Zhou Qiren: The logic of industrial transfer is irreversible, how can Chinese entrepreneurs break through the encirclement

01. Occupy the minds of consumers,Brand influence is more important than place of origin

The big topic that everyone is concerned about now is where China's world factory will go and what the prospects are? This is a topic of concern both internationally and domestically. Let's narrow down the topic a bit, where does Foshan manufacturing go from? What is the future of private enterprises in Foshan? This is related to the entrepreneurs present here.

After the reform and opening up, the achievements of Foshan manufacturing have been very significant. But if we move the time scale forward and look further into history, in fact, Chinese manufacturing was already very powerful in ancient times. Although China is founded on agriculture, from the perspective of global market competition today, Chinese agricultural products are not very well-known in the world. In ancient times, China was famous in the world for its manufacturing. China means porcelain, as well as the Maritime and Land Silk Roads. Silk is a very unique industrial manufacturing product, and porcelain is also an industrial manufacturing product.

In ancient times, Foshan was one of the four major gathering places and one of the four famous towns in China, along with Suzhou, Hankou, Jingdezhen, etc. Suzhou had silk industry, Hankou had iron smelting industry, Jingdezhen made porcelain, Foshan had Guangguo and ceramics, all of which were manufacturing industries. I once visited the sunken ship Nanhai No.1, which was made entirely of industrial products in China.

But as future generations looking at the entire history of Chinese manufacturing, we have regrets. It is not just outdated in modern times. Before falling behind in modern times, looking back, what did we leave behind? We all know that Foshan is very powerful, this place name is very powerful, Suzhou is very powerful, Hankou is very powerful, all place names are very powerful. But is there a well-known business name? Is there a well-known enterprise? Is there a well-known brand?

Do today's consumers care where an iPhone is produced when they buy it? Do you care where Apple is registered? Some people know, but many people don't know or care. We care about which brand a piece of clothing is, but we don't care where it was made.

This matter deserves attention as it will affect our understanding of the future of the manufacturing industry today. This is not what our suppliers are willing to do, it is what consumers are willing to do, it is what market buyers are willing to do, and it is what customers are willing to do. We have to adapt to this trend.

Today we asked which Chinese porcelain company is the most powerful, and many people may answer that it is Jingdezhen, but it is difficult to say which specific Jingdezhen company it is. I once visited Delft Royal Blue Porcelain Company in the Netherlands with entrepreneurs from Foshan. This company has an annual revenue of 6 million euros, and the entrepreneurs we go to do business with are all larger than this. But after visiting, it still left a deep impression. Although the scale is not large, it has been passed down for more than 300 years, selling products to various parts of the world and supplying important places such as the Royal Family of the United Kingdom and the Kremlin in Russia. It has been used in many important international diplomatic occasions.

What exactly is missing in our entire history of Chinese manufacturing? There was also excellent manufacturing, with engineers, designers, and craftsmen back then. All our efforts today were made by our ancestors, but why haven't we been able to leave a good brand and a long-lasting influence in the minds of consumers. This matter needs to be analyzed.

02.The transformation of private enterprises,To move from kinship maintenance to contractual constraints

Looking back, we mostly use traditional interpersonal relationships to produce industrial products. Family relationships, kinship relationships, are the earliest forms of human organization. The so-called 'brothers fighting tigers, father son soldiers fighting in battle', in ancient times, our entire country was organized according to kinship, and it was inherently unstable.

I was deeply touched by what Chairman Bian Cheng of Keda Company mentioned earlier. Don't think that family relationships can do things. Family relationships are family relationships, and family relationships are indispensable during rest. However, using family relationships to do things is not appropriate. Relying on family relationships to maintain, once family relationships go wrong, no one can save them. In Hong Kong and Macau, many families are involved in inheritance lawsuits, so we see that some companies collapse just as they rise up. The entire process involves both life and death, ultimately leading to the establishment of an industrial park, belt, or circle primarily based on place names, but without leaving a good brand.

So it's not just about improving technology, but also about improving products. The key is to improve culture and organization. The so-called transformation is to transform this type.

How did our private enterprises start? It's just about relying on brothers, relatives, friends, fellow villagers, and classmates, using the most established interpersonal relationships to do things. The starting point is always like this. If it hadn't been achieved back then, then it would have been 'dead', but becoming one is actually a problem. How to manage wealth when it grows? How to use more powerful people and expand the market?

