Survival and development of enterprises - Mr. Bian's speech at the 21st China International Door and Window Curtain Wall Technology Exchange Seminar

Dear entrepreneurs.

        Good morning!

  The topic of today's speech is given by the organizer, the topic is too huge and overwhelming, so I can only try to analyze and discuss with you all to benefit together.

  We all know that China's economy is in the first year of the downward spiral, and once any economy enters an inflection point, it is never just one year. It is said that 5 million private enterprises have already closed down this year, accounting for about 1/6. If we want to bottom out, it is estimated that not 1/3 fallen is not enough.

  Anxiety of growth and living

  Unlike European and American companies, Chinese companies, especially SMEs, have growth anxiety. Chinese companies have to have 30-50% growth to get by better. When the growth rate drops to a few ten percent, our profits may be equal to last year. If the growth rate reaches 3-5%, our profits may be significantly lower than last year. If there is a negative growth of 10% or less, we will have a very difficult time. Once the negative sales growth reaches 20-30%, the company must be losing money. The other day I visited INTERNORM, the number one window and door brand in Europe, their 2018 sales were 344 million euros, up 3.6% from the previous year, they felt very proud and their benefits were very good indeed. However, a Chinese company with a 3.6% growth, the boss has to droop his head. Because the growth of a European company is based on the premise that the equipment, personnel and plants are not moving at all, and that the market price is stable and the cost is stable, so its gross profit is basically equal to the net profit. But the situation of Chinese enterprises is different. First of all, our market price is unstable, and the competition is fierce as there are too many monks and too few porridge. In order to compete, the product configuration is constantly rising, leading to rising costs and a constant compression of gross profit. Secondly, our employees have a strong desire to increase their income because they are burdened with three big mountains - real estate, education and medical care. So bosses have to keep raising wages to keep people. And even after more than 20 years of operation, Chinese companies still have a lot of management deficiencies. Trying to recruit talents with broad thinking, high level, and business service consciousness for key positions, we need to pay more. As a result, labor costs continue to rise. Third, our Chinese entrepreneurs are more ruthless in buying land and building plants, resulting in higher and higher fixed costs and depreciation, but the efficiency of asset utilization is relatively low. These rising costs are forcing us to have high growth. But with such high growth, it is difficult for our enterprises to keep up with the management; this leads to malnutrition, weakness and disease, and can not withstand the storms of the market. So the growth anxiety of entrepreneurs further expands, and a vicious circle is formed.

  In the current special period of economic downturn, we are not only facing the problem of growth anxiety, but also the problem of how to survive the economic crisis. At Sayyas' annual meeting this year, my speech was titled "Live", and only by living can we welcome the opportunity to reshuffle. Ren Zhengfei also said: Huawei's minimum agenda is to live, and the highest agenda is still to live." Someone asked, "Your slogan is not three parts of the world, Huawei has one of them?" He said, "One of the three worlds is the same as living, there is no way to live without entering the top three in the industry." Back then, there were hundreds of companies in China's telecommunications industry, which later developed into four - "Great China", Huawei was the first in the carrier business, and ZTE was the fifth. ZTE is very weak, without government protection, may be killed this time. The entrepreneurs here are also facing the same problem of living.

  Spotlight on Relativity

  So, what do we do to survive? I recently created a new concept: Focused Relativity. As you all know, I am a focus maniac. In 2011, I cut off a product line that accounted for 55-60% of sales and kept a product line that accounted for 40%, and then went through a step-by-step journey from 370 million back to 150 million, and from 150 million to 1 billion this year. But focus does not apply to everyone, every business. Sometimes I wonder if Li Ka-shing is considered focused. In 1997, Li Ka-shing went to Ren Zhengfei to buy out a loss-making telecom company and asked Ren to help him make a profit before he sold it. In the end, the deal didn't work out, so he chose other partners and bought two telecom companies, each of which made more than $10 billion. Let's look at Li Ka-shing's business lineage, is he considered focused? He understands his own strengths and weaknesses, technical deficiencies by hiring experts to compensate, and he did not make telecommunications a lifetime career to develop. In fact, I think Li Ka-shing is also focused, he focused on his talent in business operations, focused on their own capital. I should say that the logic of his work is consistent with the principle of focus.

