the manufacture of complete machines, Cixi has formed a complete home appliance industry chain. This makes Cixi one of the three major "small home appliance industry bases" in China, along with Shunde, Guangdong and Qingdao, Shandong.

Industrial cluster development is one of the typical characteristics of China's manufacturing industry development. When we summarize the development history of these successful companies, we will find that they all did the right thing at the right time and in the right place. This is the opportunity of the times, which can allow a person without any resources to rise quickly.

Product positioning: The core pain point of the industry is "safety"

At that time, the socket industry in China lacked unified standards, which provided a living space for small workshop-style production enterprises, but also led to uneven product quality in the market. Many sockets produced by workshops lacked quality assurance and posed great safety hazards, such as frequent power outages and overheating, which could even cause short circuits, smoke or fires in serious cases.

The Bull Group has accurately positioned its brand at the core pain point of this industry - safety.

While others were busy looking for customers in the market, Ruan Liping devoted all his time and energy to research and development. From product development, manufacturing to quality inspection and design, Ruan Liping almost personally participated in every detail. His investment in panel materials was more than twice that of other family workshops.

The popular socket panels on the market at that time lacked a safety button design. If users wanted to cut off the power, they had to unplug the electrical appliance directly. This frequent plugging and unplugging operation not only caused wear and tear on the socket itself, but also may cause screws and parts to loosen, thus increasing safety hazards during use.

In response to this market pain point, Bull innovatively launched a socket with a push-button switch in 1996. This design can control the on and off of the circuit with a simple press, greatly improving the user's electricity safety. Today, in the Chinese market, most socket products use Bull's landmark push-button design.

In 1997, China officially issued the first national standard for sockets, and Bull Group, as one of the important members of the standard-setting committee, participated in the entire drafting and formulation process of the standard. This participation not only highlights Bull's position in the industry, but also lays a solid foundation for its subsequent development. All these achievements are inseparable from Bull's continuous investment and innovation in product research and development.

In the opportunity of the rapid rise of the industry, Bull deeply combined "electricity safety" with the Bull brand, and gradually achieved brand equal to category in the minds of consumers. In this elimination match with many participants, Bull took the leading position in the industry.

Sales channels: Building sales channels with fast-moving consumer goods thinking

The socket industry has attracted a large number of companies due to its low entry barriers, resulting in fierce competition. In order to compete for market share, many companies have adopted a price war strategy. However, Bull sockets have chosen a different path. Due to its focus on product quality and R&D investment, Bull's production costs are high, resulting in its product prices being 50%-60% higher than the market average. This high pricing strategy made Bull face challenges in sales in the early stages, and it even fell into a dilemma of having difficulty paying its water and electricity bills.

At that time, the mainstream sales model was that brands expanded their markets by developing provincial or municipal distributors. Most of these distributors relied on local wholesale market channels to wholesale products to hardware stores and other terminal sales outlets, but the distributors waited for customers to pick up the goods. However, Ruan Liping observed that Coca-Cola's distribution model was different from the traditional one. Coca-Cola's distributors would take the initiative to drive door to door to deliver goods to terminal customers.

Inspired by the sales model of Coca-Cola, Ruan Liping decided to change the traditional sales strategy and adopt a more proactive approach to promote the Bull sockets. He borrowed from Coca-Cola's approach and proposed the concept of "selling sockets in the same way as Coca-Cola" and began to encourage Bull dealers to go out of their homes and provide services directly to end customers. This strategy not only expanded the number and quality of outlets, but also incorporated them into the assessment system.

In order to further motivate dealers, Bull has increased the rebate discount. While providing generous discounts, Bull has also set clear restrictions on dealers: a policy of exclusive sales, that is, dealers can only sell Bull brand products. If dealers violate the regulations and act as agents for other brands at the same time, Bull will implement corresponding punishment measures according to the contract.

Through this active market expansion strategy and strict requirements for channel management, Bull has established in-depth cooperative relationships with more hardware stores. Bull's official website data shows that Bull has more than 1.1 million offline sales outlets nationwide.

Through the innovative sales model of regular distribution and delivery of goods to designated locations, Bull has been able to connect small and scattered hardware stores across the country into a network, and can promptly understand terminal demand, pricing, inventory, etc., to better grasp market changes and improve after-sales service levels.

Hardware store door billboards create huge advertising effects at low cost

The value of a hardware store lies not only in being a channel terminal, it is also an important base for the promotion of the Bull brand.

Due to lack of funds in the early years, Bulls had no money to advertise on TV and newspapers, but Bulls discovered a low-cost advertising and marketing method: the hardware store itself is the most accurate advertising communication scene.

Therefore, Bull paid for the production of signs for the hardware store owners. The only requirement was that the Bull logo and slogan be printed on them. The hardware store owners did not have to bear the cost of making the signs, so they were naturally willing to accept it.

Bull asked a large number of street shops to put up their advertisements. Since there are so many hardware stores on the streets, you can often see several billboards with Bull advertisements on one street. This quickly spread the popularity of the Bull brand across the country, and almost all Chinese people are familiar with it - Bull, the leader in sockets.

Each hardware store has only one store sign, which is a scarce resource. Once occupied by the Bulls, it will be difficult for latecomers to snatch this prime position.

Compared with TV ads and newspaper ads, store sign ads have another major advantage, which is their longevity. Only when a store goes bankrupt will the Bulls billboard be taken down.

It is this brand name, together with the nationwide distribution network, that contributes more than 80% of the Bull Group's annual performance.