The Keda experience mentioned by Chairman Bian Cheng should be highly valued. What does it rely on without family ties? He just had a crucial word, which is to use a common aspiration, not necessarily a familial relationship. How can an organization be formed without kinship, relying on contractual relationships, shared interests, and contractual constraints.

This is the most important transformation, no matter how you started, you must complete this transformation. To shift from trust based on kinship to trust without kinship. In fact, trust without kinship can be more reliable than kinship, relying on goals, strategies, discipline, and contracts to constrain. This is something I think is very important today.

Secondly, using family ties to connect our horizons can easily lead to self imposed limitations. We learned a saying from excellent entrepreneurs during our research in Foshan: Do not limit yourself when doing things with a world map. Establishing a company in Foshan does not mean that products can only be sold in Foshan, nor does it mean that products can only be sold in China. There is no such reason.

Keda Manufacturing can break through the encirclement, firstly, it should not be limited to a narrow market, but continuously expand the market. Chairman Bian Cheng shared that the reason why Keda was able to emerge from the low tide is that it laid out its Africa strategy long before the low tide, and the Africa strategy was even more successful than expected.

03.The transfer of industries will not stop,Enterprises need to go out and seek greater opportunities

I often say that the most modern industry is just like the ancient nomadic industry, which moves back and forth. The Industrial Revolution, initiated in Britain, quickly spread to Germany, which was a latecomer, while the United States was a latecomer. After the United States got up, the price of factors became more expensive. Then the industry moved to Japan, then to South Korea, and then to Taiwan, China, China. Following China's reform and opening up, the Pearl River Delta and Yangtze River Delta emerged.

The important thing is that this logic has not stopped, it will continue to move forward. Vietnam, India, and Laos are the same. In fact, after the Industrial Revolution, it was through industrial transfer that benefits all mankind.

There is one thing that needs to be highly concerned about here, which is the combination of some factors and other factors in another place during industrial transfer. How did the industrial transfer come about? In retrospect, there were a group of bosses from Hong Kong and Taiwan, China, China, and a group of Japanese and Korean enterprises.

Today, Chinese entrepreneurs who have emerged from the encirclement have the responsibility to bring our industrial manufacturing and management capabilities to new places, so that people who were previously unable to enjoy this product can do so. This is our mission. Without entrepreneurs, having cheap labor and cheap land alone cannot achieve industrial transfer.

In the past two years, I have repeatedly called on us not to let the epidemic block our vision and scope of activities in a narrow space. The more we go out in this situation, the more we need to reach out. How can we know if we will have a chance if we don't go out.

Last month, I visited Shenzhou International, a company in Ningbo that is also in the knitting industry. It is the same industry as the knitting industry that I saw in Zhangcha, Foshan. The owner of Shenzhou International is also a farmer entrepreneur, and the family business started. To what extent has it reached now? The most enviable aspect of it is that it does not require a sales department, only large customers and globally renowned brands are stationed in the factory to monitor the goods. Give me this line this month and that line next month. Without monitoring, we cannot grab it. To achieve this level of business is a realm and the result of hard work.

Ma Jianrong, the chairman of Shenzhou International, has a personal experience. He has been laying out in Vietnam for a long time, but when he first went there, he found that it was not possible to develop in this place. The development in China was so smooth, but when they arrived at a new place, everything was not going smoothly. So they all came back in the first wave, but later they were unwilling and stayed when they went again.

The fact proves that this step is very important, as their production capacity in Vietnam has exceeded that of the Ningbo production area. When the Ningbo production area was unable to complete orders on schedule due to the impact of the epidemic in January last year, it relied entirely on factories in Vietnam to complete the supply. So Ma Jianrong said he needs to quarantine and go out, and he also needs to go to Laos to lay out.

I think this matter needs to attract high attention from entrepreneurs in Foshan. Our antennae, vision, and information should not be limited by the epidemic. If our entire industry cannot see far and hear clearly, many opportunities for future development may be lost.

Chairman Bian Cheng talked about building factories in Africa, investing, building, and making profits in the same year. Why? Due to local shortage, while we have obvious surplus here. In the past few days, we have conducted research in Zhangcha and found that in the absence of the epidemic, there was actually a surplus of 20%, which was also due to insufficient production. The industry has been 'killed' like this, what profit is there, how to invest without profit, how to do research and development, where is tomorrow. That can only rely on perseverance. The Chinese people's ability to persevere is probably world-class, which is admirable and must be affirmed.