  Let's talk about Huawei, Huawei is not focused? Huawei has always been known for its focus, but after it went into the cell phone business, some people raised questions: you are doing TO B business, is doing the base station business, how can you do the cell phone business? This is horizontal expansion, against the principle of focus. I used to think so too. However, upon closer examination, Huawei actually started its cell phone business in 2001, matching feature phones to base stations. It is said that Huawei's investment in the cell phone business is very large, equipped with 10,000 people in the R & D force, and specifically looking for the so-called "Yu crazy" Yu Chengdong to do the cell phone business leader. Why did you do this? Because it expected that the US would suppress Huawei's TO B business sooner or later; however, the US may not be able to influence the choice of end consumers. So Huawei started developing chips and cell phone systems in 2004, with the aim of getting rid of its technological dependence on the US. Huawei treats its cell phone business as a life-or-death strategic business, rather than simply diversifying, like Gree, Lenovo, and Haier. The result of being driven by desire and being driven by mission is completely different. When you really understand its technical roots, operational determination, and strategic relevance, you will find that Huawei is also in line with the focus principle.

  A few years ago I had dinner with Chenxi Wu of TATA. Chenxi Wu is very good and very talented. When we met, the first thing he said was - the product line should be wide. It was just the opposite of my view. A few years down the line, TATA also crossed over to do aluminum clad wood windows and entry doors, and did very well. I thought, is he wrong, or am I wrong? In fact, each person, each enterprise is different; as long as your ability to hold up, your business can continue to develop healthily, is the right. People should know how much they have, and understand how big the radius of their life is. As long as you are within the radius of your ability, you are safe. So focus is relative, not absolute. If you have the ability, eight categories are doing very well; if the ability is not enough, it is always easier to do one than eight. As long as we do the business with characteristics, profits, sustainable, is successful. Don't just pursue to be big, to be big is a blessing, to do well is this.

  In addition, focus also needs to be adjusted dynamically according to the actual situation. When the enterprise is very small, you make it a needle; when the enterprise develops to the intermediate level, you make it a red tassel; when the enterprise develops to a very large scale, you can make it a golden band. Whether it is a needle or a golden band, whether it is small or large, in short, it should be competitive and fighting power. However, under the pressure of economic downturn, we should be more cautious, rather than making the enterprise into a small old tree. What is a small old tree? Is a small tree, has not grown tall, it is divided into a lot of branches, looks very dense, but it can never do great things. Not to cut off these small branches, the tree will never grow taller. Not to fall, as we all know, its center of gravity is very low. As the saying goes, "Heavy is the root of light, quiet is the king of restlessness. If you are light, you lose your root, and if you are restless, you lose your king." The word "king" means foundation. We make the business into an invincible, retaining good cash flow, even if the wind blows and shakes, but not to fall down.

  Strategic Thinking and Human Mission

  We have just talked at some length about the meaning and relativity of focus, but where does it come from? Focus is a type of strategic thinking. The most important thing we should build in our life is strategic thinking. An entrepreneur with strategic thinking can still be invincible even if he or she is a bit deficient in management. Strategic thinking is about finding the right thing to do and then managing others to do the right thing. Any boss who thinks strategically will do well in business. Strategic thinking is not about going with the flow, not about opportunism, not about being short-sighted and only looking at the immediate future. We are often reluctant to do something laborious, such as team building, training, factory image building, etc., which takes a long time to slowly ferment and produce results. Strategic thinking is holistic, goal-oriented and up-to-date; strategic thinking is innate and can be learned later in life. When Genghis Khan and Borji were not yet married, they went to Borji's house. Borji was the daughter of a large family and was reading a book. Genghis Khan asked her, "What's in the book?" She said, "There is wisdom in the book." Genghis Khan said, "Why is there wisdom in the book?" Genghis Khan believed that wisdom is in the heart of man. So, great people like Genghis Khan and Mao Zedong were born knowing. "Those who are born to know are the top; those who learn and know are the second; those who are stuck and learn are the second; those who are stuck and don't learn, the people are the bottom."

  Most of us belong to those who learn and know, so how do we learn strategic thinking? My approach is: nibble the classics, practice diligently. In my opinion, human knowledge is divided into three categories, 99% of the knowledge is junk knowledge; the remaining 1% of 99% is science, 1% of 1% is the "Tao". We have to study what is the Tao, to do the right thing. Strategic thinking can be learned by gnawing on the classics, learning some "Analects", "I Ching", "Tao Te Ching", "Yang Ming Mind" and so on. These writings of the sages of the ages, do not need more, as long as the "Tao Te Ching" with a few years to spend a word by word nibble, nibble 500 times, you will find that what to do are clear-eyed.

