"CEConline" interview with Shi Zhenrong, founder of Acer Group (1)

CEConline: Mr. Shi is a successful model in the electronics industry, and Acer is also the first successful brand in China. Today, many of our mainland readers are thinking about brand strategies. Magazine covers also talk about electronics. We have prepared a few questions and would like to ask Mr. Shi.

Shi Zhenrong:

Ok, I'm glad to answer your questions.

CEConline: So let's talk about branding first. At present, the mainland's electronics manufacturing industry is in the process of transformation. Many electronics export companies want to switch from OEM to OBM. Can you share with our managers and readers the process of creating Acer's own brand? As a pioneer, what effective steps do you think companies should take to adjust their pace of transformation, and what issues should they pay attention to in the process of building their own brands?

Shi Zhenrong:

Everyone is not familiar with the history of Acer as a brand. Let me introduce it. In the early days of Acer, because it had no resources and was small in scale, it started as a brand first. Later, it was also because of the ability of R&D and innovation and its own brand, so the competitors in the market knew that Acer in Taiwan had such a OEM service ability, so they came to ask us to cooperate with them to do OEM, we have the brand first Only after OEM, ODM.

I think that only large-scale OEMs are beneficial, but it will be more difficult to become a brand when it is large. Acer has no difficulty in making a brand because it does not have an OEM, so it starts to make a brand directly. If you want to switch from an OEM to a brand, you must have great determination. Otherwise, the challenge is very big, which is more difficult than starting a brand from the beginning. Much bigger.

Why is this happening? Because the scale of OEMs is large and the scale of brands is small, everyone is bigger than smaller. At the same time, the OEM is simple, the brand is difficult to do, everyone likes to do simple things, why do they have to do difficult things instead of simple ones.

So if you want to switch to a brand, you must have a long-term determination, because you have settled and become accustomed to the foundry culture - big and simple, but to transform into a brand culture is complex and difficult, and the scale is small.

I personally recommend that if you want to move from foundry to brand, there are two types of models. The first model is the overall transformation, giving up OEM, even if the customer does not find you, you will recognize it, anyway, you choose to stick to the brand. Such as Giant, HTC, they are very successful.

Another way is to set up a small company for branding, from small to large, and do not have a conflicting relationship with the OEM customers. I can give an example. For example, if mainland manufacturers focus on the mainland and Southeast Asian markets when making brands, this market may not be important to European and American customers, so there is no direct conflict. I personally think that if mainland manufacturers want to spread their brands to Europe and the United States at once, there is very little chance of success. In fact, Lenovo also wanted to go international in the early years, but after learning about Acer's experience, he focused on the mainland. After doing it, he acquired IBM's PC department, which made it international.

CEConline: We also know the example of Lenovo, they have been learning from you. We heard about your "smile curve" a long time ago, and the theory of "smile curve" is almost well known in the industry. Now that 20 years have passed, what new additions and changes have you made to the theoretical connotation of your "smile curve"? Would you like to share it?

Shi Zhenrong:

The smile theory was born because of changes in the computer and PC industry, so we re-examined to see what changes have occurred in the added value of the entire industry chain. It is found that the added value of manufacturing is low, but the added value of components, channels, brands and services is relatively high. I now see the entire smile curve, not only in the electronics industry, but also in the added value of various industries in the value chain.

On the other hand, based on Taiwan's past experience, mainly manufacturing foundries, Taiwan has now become the place with the most competitive foundry service providers in the world. This is mainly because Taiwanese companies are ODMs (Original Design Manufacturers). , is that one manufacturer designs and manufactures products according to the specifications and requirements of another manufacturer. The entrusted party has design capabilities and technical level, and produces products based on authorized contracts).

Because of the "D", you can move closer to the left and right of the smile curve to serve customers, and even the market can be in Eastern Europe, Mexico, and the Americas, so the entire ODM in Taiwan has become an international foundry service ecosystem .

While OEM is purely manufacturing in the middle of the smile curve, without increasing its added value to the left and right, the company's competitive advantage will essentially be lost. If mainland OEM companies want to go to the next level, either they will become ODMs, or they will gradually transform into OBMs and become brands.