But you can't make a name for yourself just by enduring hardships, you must 'kill' some good companies. The users have changed. When consumers buy something, they don't care where it is made, they care about whether the thing is good or not, reliable or not, fresh or not, bright or not. This cannot be changed. Due to consumers' attention to brands, the industry needs to produce good companies and brands, rather than relying on geography, family, kinship, hometown, or administrative divisions to do business.

04.Enterprises need to practice 'ordinary skills',Decision makers from the 'key few' need to practice 'extraordinary skills'

Chairman Biancheng talked about the three magic weapons for Keda's development.

The first is strategy, which cannot be all right, but at least we need to do more right.Every company has made various investments, and it is important to summarize the lessons learned. Making mistakes is not surprising, but fatal mistakes cannot be repeated.

The second is to have a cultural support strategy.If there is no team and no culture to support the strategy, it will only be written on the wall. When it comes to adjustment, the team cannot keep up with it and trust cannot keep up with it.

The third is that the "key minority" who make decisions in enterprises is very important.Now this kind of situation, who is the parent in the enterprise, how to take charge, the weight will come out. When the situation is good, the level of the leader is not very important. Now who also don't know the next problem, leaders are very important.

What to do next, imagine several situations. If the current situation still has 6 months, can you survive? What about 1 year? What about 3 years? Under various circumstances, how do you prepare to deal with it? Do you have a plan? You can't leave it to fate and decide where to go. Human brain decision-making will be known at this time.

Forecasting is useless now, and many things cannot be predicted. Therefore, the order of decision-making should be reversed. First, you should be prepared for bad things. Don't make too much preparation for good things. When unexpected bad things come, can you deal with them? The second is contingency. No matter how well you prepare, the order of actual occurrence may be different. The third is forecasting and planning. Just now, Chairman Bian Cheng mentioned the "key minority" in decision-making. The chairman and general manager present here are the most important at this time.

Not long ago, the Foshan Federation of Industry and Commerce organized a team to go to the bull. We found that the bull was learning lean from an American industrial consulting company called Danaher. Danaher redefined the lean production created by Toyota and developed a set of tools. It invested in about 700 manufacturing enterprises before and after the lean transformation, and the value of the stock price was better than Buffett's investment results.

Many Chinese students have been employed in Danaher, and some of them have come out and set up an industrial consulting company for the Chinese market to help Chinese enterprises become lean. The first customer is Midea Group. Now Midea has trained many lean engineers.

Now the price of products is reduced and the price of factors is increased. What should we do? You can't let the price not go up even if you shout to anyone. Solving the things you are in charge of can help you tide over the difficulties. We went to see the Bull Group and were very touched. Later, we invited the lean experts of Bull and Hemei, as well as the experts of the industrial consulting company that helped them become lean, to introduce lean to Foshan entrepreneurs.

Today, I would like to take this opportunity to repeat this topic, what should enterprises do when they encounter difficulties? It is very good to squeeze some water out of the "dry towel" through lean, increase the centripetal force of workers and reduce the improper investment of enterprises.

Or in a word: live to death and practice ordinary kung fu. As long as the enterprise is alive, it will practice every day. The more panic and uncertainty it is, the more it is necessary for workers to have something to do. If you say every day what tomorrow will be like, the workers will be mentally broken.

Of course, it is not enough for the boss to have ordinary kung fu. The decision makers, that is, the "key minority" mentioned by Chairman Bian Cheng, should also practice "extraordinary kung fu" to expand the market and extend their tentacles. No one knows the changes in the world in the future. If something goes wrong, there will be new opportunities. If you don't enter the market, you don't know if this thing will work. Whenever possible, the enterprise must "fight" out and extend its tentacles.

There is already obvious overcapacity in China. I visited an aluminum company in Foshan last year and learned that 95% of aluminum raw materials are imported, and we process them and sell them all over the world. Others earn money from raw materials, how many products can you buy? Can this model last? Why does the manufacturing industry move around the world? Because of employment, taxation, and added value, which countries want, if you alone can not last, so the manufacturing industry must go out.

Just like other places moved to us back then, now it is the turn of Chinese entrepreneurs to bring resources and organizational capabilities to a wide area. The country has put forward the "Belt and Road" initiative. Going out along the Belt and Road will not suffer losses, and part of the income from going out and investing will come back. Just as Koda's investment income in Africa has returned, it will eventually help the national economy. We must not be narrow-minded.

Information source: Intelligent Manufacturing