PARTNERSHIP PROPOSAL COMPANY OVERVIEW O ur company, Shark Sportswear, was founded in 2011 with one aim in mind; utilize the core geographic strengths different parts of the world offer in order to create a disruptive force in the Team Sport Uniform industry. San Diego Tijuana Ningbo, China With this aim in mind, we set up an efficient production facility in Tijuana, Mexico. From here, we service the U.S. market as if we were there, while reducing fivefold our manufacturing and operational costs. At the same time, and acknowledging China’s World supremacy in the textile industry, we set up a procurement office in the prosperous city of Ningbo. From here, we procure, supervise, and control every aspect of our raw material supply chain. Most important of all, from our facility in San Diego, we are able to provide exceptional service to our customers and partners. Pg. 2 OUR LEADERS Rodolfo Gonzales Lifelong entrepreneur with 20 years of experience in the textile industry, our founder, Rodolfo Gonzales, has operated manufacturing facilities in the U.S., Mexico, Philippines, and China. While living in China for almost a decade, he created an impressive network of textile suppliers. This combination of manufacturing and supply chain management rests at the heart of our company’s strategic strength. Amanda Wang An extremely knowledgeable textile engineer with decades of experience sourcing, developing, and supervising textile manufacturing, Amanda is an indispensable part of our team. From Ningbo, China, she manages an intricate network of suppliers, QC staff, and logistic partners. Jei Huerta Having occupied every conceivable position inside a factory, Jei is about the most experienced person on our team. Knowledgeable of every part of the cut and sew methods, he oversees sample development, cutting, sewing & QC. Pg. 3 OUR PARTNERS GS Consulting Group After 15 years with Deloitte & Touche, Mr. Oscar Sospa formed GS Consulting Group, a tax and accounting firm specializing in every aspect of the intricate Mexican tax environment. Sanyo Customs Broker Operating on both sides of the border, Sanyo Customs Broker (a division of the Global electronics powerhouse) is as professional as they come. Well structured, disciplined, and with an exceptional spirit of customer service, Sanyo ensures our IN and OUT shipments cross almost seamlessly. Innova-tech Consulting With years of experience consulting multinational firms at the highest levels, Innova-tech has been an extraordinary partner helping us navigate through the complex Mexican import-export license process. Pg. 4 THE CASE M ost sport team sublimation uniform companies suffer from three main weaknesses: • Cheap technology = Oversupply • Insufficient economies of scale • Entrepreneurs spread too thin Cheap Technology = Oversupply Steadily decreasing the price of equipment has brought in dozens, if not hundreds of companies with essentially the same product offering. As a result, pricing pressure has forced existing companies to reevaluate their pricing structure in order to survive. What years ago was an extremely profitable business has now turned into a commodity price driven industry. Pg. 5 THE CASE Inefficient Economies of scale While the concept of manufacturing in Mexico or buying raw materials in China is not new, most companies lack the size and knowledge to migrate their supply chain and manufacturing overseas. As a result, U.S. companies are exposed to wages six to seven times higher than Mexico, and raw materials (fabric, paper, and ink) three to four times higher than China. Spread Too Thin Most entrepreneurs in this industry are well networked business people and savvy marketers who, without previous experience, are suddenly faced with the need to run efficient factories. As a result, the average entrepreneur spends his or her day managing hundreds of operational details that distract them from the one thing they should focus on; GROWING THEIR BUSINESS. What We Do We create partnerships with companies suffering from these weaknesses and take over their entire manufacturing and supply chain activities. During the course of action, we bring down their costs 50% - 75%, while allowing them to focus on what they are really good at; the creative process and growing their business. Keep reading…….. your business depends on it. Pg. 6 THE NUMBERS T he chart below compares and highlights the differences in the expense categories most affected by an operating sports team uniform sublimation company. Expense line item Your Costs Our Costs Fabric (Avg cost per yard) Sublimation paper (Avg cost per sq foot) Ink (Avg cost per kg) Labor (Mexico Manufacturing) $4.50 $0.12 $120.00 $0.93 $0.03 $20.00 Shop floor supervisor (per month) Sewing machine operator (per month) Cutting staff (per month) Graphic designer $1,800.00 $1,200.00 $1,500.00 $2,500.00 $430.00 $320.00 $400.00 $800.00 Main raw materials (The China effect) Let’s put this into context and assume an operation that manufactures 1,000 units per month. The expenses would amount to $18,000 - $30,000 per month; with a cost per unit of $18.00 - $30.00. On the flip side and incorporating economies of scale, our operation accomplishes a cost per unit that ranges of $4.50 to $6.00 per unit. This strength in cost allows our partners to compete much more aggressively in the market. Pg. 7 WHAT EACH PARTY BRINGS Our Strengths SUPPLY CHAIN • Years of experience sourcing and manufacturing in China provides us with a competitive advantage not reachable to most small companies. MANUFACTURING BASE • Mexico provides manufacturing and operational efficiencies that are difficult to match for small companies in the U.S. LOCAL KNOWLEDGE • With a long history operating out of both countries, we’ve accumulated the knowledge that permits us to extract the best each country has to offer. ECONOMIES OF SCALE • Knowledge without volume is futile. Our volume of business allows us to create economies of scale that make Chinese sourcing and Mexican manufacturing a possibility that is not easily reachable. Pg. 8 WHAT EACH PARTY BRINGS Your Strengths DISTRIBUTION • Distribution means sales and sales makes this deal possible. Without a revenue stream, a partnership starts at zero; a condition that significantly reduces the probability of success. NETWORKING • Industry networking is more important if not more than distribution. Networking sets the foundations for growth and it is perhaps the single most important strength we look for in a partner. MARKET STRUCTURE • Knowing the buyers’ and sellers’ relative strengths as well as associations, contributors, etc., sets the ground for an aggressive strategy. It would take us years to know what you know about the market today. PRODUCT KNOWLEDGE • Again, it is your product specific knowledge which permits a fast track to the market. Without it, we would need to engage in a lengthy trial and error product development process. Pg. 9 OUR PROPOSAL W hile a number of factors affect the formation of a partnership, there are common denominators that apply to almost every deal. Shares of Ownership An important topic in the formation of a partnership lies in the distribution of shares of ownership. While the answer varies depending on the relative strength of our partner, most deals range within a 60% - 40% spread for either side; most of the time favoring 50% - 50% deals. Mechanics & How They Work Once the partnership is completed, an operating budget is built under the new entity. This operating budget includes cost of operation in the U.S., along with salaries for the partners. Our manufacturing arm, Shark Sportswear Mexico, manufactures for the new partnership at cost, guaranteeing a target price of $4.50 - $6.00 per unit. The new partnership continues to sell at full price. All profits are accumulated under the new entity. This essentially means all profits are accumulated under the new partnership based in the U.S. Pg. 10 NEXT STEPS T his partnership provides a win-win opportunity for you and for Shark Sportswear. If you would like more information or the opportunity to discuss the prospect of working collaboratively, please contact at: Shark Sportswear Rodolfo Gonzalez 2340 Enrico Fermi San Diego Ca, 92154 (619) 758-3802 [email protected] www.sharksportsware.com Pg. 11
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