In fact, mainland enterprises can start branding from the mainland market and slowly build core competencies over a long period of time, because to build a core competency, it may take 10 years for manufacturing and 20 years for research and development. Brands in marketing services take more than 30 years to form, which takes a long time. In other words, this ability takes a long time to develop slowly. I think the smile curve may be useful for a long time to come.

But then again, the manufacturing of the intermediate links is also very important. Without manufacturing, there is no carrier. Hardware is a carrier. You have to put some value-added smart design, R&D technology, and brand on it. You must have a carrier. Create more added value.

In terms of division of labor, some do research and development, some do marketing, and some do brand promotion, but no matter what, you need to know where you are and face global competition.

Brands are relatively localized. Although brands are globalized, they need to be localized for implementation, because if you want to do services, channels, and channels, they must be localized, so this is why I think mainland manufacturers should establish their own In fact, the brand should first be based on the mainland market, where there is a lot of space. How can there be globalization without localization? !

From another point of view, why the US has the most world-renowned brands, because the US market is the largest, and the Chinese market will also become the largest market in the future, which is very exciting. Of course, if there are always copycats and infringements, it is impossible. Now many companies take the road of borrowing other people's brands, and this road will not work for a long time. As long as mainland enterprises make up their minds today, move forward step by step, keep their feet on the ground, and truly build up their core capabilities, if we have our own technology and brands, and the mainland has the largest market, then 30 years from now, the most world-class brands should be It's the mainland.

CEConline: I think the current situation in the mainland market is far from the situation you just described.

Shi Zhenrong:

I expect to see it, but I don't know if I can see it before "going home".

CEConline: 40 years of career, you already have such experience, but for mainland manufacturers, they still lack this experience, maybe not focus on market service , placed on customer responses and feedback. From your observations, where do they need improvement? What advice do you have, especially in terms of marketing?

Shi Zhenrong:

From the perspective of the smile curve, all industries need to serve customers on the far right. If you manufacture something that is not what customers need, there will be an oversupply and it will be of no value; if you do a lot of research and development, but the results of the research are not what the market needs, then your investment will be wasted. So understanding the market is very important. As for OEMs, as far as many companies in mainland China are concerned, they do not need to understand the market very much, because the OEM market is a big brand customer, and the company can do what it asks you to do. But to make your own brand, you must understand the needs of customers by yourself, to guide the direction of innovation and research and development of your company, and to create customer value.

From the perspective of the Chinese market, Chinese manufacturers are the ones who understand the entire Chinese market best. After understanding, they must have the ability to innovate. Looking at the development of the mainland now, with the improvement of all aspects of education, there is absolutely no problem with the talent pool. What is needed now is determination to move in the right direction for 30 years. It may take two generations to work hard. If the first If one generation doesn't do it, the second generation won't be able to continue. So be sure to have that commitment and a strategic plan.

CEConline: Our readers have been wondering how? How to improve? What you just mentioned is a relatively long-term direction. If the company wants to become a brand in the future, what should the company do? Do you have any specific suggestions?

Shi Zhenrong:

It should be done from yesterday, from small to large. The time span for building a brand is very long, and you have to pay a lot of tuition fees in the middle. If you lengthen the time when doing it, it will not be difficult, and the risk factor and investment resources will be smaller. I strongly encourage you to grow from small to big. If you have too much ambition, invest too much resources, and expect too much, once you fail, it may be a small waste of resources, but if you lose your confidence, it will be a big problem and even more troublesome.

If you do it little by little and do it step by step, if you make a mistake, you will only pay the tuition fee, and it will be worthwhile to learn it, and you will have more confidence in doing it. I think this is the way to go.

From the objective point of view, the goal is not set for ten years, but it is set for 30 to 50 years, and it is done step by step. This generation says that I am just paving the way for you. In the hands of the successor after thirty years. Do it in this way, and the company will surely grow to the desired goal.

CEConline: When you started your business, did you think about your vision in 30 years and plan to take it step by step?

