Hidden champion, implicit or explicit choice

It is the dream of many entrepreneurs that a company can grow rapidly. From being unknown to becoming an invisible champion in the industry, the journey has been arduous. When faced with a key choice, should you continue the business you started with, or expand into new business areas? Is it to continue to make a fortune and become an invisible champion, or to establish a brand in the industry and move to the front? If you want to go to the front, where should the brand be established and how should it operate? Many questions with no easy answers.

This issue of "CEConline" magazine invites two entrepreneurs, Li Jie, Chairman of Golden Anchor Group, and Wang Lin, President of ATA Company. Their companies have achieved continuous success as hidden champions in their respective industries. Today, The former is actively exploring the choice between being invisible or being visible, while the latter is taking a firm step towards the foreground.

We also invited Haining, Managing Director of Jebsen & Co. Founded in 1895, Jebsen is an industry leader in market development and distribution of high-end products. Many of the brands it represents are well-known, and Jebsen is somewhat invisible.

How the Hidden Champions are made

First of all, please introduce your company to the guests.

Li Jie: Jinzhuo is a township enterprise founded in 1984. At first, it did supporting production for state-owned enterprises, and made accessories for bicycles and sewing machines. In 1987, by chance, I started to do extrusion Qiang, using the techniques of stamping, welding and painting that I had mastered before. In 1997, it became the largest in China. The customs data showed that our exports accounted for 50% of the country's total, and the annual export volume was four or five million US dollars. At that time, we had nothing else to do, and only squeezed Qiang. At present, the annual import volume of Jiangxing Jiang in the United States is between 11 million US dollars and 13 million US dollars, which includes shipping costs. The offshore figure is a little smaller, and the Jin anchor family accounts for more than 7 million US dollars.

Wang Lin: I co-founded ATA with Mr. Ma Xiaofeng in 1999. We describe ourselves as experts in testing services. In the ten years after its establishment, ATA has been cooperating with the government and industry associations to conduct examination projects, such as the qualification examination for the financial industry and the securities industry. Since last year, ATA has started to develop two market-oriented businesses, B2B and B2C. The business structure has grown from a stand-alone business, that is, relying on government and industry business, into a tripartite relationship. Among them, the B2B business is a "selecting talent" service for enterprises, and the B2C business Including TOEIC, Cambridge Junior English and so on. Because of the good selection of the blue ocean, ATA has avoided vicious competition and has not faced any decent competition except for the local market.

Haining: Jebsen & Co. is a marketing and distribution company that has been operating in Hong Kong and the mainland for 115 years. We mainly have four business units, the luxury business unit, which mainly includes automobiles, watches and clocks, and some fashion products and yachts; the consumer goods business unit, which mainly distributes electronic consumer goods and some photographic equipment; the beverage business unit, which mainly acts as an agent. The products are alcoholic beverages, including beer, wine, spirits and water beverages; there is also an industrial product unit, which is mainly responsible for the import and distribution of mechanical and chemical raw materials to China.

Gold Anchor is the invisible champion in extrusion Qiang, while ATA is the market pioneer and maintainer of its leading position. How do you two see your competitive advantages? What is the competitive strategy?

Li Jie: As far as squeezing Qiang is concerned, it is rude to say that we are the invisible champions. Started in 1987, it accounted for half of the domestic market and 30% of the US market in 1997. It is already a leader.

The formation of competitive advantage has gone through a historical process. This product was first used in developed countries and also produced in developed countries. Later, with the development of international trade, it was gradually transferred to lower-cost production areas. Initially, we relied on the cost advantage, and at the beginning we could only say that the lowest-end products were cheaper than others. Almost in the mid-1990s, the United States and South Korea stopped the production of extruded Qiang, and Taiwan still produces it, but it only produces very high-end and professional products.

The so-called price advantage, the mainland and Taiwan are 30% cheaper than South Korea, and how much cheaper you are than others on the basis of 30% is of little significance to customers. In the late 1980s, due to price competition, some mainland enterprises made shoddy products, and customers purchased from Taiwan. We have never lowered the quality, and the price is so low that it endangers the quality. The competitive advantage is still in quality. We will not change the strategy of ensuring quality. If there is a need for adjustment, it is to look at the changes in the adjustment of the labor market in the future. Are we going to follow the way of Taiwan? Products are becoming more and more high-end products. There is such a trend at present, but we have not given up the production of low-end products.

