Distinguished guests, Dear Sayyas members, and friends online:
I was moved by members of Sayyas, but also by more than 5 million online participants! Today, we are here hosting an annual event with only 300 people offline and more than 5 million online. We are also the first time to try such an online and offline cloud annual meeting. Despite the apparent cause of the epidemic, there seems to be a force pushing us fast into the Internet age, which may become normal in the future.
Everything has its advantages if it has its disadvantages. As Lao Tzu said in chapter 57 of Tao Te Ching, misfortune depends on blessing, and blessing depends on misfortune. In Chapter 42, we gain from the loss. Good and bad, loss and gain, are related. The epidemic has brought life harm to the world and economic impact, but it has also brought many changes. As for Sayyas, bids for more than 100 suppliers were all online. The bidding for the construction of Phase III factory in Shuangcheng was also completed online, including the brand renewal conference last year. The whole proposal and planning is almost online.
What is particularly interesting is that, before the epidemic, the 5,000-square-meter office building at Sayyas's factory in Shuangcheng, Harbin, was overcrowded. While we were worrying, the epidemic came. A lot of employees work online from home, and instead we set aside 1,000m2 for windows and passive building displays. This allows more people to understand the benefits of passive buildings to humans. We can say that the epidemic has brought us disaster, changes, but also brought us a reminder. Is it a natural or man-made disaster? How should we live with nature?
In the first few years, I read a book titled Suffering and Success written by General Jin Yinan, describing the great Chinese Communist Party that experienced numerous hardships before achieving today's success. No suffering, no success. Suffering is a blessing in makeup. The same is true for Sayyas. This data represents October 31, 2017. This is the biggest suffering we have ever encountered - The company's IPO application was not approved. This hit us in the head and made us reflect. So, from November 2017, we began a three-year organizational change. Here I would like to thank two people, my wife Ying Jingfen and the management center Teacher Wang. In the past three years, they have continuously promoted organizational changes, which gradually transformed our organizational structure from a pyramid power structure to a matrix structure with blurred departmental boundaries and hierarchy, and gradually transformed Sayyas into a self-motivated organization.
During these three years, our operating income and net profit both achieved substantial growth. It can be seen that without suffering, we cannot grow. In the next three years, Sayyas will continue to deepen organizational change. An executive of Huawei once told me that organizational change is the most important thing for an enterprise from RMB 1 billion to RMB 2 billion. It can be foreseen that the organizational change of Sayyas is facing many challenges in the next three years.
On December 29 last year, we once again obtained the acceptance notice from Shenzhen Stock Exchange. In my mind, especially in the last five years, I have read the Tao Te Ching intensively, and I am more and more aware of the insignificance of human. Our lifetime is the process of seeking to let go. The first is kindness, the second is thrift, and the third is not to dare to be the first. Kindness is letting go of ourselves and altruism; Thrift is self-control; Not dare to be the first is respect for "Tao". Life is to follow three principles - altruism, self-control and respect for "Tao" Therefore, even if Sayyas is not listed, we should also make it a company that conscientiously pays taxes in accordance with the law and continues to operate in a standard manner. If this leads to the loss of the enterprise, it must be something wrong with the operation. An enterprise should make great efforts in its strategy, brand and products. It should not only achieve legal compliance, but also make its employees well-paid, and have enough profit and cash flow. This is the right direction for a good enterprise. Huawei is a typical case in front of us.
So how can we run the business well? Today I want to share some common sense with you. Chinese people love taking shortcuts, figuring out business models and overtaking on corners. But for more than 20 years, I have not found any shortcut. I still have to make progress step by step. This is the correct principle in the world. According to the 53th chapter of Tao Te Ching, "Shi Wo Jie Ran You Zhi, Xing Yu Da Dao, Wei Shi Shi Wei. "Da Dao Shen Yi, Er Min Hao Jin." It means that if I knew anything about the general principles of the world, I should know to choose the easy way out. The road is very smooth, but most people like to take shortcuts, which on the contrary overreaches themselves.