Shi Zhenrong:

30 years ago, I definitely didn't have such an idea, I can only say that my current view is this. When I started my business, the microprocessor was the main technology of the second industrial revolution, and I thought that was the way of the future. We Chinese did not keep up with an industrial revolution and suffered a big loss. Therefore, in the direction of the microprocessor of the second revolution, we can no longer miss it. If we miss it, we will be the sinners of the nation. So we did, because since we can see that this is bound to happen, why not do it?

I myself have two suggestions. The first is that since you can't go wrong in the direction you are looking for, you must continue to do what is right. The second is that we have insufficient objective conditions, insufficient capabilities, insufficient resources, and insufficient image. What are we going to do? None, these are very realistic, you can only build up slowly over time, accumulate resources, capabilities, and the confidence of the outside world in your brand image - and these all take time. If you think it's the right thing to do, you're right to do it.

In short, keep doing it!

"CEConline": At present, the manufacturing industry in mainland China is facing the dilemma of transformation and upgrading, which is similar to Japan 40 years ago and Taiwan 20 years ago. In your opinion, compared with Japan and Taiwan, the manufacturing industry in mainland China How is the current situation different? What do you think is the future development direction of the electronics industry in mainland China?

Shi Zhenrong:

Compared with the mainland, Taiwan has no local market and is too small. When Japan develops its manufacturing industry, OEM and technology research and development go hand in hand. However, Sony insisted on taking the brand on the first day, relying on technology and quality to be the best in the world. Compared with Taiwan, Japan also has a local market, and the scale is not small.

From the perspective of the mainland, OEM and manufacturing can be said to be the first stage of economic development. Doing these can increase the employment rate. As long as there are people who can do manufacturing, mainland enterprises can enter, which has a great impact on economic development. help.

In the long run, with the education level of the mainland, there are a lot of human resources (not only labor) and market resources, so the development strategy should make good use of the mainland's own resources, the mainland's own resources are large enough, human resources and market resources Especially huge. Human resources should be called brain resources. In the future, we are faced with a knowledge economy, and the knowledge content of future economic activities will become larger and larger. In this environment, the mainland actually has relatively good conditions.

At the same time, the mainland also has the advantage of being a latecomer. The problems in the United States, Japan, and the world can be seen in the mainland, and you can pay a lot less tuition. In order to achieve economic benefits, it is actually necessary to study more, and the current learning spirit in mainland China is very good. In this case, as long as it is not too short-term, do not use any means, such as copycats, infringements, etc. - that is not worth the loss, and some benefits are obtained in the short term, but the price is also high. For example, there are many problems with unspoken rules in the development of the mainland. . In my opinion, as long as we follow the steps and take the right path, given the current objective environment in mainland China, it should actually be said that there is a good chance.

"CEConline": We have also seen many mass incidents in the mainland due to short-term interests, such as poisoned milk powder, and scandals such as poisonous food in the history of the United States. It seems that there were not many such incidents in Taiwan at the beginning. Why is there such a problem in the mainland now?

Shi Zhenrong:

In my personal opinion, Taiwan talks a lot about morality and culture. Although there are short-term benefits, Taiwan's philanthropy has developed very well. Taiwan emphasizes "goodness" in the whole culture. In this regard, this will constrain the market a bit, but it cannot be said that Taiwan does not have the current problems of the mainland. Because the objective environment makes everyone pursue short-term profits. In fact, it was the same in Taiwan at the beginning. Everyone rushed to the profitable industry. As soon as there was a profitable business, everyone worked together. Although it is not necessarily infringing, it has a negative effect on the industrial environment and leads to vicious competition. , profits are reduced.

There is another reason. I think it is also because Taiwan's domestic market is small, and it is forced to go in the direction of internationalization. The rules of competition are also international rules, so this internationalization has also internationalized the entire way of competition in Taiwan. Taiwanese enterprises It is also easier to understand some of the ways of international operations, so some phenomena in the mainland are relatively rare.

"CEConline" interview with Acer Group founder Shi Zhenrong (2)