  But just gnawing on the book is not enough, but also need to practice diligently. Learn and practice is not also said. Learning without thinking is confused, thinking without learning is dangerous. Three points of learning, seven points of practice. I am willing to read some long articles of tens of thousands of words on the Internet, my eyes are not good, I can't read them on my cell phone, so I let my secretary print them out and keep reading a dozen copies every day. This era is changing, we need to understand the policy, understand the industry, understand the thinking and decision-making logic of young people. You can't always be an afterthought, or even unaware, so you will be left behind by the times. We need to absorb modern knowledge and culture, and measure its correctness with the Tao. Conscience lets us know right from wrong, but many things are right or wrong but cannot be determined at once; we must exclude mistakes in order to converge on the right. Only through continuous learning can we gradually build up our strategic thinking.

  So, where does strategic thinking come from? I think it comes from the mission. People do not come into this world without a reason, but with a mission. Life is made up of three words - live, live and die. But we only like the first two words, we often say how beautiful "life" is, but avoid saying the word "death". I think we can actually change one word - life, living, back. Back, is home. The life of a person should answer three questions: Where do you come from? Where are you going? Who are you? What your mission is determines who you are. Where you come from inevitably leads back to where you are going. You come with a mission, and when the mission is accomplished, you go back to where you came from. So, let's not just think about making money, daily corpse, cheating, eating and drinking. Wang Yangming said: Everyone has a conscience, and everyone can become a saint. I think we can add one sentence: Everyone has a conscience, everyone has a mission, and everyone can become a saint. The so-called conscience is the knowledge of good and evil. "There is no goodness or evil in the body, but there is goodness or evil in the movement, and to know goodness and evil is conscience." When we know good and evil, we have to determine whether we want to do good things or evil things. Once you understand your mission, your strategy will naturally be clear.

  Drucker had a profound vision of mission when he said, "A mission is what you do in this life, and all work is derived from and closely related to the mission." Mission is like a red thread that runs through the whole process of business management and operation. Businesses suffer badly because they do not have more time to think about the mission. Drucker said, "What is management? Management is the process of defining a mission and organizing human resources to achieve it." In Drucker's eyes, the mission is the law that makes a business successful.

  In addition to mission, I recently thought about another issue - longevity and living. Is it a high life expectancy for someone to live to 90 years old? If he just lives to show others, then I think he has not lived. In my opinion there are three ways to live. One is to live in the eyes of others. I have to work hard! Let my parents see that I have given them a good fight, let my classmates see that I am pretty good, let the world see that I have done 10 billion, you have to respect me. Most of us are such people, to fight for breath, but the more you live, the more tired. I am so old, why should I live in front of you? Why not live down to earth and live for yourself. The second way to live, live for yourself, to be exact, live for selfishness. I have to be kind to myself, eat more good food and drink better. When I eat and drink, suddenly I feel that there is no meaning, I feel empty, I feel that there is something wrong. Because God has put the mission in people's heart, what you lack is that you haven't found your mission yet. After you find it, you will live for the mission, live for human life, and this is the third way to live. In Chapter 49 of the Tao Te Ching, it says, "The sage has no constant heart, but takes the heart of the people as his heart." It means that the sage has the heart of the people as his heart. "Those who are good, I am good; those who are not good, I am also good - virtue is good. Those who believe, I believe; those who do not believe, I also believe - virtue and faith." Wang Yangming lived for 57 years, and he decided from the age of 29 to be a saint by preserving heavenly principles and removing human desires. Then I think his real life expectancy should be 57 minus 29, 28 years. The day a man finds his mission and strives for it, his life begins. Everyone has to think about his mission, because with a mission, you know what your strategy is; with a strategy, you know what you should focus on; with a focus, you can live and you don't have to suffer from the anxiety of growth.