Wang Lin: Investors often ask me about competitive strategy. As a market pioneer, we have the opportunity to formulate the rules of the game and set standards. On the one hand, setting high standards is good for customers, on the other hand, the high threshold makes it difficult for competitors to enter. I can compare ATA to a hen in its prime that can lay eggs every day. For competitors, they are also faced with the balance of chicken and egg, and they have to go through a 7-year or even 10-year unprofitable cycle.

At the same time, the accumulation of experience in this industry is an important factor for success. The acquisition and transfer of experience in the exam industry is much more complex than in the manufacturing industry. It is worth adding here that ATA's pursuit of technology is not only to meet the needs of the market, but also from the pursuit and love of technology, so it has always maintained a technologically advanced advantage. At present, we are secretly developing platforms and services that will be used in a year or two in order to gain a stronger competitive position in the world.

Invisibility depends on strategic needs

ATA started to promote market-oriented business last year, why is it no longer invisible, and why did it wait ten years to move to the front?

Wang Lin: Marketization is the desire of ATA since it was born, but there is a reason why it only started to do government and industry association projects. In addition to capital, it involves technology platforms and channels. The development of Internet companies requires technology platforms, payment platforms, and logistics platforms. The examination industry in which ATA is located also involves the physical space required for examinations, and this needs to cover the whole country, and cannot be achieved overnight. The test site needs customer support, and when there are customers, it needs a site to serve customers. It is like having hens to lay eggs, and eggs to breed hens. It is necessary to find a balance between chickens and eggs. Since ancient times, Chinese examinations have been mainly government-run, and private examinations are rare. The authority of the examination is based on the authority of the political institutions. Therefore, ATA adopts the strategy of standing behind the examination institution to highlight the authority of the examination itself.

On the other hand, when I was still very weak, I didn't want too many people to be interested in this industry, and I grew up first, so I didn't do any advertising for the first ten years of development. Invisible or not, we come according to the needs of enterprise development. A year ago, I felt that there were sufficient reserves of technology, capital, and experience, and the market was relatively mature, so I began to move towards marketization, and realized the dream that was there at the beginning of its establishment.

I describe ATA's current business situation as "the hall is up, the kitchen is down". In the past ten years, ATA has revolved around the pot. In the future, we will still serve the government and institutions well. At the same time, we will make efforts to the broad market of enterprises and individuals.

As far as B2B is concerned, how does ATA enter the market?

Wang Lin: ATA provides examination services, and examinations cover a wide range of subjects. There is a very large market for enterprises to evaluate and test recruiters, but no one does it. In 1996, Harvard reported that 23% of companies in the European and American markets used assessment and examination as an important reference for hiring employees. By 2007, this figure had risen to 76%. Few Chinese companies do this because they don't have the manpower and material resources to compose a dedicated person to complete it.

Specifically, how to cut into the market. Companies such as 51job and Zhaopin Recruitment have already done advertising and recruiting talents, which is already saturated. But no one does the job of selecting resumes. It is an almost impossible task for human resource managers to read voluminous resumes. Therefore, we have developed a talent selection platform that integrates resume screening, talent assessment, and recruitment examinations. First, the data is unified in a format, and then data mining is implemented to filter by conditions. This platform involved the evaluation of more than 600 positions, and the technical preparation took a lot of time, which is why ATA waited ten years to start the B2B business of talent selection.

As far as suppliers are concerned, selection requires comprehensive and credible content. ATA signs exclusive contracts with authoritative content providers, such as ETS in English. Interestingly, the TOEIC test of ETS is undertaken by ATA, which is both our supplier and our customer, reflecting a high degree of integration of resources. The barriers to entry are high if competitors want to enter.

Is the golden anchor going to the foreground or continuing to be invisible? What's the next step?

Li Jie: In the domestic market, we will try our best to move forward.