One of the four things I'm going to talk about today - research and development. Neither American presidents and emperors do not determine the way human society lives. Any dynasty change is just a change of power and has little impact on people's lives. Who are the people who influence the world? Einstein, Nobel, Jobs, Musk...This is the power of science. Science is not creation, but discovery. It is a principle which God has long concealed in the universe. It's waiting for us to discover like children. So to speak, the process of human history is the process of discovering science. A Nobel Prize winner in the United States once said that 80% of the American economy depends on technological innovation. Companies in China prefer to develop downstream more often, while companies in America and Japan prefer to develop upstream. Huawei was hit by such outages from upstream. Fortunately, Boss Ren laid out the operating system and chips in advance in 2004. There is a Japanese company that makes MSG, but it actually controls 70% to 80% of the chips that contain a super insulating material, which is extracted from a byproduct of MSG. In China, those who excel in learning can be officials. The education we have received since childhood is that "nothing is lofty except reading books" and "wealth and beauty can be gained through diligent study". The word "science" is missing in the industry and commerce, and we are not interested in scientific exploration and discovery.
The British Museum once made such a statistic: From the Paleolithic Age to 2008, there were 1,001 inventions and creations in human history that affected the world, among which 30 were from China, accounting for 3%, which is not much. But these 30 inventions and creations date back 1,500 years. Among the 838 major inventions and creations that have affected the world since 1500, China has not made a single one. It's actually kind of embarrassing. It should trigger our deep thinking! Why did China quickly launch the science and technology innovation board in 2018-2019? I think what our country really wanted was "revitalizing the country through science and technology", because we were held back by our lack of innovation, so we were then held back by the US. But it is very difficult to fight back and excel In the case of insufficient technological innovation. Therefore, the development of science and technology is extremely important to human society.
Sayyas has always attached great importance to innovation for more than 20 years, and has applied for hundreds of patents in the past 20 years, but I am always very anxious, because I always feel that the technological innovation in the window industry is seriously insufficient. I told the leader of the R&D center that we must make the R&D center a pan- R&D center. We must include all the team members of Sayyas, including distributors, suppliers and equipment vendors, into the pan- R&D center. You should take your employees to learn all over China and even the world for better technological innovation. On July 7, 2020, we launched a new-generation aluminum-clad wood window. We named it Cool 8 Degree. This product uses new materials that can be used in the aerospace field. It combines the advantages of aluminum alloy window and aluminum-clad wood window, and overcomes these disadvantages. This makes it different, and customers like it very much. It can be seen that technology is so important to enterprises, so we should have more creation, and constantly bring forth new ideas.
On September 25, 2020, we also launched an aluminum alloy window product, which actually caused a shock in the entire aluminum window industry. Aluminum-clad wood window falls into a small category. The whole country does not exceed 300 enterprises to produce it, but there are 30 thousand enterprises for aluminum alloy window. Sayyas has never produced aluminum windows before. Our first aluminum alloy product - JE110 is unique in the design. This caused a shock in the whole industry, because we use the thinking and technology platform of aluminum-clad wood window to design and manufacture aluminum alloy window. However, this product is just one of the many cases in the aluminum-clad wood window products of Sayyas. Here I must explain the orientation of Sayyas. Sayyas is only equal to the aluminum-clad wood window. Sayyas is not trying to take a share of the aluminum alloy window market. NO！ Sayyas's JE aluminum alloy window is just a dessert. It is an auxiliary product for Sayyas's customers to use in bathrooms, kitchens, garages, swimming pools and other spaces. Of course, if it grows in the future, it may establish its own business.
The second common sense I want to share with you is manufacturing. China has a population of 1.4 billion with the second largest GDP in the world; The United States has a population of 300 million with the largest that. Comparing the population with the economic aggregate, it is obvious that employment is the biggest problem for China. In the face of the new economic environment, the Americans are trying to encircle and suppress China. What is the future of our economy under the further impact of the epidemic? There are just over 3 million farmers in the United States, producing more than 500 million tons of grains each year. China has seven to eight billion farmers and produces more than six hundred million tons of grains. China must take the road of large-scale agriculture, breeding and planting in rural areas, because a large number of surplus labor force lurks in the rural areas. How can this labor force be transferred? Urbanization! Urbanization! Urbanization!