Product category expansion based on a mature dealer system

As a branch of the civil electrical market, sockets have relatively low added value. The civil electrical market is large in scale and covers many sub-sectors. In addition to converters (so-called sockets), it also includes wall switches and sockets, LED lighting and other sub-sectors. These sub-sectors have different technical characteristics and market demands, which together constitute the diversified pattern of the civil electrical market.

Civilian electrical products are mostly durable consumer goods with low unit prices, infrequent replacements, and low technical requirements. It is difficult for Bull to maintain its existing market and brand by relying on a single product category. Diversified development of Bull is an inevitable trend.

Ruan Liping once said: "We will first draw a circle for ourselves within the scope of our own capabilities and confine ourselves to this place. After we become the boss in this circle, we will draw a bigger circle for ourselves. These circles are not drawn casually, but need to be based on our own abilities and advantages."

With its strong dealer system, Bull Group has successfully expanded its product line from sockets to other fields. In 2007, Bull officially entered the field of wall switches and sockets. In 2014, Bull further expanded its presence in the LED lighting industry. This series of decisions benefited from the booming Chinese real estate market. According to statistics, from 2009 to 2017, the annual compound growth rate of the LED general lighting market reached an astonishing 54.62%.

By 2020, Bull integrated its wall switch and socket business, LED lighting business, and smart home business including bathroom heaters, smart door locks, smart clothes drying machines, and smart curtain machines into the smart electrical lighting business segment. The 2023 financial report shows that the revenue of this business segment has reached 7.9 billion yuan, accounting for 50.43% of the total revenue, completely getting rid of its dependence on socket categories and achieving diversified business development.

Response to channel crises in the e-commerce era

The reason why many companies that achieved great success in offline channels in the previous era have been surpassed by their peers in the Internet era is often because they have not kept up with the pace of channel development, failed to develop e-commerce channels, and missed the dividends of the channel revolution.

How does the Bull Group respond to changes in channels in the e-commerce era? As early as 2015, Bull keenly captured the changing trend of consumer purchasing habits and quickly expanded new e-commerce channels. In order to ensure the coexistence of online and offline businesses, Bull implemented a strategy of moderate product differentiation, avoiding direct conflicts between different channels in product prices, and successfully built a more diversified and comprehensive sales channel network.

Because of consumers' recognition of Bull, even if consumers' purchasing habits have changed, other socket brands still cannot shake Bull's market position on e-commerce platforms.

Let's imagine here that if Bull had not increased its investment in e-commerce platforms in a timely manner, would it have left a huge opportunity for other socket brands to rise? Because in China's clothing, home appliance and other industries, there are too many traditional big brands that have quickly fallen in the e-commerce era, and new pure online sales brands have emerged.

The road to "brand rejuvenation" for old manufacturing industries

We have always emphasized that disruption often does not come from direct competitors, but from the changing times. When Bull was the leader in the socket industry, the entry of Xiaomi brought a considerable market impact, which also made Bull realize that its position was not unbreakable.

Xiaomi has adopted an "ecological chain" strategy, focusing on attracting young user groups and attaching importance to the development of e-commerce channels. Over the years, Xiaomi has made remarkable achievements in the field of the Internet of Things. In 2015, Xiaomi launched a power strip with a USB interface, positioning it as a "work of art in the power strip", trying to grab the traditional socket industry through high cost performance and design.

As Xiaomi has a huge Internet user base, and its socket product is compact in design and equipped with three USB charging sockets, this product has been enthusiastically sought after by young consumers since its launch.

Bull's reaction speed also exceeded the industry's expectations. Just three months later, Bull launched a product that was quite similar to the Xiaomi power strip. The quality reputation and trendy design made this product also very popular.

Power strips have very high requirements for safety attributes. Compared with the "artistic quality" emphasized by Xiaomi, users obviously trust the "safety" that comes with the Bull more, allowing the Bull to maintain its main business.

Ruan Liping once publicly stated that he wanted to thank Xiaomi for allowing the Bull to keep up with the trend of the Internet and discover user needs, so as not to be eliminated by this era.

While digital products have become very popular, USB charging sockets were not the first to appear on Bull's sockets. This is precisely the lack of market insight for many traditional brands, and if they are not careful, they may be doomed.

Looking forward to the future: Can the charging pile business make Bull's future a success?

As a giant that emerged in the era of traditional manufacturing, the Bull Group's advantage in the socket field is unquestionable. Although the new energy vehicle market has become a general trend, Bull does not have a clear advantage in the charging pile business.

First of all, Bull is an independent charging pile manufacturer. Its biggest competitor is actually the supporting charging piles produced by car manufacturers. When consumers buy a car, it will be equipped with the original charging pile. The market left for Bull is more of the public charging pile market, or it can cooperate with vehicle manufacturers to become a solution provider.

Secondly, the channels are not suitable. Bull’s traditional agent channels are mainly hardware stores, which can no longer be the main sales channel for charging pile business. For the charging pile business, Bull has started to attract investment nationwide.

The 2023 financial report of Bull shows that the charging pile business achieved revenue growth, accounting for 2.42% of total revenue, and there is still huge room for growth.

How will Bull achieve a breakthrough in the charging pile business? Let us wait and see. We will continue to follow up and update this article.

A brief summary of the Bulls' success

Opportunities of the times

1. The starting stage of China’s manufacturing industry.

2. Cixi’s industrial cluster advantages.

3. The development of China's real estate market.

Core experience that can be learned from business models

1. Brand and product positioning, safety.

2. Establish a dealer system and innovate the model, and take the initiative to visit customers.

3. Hardware store door advertising to lock in scarce resources.

Bull is one of the typical examples of the rise of China's manufacturing industry. Through the summary of Bull's growth, can your country and the resources you have find similar epoch-making business opportunities?