  When you live for your mission, you feel invigorated because every day you are doing something meaningful for the world, and your personal gains and losses don't feel like a big deal anymore. Man comes naked from God, and it is the LORD who rewards him and it is the LORD who receives. We bring nothing, and we take nothing away. Money is really a gift of life and a test of man. "When gold and jade are full, no one can keep it. Wealthy and arrogant, since the blame of their own legacy. Success is the way of heaven." It means that if one is rich and arrogant, one is leaving oneself a scourge. When a thing is done successfully, it should be collected, which is in line with the natural law of reason. It is the greatest ignorance for a person to be proud when he is rich.

  Uniqueness and cost performance

  What we have just talked about are all theoretical concepts, but what should we do if we project them onto business management? In fact, there are only two things to do in business: first, to do uniqueness. Second, to do the cost performance. You can't have both. With the uniqueness, there is a premium power, there is no need for cost-effective. Even if the sales are not large, but multiplied by the high unit price, the business can still live well. So how to take the road of uniqueness? Uniqueness is to use technology, hot, new categories, etc. to position themselves, is to tell a brand story. Brand is not the same as enterprise, enterprise has a brand; brand is an important sword of enterprise, rooted in the hearts of customers a mark. A company has to find its uniqueness first. Preemptive positioning, associated positioning, repositioning for rivals, whatever positioning method you use, always make your business unique. Unfortunately, there are many very good enterprises that have not found their own mission, and finally driven by profit, the more they do, the less they have characteristics.

  In creating brand uniqueness, we Chinese like to take shortcuts. As the saying goes, "The road is very flat, but people are good at the path." After positioning theory was introduced into China, it became a bit tasteless. They emphasize that "facts are not important, but perceptions are", fabricate a characteristic, and then lead entrepreneurs to advertise, and to their surprise, some companies succeeded. This is the sadness of our Chinese people who think that facts are not important. Their positioning has two bases: based on the customer's mind and based on the competitor's situation. But I say there have to be three bases - based on competition, based on perception, and based on facts. Is a brand played or grown out? When Qinchi Wine, the king of CCTV advertisement, was written by a reporter of Xinhua News Agency in eight articles of "Talking about Qinchi", is there still Qinchi now? Is the brand story branding for the sake of branding, or really from the product and service to create uniqueness? The foundation of our brand should not be built on the beach, but on the rock.

  Let's talk about value for money, value for money is good value for money. Do not simply understand the price performance ratio into price cuts and price war. Can do cost-effective enterprises are few and far between, like the United States Southwest Airlines, Wal-Mart, Carrefour, UNIQLO, Indy, you can count on are large enterprises, China's millet is also considered one. Because doing cost performance is very risky, you must have strong organizational management capabilities and high capital investment to reach the upstream and downstream of the industry chain, in order to bring down costs. Small and medium-sized enterprises should be careful to use the cost-effective way, because you are a small business, no influence, people may not even give you the opportunity to prove that you are a good product, it is simple to determine that you are crude. When the time comes, you sell very cheaply and have very little sales, the cost will become high.

  Standing in Sayyas this perspective, my understanding of cost performance is focus, scale, supply chain. When we focus on the single category of aluminum clad doors and windows, just when the industry is not in a period of intense competition. First, the focus brings sales, and procurement costs plummeted. The stuff should be good, the price should be low, the regulation should be strict, of course, our payment is great. With these conditions, our suppliers are happy to work with us even if they don't make much money. Second, my inventory costs go down. Because of the focus, there are fewer kinds of raw materials, and it is easier to manage. Third, our consumption cost is down. Because of the high sales volume and single product, the specialized division of labor is more efficient and the utilization rate of production line materials is improved. Fourth, my labor costs are also low because Sayyas has work to do throughout the year, so accounting for labor costs per order is not high, but workers are guaranteed an income of more than $6,000 per month. Fifth, because of the scale, equipment depreciation is not as high as others.

  A recent visit to INTERNORM's factory gave me a big shock. Their 112,000 square meters of factory, output 27.5 billion, Sayyas 100,000 square meters of factory (not counting Nanjing), output 1 billion. 100,000 square meters and 112,000 square meters, a difference of 2.5 times the sales, why? Because they are working in two shifts and three shifts. A European company can work two shifts and three shifts, why can't our Chinese companies? They shocked me, I no longer pursue the construction of plants. This fixed asset investment can save a large amount of money. We must think about the benefits of focus, and we must not analyze the costs statically, but dynamically. Once you have made up your mind to focus, you must make the scale up, because the scale will make your costs go down greatly and the benefits go up greatly.