In my speech in 2018, I once predicted that China's rural homestead would surely enter the market within five years. Unexpectedly, China's "Beautiful Villages" plan has begun to move forward in full swing in 2020. Our country take back the land of rural homestead and give farmers compensation and insurance. At the same time, farmers can get real estate certificates for their houses, so that they can make it enter the market and sell them to urban residents. People in city bring their money to the countryside to promote the development of rural economy; People in rural area bring their insurance to the city to settle down and buy a house. This is the new development pattern of "taking internal circulation as the main to promote double circulation". It was a brilliant move. This could help narrow rural construction land and shift the target to urban construction land. We will also ensure that the 1.8 billion mu of arable land will remain unchanged. Only in this way can we build up China's rural economy, build up China's urbanization, and boost domestic demand, so as to promote China's economic development for another 20 or 30 years, and give us buffer time for scientific and technological innovation. But I have also been thinking about a very serious problem: What can five or six billion farmers do after they enter the city? How do they make a living? Employment will become the top priority of our country. Here, I dare to predict again: in the future, our country will develop manufacturing industry vigorously, so as to create jobs for farmers into the city. Sayyas is a pure manufacturing enterprise. We are sure to see a boom in manufacturing.
The most important thing for Sayyas is manufacturing. I often say that if you compare a business to a car, the manufacturing is the chassis and the wheels, and R&D is the engine. Last year, Sayyas completed nearly 40,000m2 of factory in Nanjing; The construction of Phase III factory in Shuangcheng, which covers more than 30,000m2, was started, completed and put into production in the same year, creating a miracle of Sayyas. In short, in manufacturing, we need to adopt a strategy of going ahead steadily and surely, strictly select materials and equipment from all over the world, make detailed plans and ensure quality. Sayyas's biggest focus is on manufacturing, and the rewards associated with production line innovation are also my favorite. Since 2014, we have promoted the "three improvements, three reductions and re-creation". Innovation from the production line has helped us create great value. Here I want to tell the manufacturing center that manufacturing only needs to follow three principles - more, faster, better and saving. More means to improve the scale. There is no low cost without scale; Faster means to improve efficiency; Better means high quality; Saving means saving every inch of material. Now our manufacturing center is well-equipped with talented staff, but we still want to continuously absorb talents for the preparation of our future new factories. Making solid development in manufacturing is the fundamental of Sayyas. We can't do anything but make products.
The R&D and manufacturing mentioned above are Sayyas's strengths, but an enterprise cannot achieve long-term development without marketing. Marketing is a big deal. Drucker once said that there are only two things to do in a business: one is marketing, and the other is innovation. Innovation is also for marketing. A company that can't market is playing hooligan. Sayyas started with engineering. Engineering marketing should be considered simple marketing; Therefore, Sayyas has been weak in marketing from the very beginning .
There are many window enterprises in China, which are determined to do retail rather than engineering, because its project price is low, its payment is slow and its cycle is long. At present, Sayyas's engineering accounted for more than 60%. Over the past 22 years, we have completed over a thousand projects, but we rarely fail to collect the quality guarantee deposits on any of our projects. Why? Because for Sayyas, it is its duty to do well in products and services. We adhere to two basic principles .The first principle is to keep our customer impeccable, speechless and undeniable. I often tell the sales manager and after-sales manager, "how blessed we are"! So many developers' engineering departments and property companies scrutinize us. They are our free inspectors. We should embrace them with love, get things done, and make the end consumers satisfied. The second principle is the two "RMB 200,000" principle. If you owe me RMB 20,000, even if I really have a problem, I am willing to spend RMB 200,000 to correct it. If I don't have a problem with it, I'd rather spend RMB 200,000 on a lawsuit than get the RMB 20,000 back. Relying on this spirit, Sayyas has not fallen down but continues to move forward on the road of engineering marketing. This year, the sales of the project center led by Bian Keren are still much higher than the retail center, but the retail is our future.
If there is no retail, there is no future for Sayyas. From last year to around the Spring Festival this year, I visited more than 50 dealers. After the annual meeting, I will continue to visit the dealers comprehensively. Companies like us in the northeast, especially those in Heilongjiang, don't know how to run a retail business. Brands in consumer goods, such as Blue Sky washing machines, smoke hoods, pune cabinets, and Klasse wooden doors, have vanished without a trace. The whole custom furniture industry in China is completely dominated by eastern China, not to mention Heilongjiang. Retail is a complex marketing, including online and offline, new retail, new media, Little Red Book, Tik Tok, Jinri Toutiao, designers, architects, store image and so on. How should we run a retail business well? What matters most is the strategy and competence of the dealer owner and his team. Each dealer owner is the general manager of Sayyas branch in each city, so we treat the dealers as a family. If you're watching live online, I want to honestly say that you are the most important. I hope you can cooperate with Sayyas all long; Sayyas will also strive to create good products, and provide you with better services. If we are not good, you can say goodbye to us; If you're not, we'll say goodbye to you, too.
