"M&A + Equity + Equity" The Way of Expansion of Colorful Pass

2009 was the most serious year of the financial crisis. Under the heavy pressure of rising raw material prices, rising human resource costs and sluggish external demand, China's manufacturing industry, especially export-oriented small and medium-sized private enterprises, encountered an unprecedented severe situation . However, Yang Xiuquan, chairman of Shenzhen Qicaitong Co., Ltd., went against the market and entered the manufacturing industry, realizing the transformation from a trader to an integrated industry and trade.

Retaining talents with equity

Qicaitong Silicon Plastic Technology Co., Ltd. is a manufacturer specializing in the production and sales of mobile phone accessories in the Pearl River Delta. It is a traditional manufacturing enterprise. However, this company has maintained an average annual revenue growth rate of more than 25% since its official establishment in 2009. It has expanded to 5 branches and has an average daily production capacity of 400,000 sets of mobile phone accessories. In the general environment of sluggish growth in the manufacturing industry after the global financial crisis, it is very difficult to achieve such a result.

Interactive topic: Do you yearn for "body stock system"?

It took 14 years for Yang Xiuquan, who was from the grassroots, to start from the wholesale and retail of mobile phone cases and other accessories, to setting up his own factory in 2009, and now developing into five branches. The transition from wholesaler to manufacturing is not easy, and the thinking modes of sales and manufacturing are completely different, but Yang Xiuquan has come step by step.

He said that this was due to the fact that he used the right people, "Because I don't know much about manufacturing, I introduced two shareholders when I set up the factory as the specific executors of daily operation and management. Shareholders are all external industry elites." When asked if he would worry about the loyalty of external executives and shareholders, Yang Xiuquan said that he has several principles as the criteria for selecting and employing people: First, the goal is the same, and the core is selected. Executives and shareholders must have the same goal; the second is ideology and morality, and those with flaws should be vetoed by one vote and resolutely not to cooperate; the third is open-minded, only with an open mind can long-term cooperation.

Yang Xiuquan had a taste of the success of the initial establishment of a factory through the investment of core talents, and it is logical to follow this model for subsequent expansion. He acquired the second production plant to expand production capacity. He decided to become a major shareholder after a long-term contact and inspection of a well-run factory with strong technical management, but suffering from insufficient funds. After becoming a shareholder, he let the original boss who was good at technology continue to hold a certain share, fully responsible for the management of the factory, and gave a certain "share" to the factory director responsible for the execution of the factory. The so-called body stock, according to Yang Xiuquan's words, is "the people are, the equity is there; the people go, the equity is left". This retains the core management team and achieves effective incentives.

"Body shares" actually appeared in Shanxi merchants in the Ming and Qing dynasties. In the TV series "Qiao's Courtyard", after understanding the reason why the "running street" guy (the grass-roots business representative) Ma Xun wanted to resign, the owner Qiao Zhiyong, in order to motivate the employees to work hard, gave all the apprentices in the business to the apprentices. Each person tops 1% of the body stock, and increases with the age. In this way, every year at the end of the year, the guys can receive tens of taels or even hundreds of taels of silver in dividends, changing from employees to "minority shareholders", which is a typical "equity incentive". The body stock system is known as "the most advanced material incentive in the feudal era". This system also has reference significance for current enterprises, especially small and medium-sized enterprises.

Yang Xiuquan used the "body stock system" very effectively. After successfully setting up a manufacturing plant, he found the right time to extend to the upstream of the industrial chain and acquired two injection and mold companies. The original shareholders of these two companies were all absorbed by Yang Xiuquan, while the factory manager in charge of front-line management received 5 to 10% of the shares. Yang Xiuquan asked them to continue to be responsible for most of the production and management of the factory, and he was only responsible for the formulation of the general direction. This model enables Qicaitong not only to acquire plant equipment and upstream and downstream integration capabilities, but more importantly, to acquire core talents in this field, enabling his company to expand into new business segments smoothly and rapidly.

Although Yang Xiuquan's equity incentives do not involve as wide a range of employees as high-tech start-ups, he has set a clear "incentive track" - "employees - grassroots management - executives - dry shares - shareholder". The number of factory managers who have obtained "skilled shares" are all promoted from the grassroots level, which gives ordinary employees a clear incentive signal and makes employees more confident in their career future.

Centralization and decentralization

Through equity incentives, core talents can have a sense of belonging and ownership of the company. This is only one aspect of the problem. How to manage the distribution of management power in enterprises It is also the key to core talent incentives. Because the value realization standard of core talents is often not only material money, but also their consideration of whether their career ideals can be realized and whether their personal power and status can be respected are equally important.

Yang Xiuquan also has his own thinking in this regard. As the company's top decision maker, he is very subtle about "taking power" and "delegating power". He cited the rise and fall of the Mongolian Empire as an example: the rise of Mongolia lies in loyalty to Genghis Khan, and the division of the four sons after the death of Genghis Khan is due to the lack of a unified center. "One idea is loyal, and two ideas are troubled," Yang Xiuquan commented. Therefore, he believes that the division of labor between the boss and the core executives should be that the boss makes the strategy, and the executive is responsible for the implementation of the strategy. The boss has absolute authority in the general policy, and the executive has full autonomy in specific implementation.

On the day of the interview, Yang Xiuquan was about to hold the annual summary meeting. At the meeting, he announced the introduction of a new performance appraisal mechanism, taking both the pass rate and the number of qualified products as the key indicators of employee performance appraisal. This requires re-evaluation of employees' basic salary and piece-rate wages, and the formulation of new rules. Yang Xiuquan said that he would only make directional decisions, and he fully trusted the general manager of the branch and other executives to let them do it.

This example is the epitome of Yang Xiuquan's leadership model of core executives. He emphasized that the boss's role is to "position" rather than "offside", and after making sure that the line is correct, let go and let the subordinates play the initiative. The advantage of this decentralized leadership is that the enthusiasm of subordinates is easy to be stimulated, but the disadvantages are also obvious, which can easily lead to insufficient incentives, or too much empowerment, resulting in out of control of management. Yang Xiuquan's solution is to combine vertical incentives with horizontal competition.

No PK, no vitality

In Yang Xiuquan's view, first of all, these executives are shareholders or "stock" holders, and the company's performance is closely related to them. This is the most fundamental and effective incentive mechanism.

Secondly, the entire Qicaitong company advocates "PK culture". Introducing competition within the company, according to Yang Xiuquan's words, is "a donkey or a horse, just pull it out for a walk and you will know." Although it may bring a lot of pressure to employees, it is very effective in improving efficiency.

Although the two production plants of Qicaitong are in the same factory area, they are two completely independent accounting company entities. 's order. The business department is also divided into several business groups to develop the market independently. This PK model runs through all management levels. In the production process at the grass-roots level, how many products each person makes every day, what the ranking is, and what rewards are clearly marked on the Kanban board. Yang Xiuquan suggested that all manufacturing factories with more than 100 employees should be split up. Only by splitting can there be competition and efficiency.

Yang Xiuquan, a grassroots entrepreneur, is not extensive in business management. He actively participated in the EMBA course of a famous business school, so that his management thinking will not fall behind. Although he can't carry out large-scale equity incentives like high-growth start-ups, his model of "M&A + equity + stock" is worth learning from; Yang Xiuquan's sense of proportion is also in the empowerment and management of core employees. Ingenious; and the way to encourage competition within the enterprise can also be used for reference by other manufacturers.