  Capabilities are built on top of the organization

  Whether it's being unique or being cost-effective, it's all about people. When people come together, they form an organization. Someone once interviewed Li Ka-shing: "What is the biggest lesson you have learned from being in business for so many years?" He answered two words: "organization". Without organization, all ideas are just empty talk. But the two main characteristics of human beings - finite and guilty - make the organization have division of labor, difficult to synergize. If we want to make the enterprise better, we have to improve the organizational capability and carry out organizational change. Organizational change is a change of organizational structure and culture. Organizational structure solves the problem of matching authority and responsibility. For an enterprise to be sustainable, it needs an organizational structure that can be shared. Organizational culture solves the problem of unity of thought and behavior. Companies that can make organizational changes at the right time can activate the creativity of their employees.

  You can't form an organization without people. Therefore, the first person a company should look for is the person in charge of human resources. The creation of an enterprise, no one can, just can not be without human resources. Huawei, Ali have a very strong human resources. Human resources must be highly, caring, knowledgeable, understand the business, understand the product, rotation over the better.

  First people after things, find the right people than what is important. Rather lack than overflow, slow to recruit people, fast to expel people. Not easy to let him in, the conversion should be slow, a good test. Quick to throw people out although it seems a bit unsympathetic to the employee is also a blow, but he still has the opportunity to continue to grow in other enterprises. If he is allowed to mix in the business, hitched to his youth, only really harm him.

  People are not trained, but training is also important. The competition in the future is not the competition of strategy, but the competition of management. Management involves all employees, management is repeatedly grasping, grasping repeatedly, rowing against the current, no progress or regression. An excellent person who does not train for a long time will slowly become mediocre. A person who does not learn is certainly not good. So we have to carry out three training: trained people, trained ideas, trained behavior.

  In the organization operation, appraisal is very important and painful, but as the boss must learn this homework. If you can stick to this thing for a long time, you will become different. Huawei talks about value creation, value evaluation, and value distribution. Sayyas has also been on the road of assessment and evaluation to figure out. In addition, we have to be bold in management. Dare to manage is not to accommodate anyone, we are often accommodating cadres, because we are a carrot a pit, a cadre resignation, the recruitment will take a few months. In the middle of this is a break in management, coupled with the lack of work standards, making it difficult to maintain the continuity of work. In Huawei, a person quit, there are people waiting in line behind. Huawei A grade bonus is three times the B, and C is 0, is such a big difference, so the ABC competition is absolutely brutal. We do not dare, worried about the whole too strict, the staff ran away. In spite of this, we still have to learn to dare to manage, learn to assess and evaluate, monthly appraisal, quarterly appraisal ...... methods vary and firm.

  Assessment at the same time, we have to learn to share the money, do not learn to share the money is difficult to run a good business. The core of all systems, in fact, or the distribution of benefits, with KSF, PPV, equity, so that everyone to be the boss. Why do we, as bosses, work like old donkeys without supervision. Because we have a mission, a vision, and interests, and the employees don't. If only the boss has a mission and the employees don't have one, the business won't go too far. We have to build a platform, we have to revamp the salary system and the equity distribution system, so that the vitality of all employees is stimulated, and everyone comes out to be the boss, and their own salary is decided by themselves. The reason why the Communist Party was able to defeat the Kuomintang was that he activated the individuals and made everyone a striver with a mission, and finally formed a culture, and a team without culture cannot win battles. The root of culture lies in his faith, and it can be said that culture is an appearance of faith. What kind of culture there is, what kind of enterprise there is, what kind of enterprise there is, what kind of society there is.

  When the enterprise is small, the thinking can be all in one person's head. If you want to make your business bigger, we must ask every member of the team to go from being an executive to being an elite soldier who can ask questions and have solutions. The power of the organization is infinite, but if the organization is built on top of the boss, the organization is weak; if the organization is built on top of the team, up and down together, together, we can be less bureaucratic, not pander to the top and bully the bottom, but up management, down responsibility. Taking an order depends on R&D ability, marketing ability, branding ability, and more importantly, on the corporate culture and administrative ability that customers see, hear and feel in the company. How to make everyone in the organization move and submit to the organization's goals, and how to make the people who undertake business performance to share the growth with investors, is the focus of organizational change. Only by doing this can we achieve healthy and rapid growth and cure our growth anxiety.

  Well, that's all I have to share, thank you!