So let me conclude with marketing. First, for a brand, good product quality is very important, but what is more important than quality is cost performance. Second, the sales volume of an enterprise is very important, but what is more important than the sales volume is the perception of customers. Cognition determines fact, and cognition is greater than fact. It can be summed up in two points: one is the uniqueness, and the other is the cost performance. I did not say that, but Ren Zhengfei did. So we are determined to make up the weak link of marketing, especially the retail business. We hope to double the sales of Sayyas and form a two-wheel business drive of engineering and retail. Engineering cannot be developed too quickly; Retail can't grow too slowly!
I talked about research and development, manufacturing and marketing, but is there anything more important than these three things? Yes! That's sense of values. The world is defined by three words: principle, morality and law. R&D, manufacturing and marketing belong to the academic level, and sense of values is the true principle level. As the saying goes, principle cannot work without academic, while academic cannot achieve long-term development without principle. Values and moral laws determine the direction of the world. Principle is the natural law, and morality comes from principle. In the Analects of Confucius, there is a sentence that appears twice. It is "Yi Yi Hu"! "Wu Wei Jian De Ru Hao Se Zhe Ye." It means that napoo, I've never seen so many virtuous people as lustful people. Good morality is the pursuit of personal cultivation and working principles, while lewdness is the pursuit of personal desire. Lao Tzu said: "Wu Se Ling Ren Mu Mang, Wu Yin Ling Ren Er Long, Wu Wei Ling Ren Kou Shuang." It means that people are dazzled by a riot of colors; The noise makes people hard to hear; The strong mixed taste affects the taste of people. Lao Tzu is not interested in decadent music and color. In 35th chapter of Tao Te Ching, "Yue Yu Er, Guo Ke Zhi". "Dao Zhi Chu Kou, Dan Hu Qi Wu Wei." "Shi Zhi Bu Zu Jian, Ting Zhi Bu Zu Wen, Yong Zhi Bu Zu Ji." Music and good food make passers-by stop, but the principle is plain and tasteless in words. However, it is invisible and unheard, but its effects are endless and unlimited. Mencius also said: "Ren Zhi Suo Yi Yi Yu Qin Shou, Ji Xi". "Ji Xi" means conscience. Man is different from animals because he has a conscience. If a man follows the principle, he is a saint; If a man deviates from the principle, he may be worse than a beast. Thousands of years later, the words of the saints are still in our ears, but the slogan "appearance level is justice, and appearance level is greater than life" has become the declaration of this era.
So, for the world and for companies, values are the most important. In Alibaba's new employee training, the training about values needs to be completed in five days. The basis of values is human resource management. The premise of values is to recruit like-minded people. The word "comrade" is such a great word. So, ‘Select" is the top priority among the four words "Select, Employ, Train and Retain". When you start a business, the first person you look for is the director of human resources. Excellent talents are selected, not trained. Selecting the right employees is the prerequisite of all other things. With the right people in place, how can values lead and become a powerful driver of R&D, manufacturing, marketing, and operations? It's value creation. Values without value creation are just nonsense. What's the next to value creation? It's value evaluation. Without value evaluation, no one is willing to create for the enterprise. We must be open, fair and just to inspire the strength of the team. What's next to value evaluation? It's value distribution. The core of an enterprise's values and the basis point of its culture lies in value distribution. A culture without value distribution is nonsense. Without assessment, evaluation and incentive, no matter how excellent a person is, he will not meet with success. This is Huawei's three principles of value - value creation, value evaluation and value distribution. We use these three principles to support our values, which then guide our R&D, manufacturing, marketing, and operations.
Finally, I want to end with a paragraph. The future of Sayyas is to build a platform of altruism. On the platform, everyone is the boss. On the platform, we don't grow old year after year, but create new things day after day. Believe in the power of common sense. Believe in the power of repetition. Be a friend of time. Thank you!
Address of Shuangcheng factory：
Crossroads of Songhuajiang Road and Xing'an Road, New Industrial Park, Shuangcheng Economic Development Zone, Harbin
Address of Haxi factory：
No. 9, Xinnong Road, Nangang District, Harbin
Address of Nanjing factory：
No. 18, Zhonghuan Road, Jiangning District, Nanjing
Address of Nanjing office building：
Building F, Shimao 52 +, Yuhua District, Nanjing
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