Speaking of the next step, we plan to develop some more high-end products on the one hand, continue to complete the product series of extruded Qiang, and on the other hand use the same channels to develop related products.

The product of squeezing Qiang is a tool for home decoration after all. It is the same customer as the roller frame and roller brush for painting, and the technology used is still plastic and hardware. In product design, there are mature and strict standards abroad, and our technical staff develops according to the standards. Therefore, this product is capital-intensive and technology-intensive, and the threshold for these two points is relatively high.

We will try to set up factories in inland areas from next year to the year after, and make good use of the cost advantage of human resources to gradually transfer production capacity from Tianjin to Hebei, Shandong and inland areas. Our processes and technologies are still very easy to transfer. of. After 5-10 years, we will make high-end products in China, and low-end products may be made in Vietnam, depending on the development situation at that time.

How do the hidden champions come to the fore?

From the invisible champion to the front desk, which involves the establishment of the brand, and also involves the marketing at a larger level, how to carry out this work?

Li Jie: We have accumulated overseas customers little by little over 23 years to establish a reputation and gain market recognition. We cannot spend another 23 years in the domestic market. We must find some shortcuts, such as investing in network construction and brand image construction. We are still learning this. After all, the rules of the game in the domestic market are different from those of export. Export is equivalent to wholesale, and domestically we have to face the retail market.

Wang Lin: Brand marketing generally includes two aspects, the company and the product, which should be the main one? ATA is now based on product brand marketing, supplemented by the company's brand marketing. We believe that marketing strategies should be adapted to the stage of development.

Jebsen is a company engaged in marketing and distribution. Will its development encounter bottlenecks in the future, the brands it represents have encountered bottlenecks, or the market is saturated, will it move from the backstage to the frontstage at that time?

Haining: I think it will take a long time, we think it will take a long time for China to see such a situation - the consumer market is saturated, the brand is saturated. I don't think I will see this day in my lifetime.

Other mature markets in the world, such as the Western European market and the US market, even though the consumer market is relatively saturated, it still grows, which is mainly driven by innovation, by the introduction of new products and the emergence of new brands. People have this instinct to buy new brands and new products, so I think it will be a very long time before we see this kind of relatively steady growth in China.

Another very interesting thing is that China now has its own brands. In the future, these brands will not only be domestic but also international, which will also have a profound impact on the future.

How fast is Jebsen currently growing in China? What advice do you have for Chinese domestic brands that will go international in the future?

Haining: We have maintained an annual growth rate of 17% in China for the past five years, and we believe this growth rate will continue. Not all brands are growing at the same rate, but overall our business is growing at that rate.

About the internationalization of Chinese brands and local brands, it is just like what Japanese companies asked themselves 50 years ago, and it is also the same as what Korean companies asked themselves 20 years ago. Quality is one of the most critical issues, and we must pay attention to quality. The low-price strategy brought about by the labor price advantage is very interesting and can be attractive for a while, but in the end it is the quality of the product that wins.

I think Chinese brands must focus on quality and deliver on their commitment to quality in order to succeed in the world. We've seen what's happened to Toyota recently, Toyota is such a quality-focused company with these issues, and we'd really like to believe they'll get through this, but this thing hit them hard.

Expert Comments

Xu Zhixian: Former Microsoft Asia-Pacific Sales Director and Senior Marketing Expert

The Internet era accelerates the development of enterprises. In the past, it may take a hundred years for a company to become large, but in the Internet era it may only take ten years, or even five years. There are several ways for enterprises to develop. They can rely on the introduction of external investors, such as venture capital or private equity, but at the cost of diluting equity; they can also rely on themselves to grow with the help of technology platforms, but it is relatively slow; the third is a combination of the two.

Whether to be an invisible champion or to be a champion in the foreground is not only a matter of the development stage, but also related to the business model and the products of the enterprise. Sometimes it's right not to do brand marketing. If Jinan only does export business, it doesn't need to go to the front desk. If ATA does not do B2B and B2C business, but only serves as a service provider for government and industry examinations, it will always be in the background and must be in the background. In order for an enterprise to develop in a market-oriented manner, it must go to the foreground.