Seizing the Opportunities of the Post-Crisis Era

On September 15, the "BMW 5 Series "CEConline" Business Pioneer Forum" came to an end in Beijing. Previously, the forum has been successfully held in 13 cities across the country. The entire series of forums aims to help Chinese export-oriented enterprises seize opportunities in the post-crisis era, attracting nearly 3,000 export enterprise managers.

CRAIG PEPPLES, COO of Global Sources and publisher of "CEConline" magazine, co-organizer of the forum, brought good news to the attendees: "Buyers are back". In August 2010, China's total export value increased by 34.4% year-on-year, achieving a strong rebound; with the recovery of the global economy, orders from the US and EU markets also began to pick up. For Chinese suppliers in the post-crisis era, it is crucial to learn how to balance traditional and emerging markets and seize opportunities for recovery.

Mr. Pei said: "How Chinese suppliers balance traditional and emerging markets in their future export strategies must weigh their advantages according to their own actual conditions, and effectively take into account both traditional and emerging markets. The crisis era tells us that eggs cannot be placed on the shelf. In the same basket, it is imperative to develop emerging markets. Suppliers must analyze the changes and differences in the consumption behavior of buyers in emerging markets and traditional markets when formulating export strategies, weigh the pros and cons, and take measures according to local conditions. It has its own reality and can give full play to its own advantages.”

Dr. Dai Lei, Senior Vice President of Marketing of BMW Brilliance Automotive Co., Ltd., the co-organizer of the forum, said: “In 2009, we invited economists, government officials and well-known entrepreneurs to discuss and analyze the Some companies in trouble have provided experience. This year, we will join hands with Global Sources again, hoping to help everyone build confidence, seize business opportunities, and create more brilliant results.” Director of the Institute of Industrial Economics, Chinese Academy of Social Sciences, President of China Business News, Mr. Jin Bei, the doctoral supervisor, delivered a keynote speech on "The Direction of China's Industrial Competitiveness Improvement after the Financial Crisis". The participants conducted in-depth discussions on the theme of "Industrial Transformation and Enterprise Value Chain Upgrade".

Unique Competitive Strategy

Mr. Pei Kewei made a keynote speech on "Post-crisis era, launching new export strategies" at the forum on September 15th, and shared with the participants that Global Sources carried out at the beginning of this year. In a supplier survey, 83% of Chinese suppliers surveyed were confident in their 2010 export volumes.

Buyers are back, but buyers are more discerning. In terms of quality, payment terms, the quality requirements of the product itself, all aspects are improving. Although the economy has recovered, consumers in Europe and the United States have become more cautious in their purchases than before, and they have begun to consider product durability, corporate social responsibility, and more. Accordingly, exporters must meet these demands of consumers. On the other hand, buyers from emerging market countries showed different needs from those from European and American markets. Faced with such an environment, coupled with the appreciation of the RMB, rising labor costs, rising raw materials and other factors, China is no longer the cheapest production base in the world, and companies need to find unique competitive strategies.

Mr. Pei shared some thoughts from four aspects: operation mode, target market, target buyers and promotion. In terms of operations, suppliers should not only reduce costs through cost control, but also improve efficiency itself. Here, Mr. Pei shared the survey results of "China's second-tier cities with the most development potential" conducted by "CEConline" magazine and Beijing New Generation Market Monitoring Agency in August. In the face of rising operating costs, 25.6% of the The interviewed managers indicated that they have or planned to relocate their business activities to second-tier cities in order to enhance their competitiveness. The most popular target migration cities are Suzhou, Hangzhou and Chengdu, in that order.

On the market side, a very important lesson from the financial crisis is that markets need to be diversified and not too dependent on a single market. Data from the IMF shows that the global economic development, the average annual growth rate of economic output in various regions is 3.9%, China is a double-digit, the traditional European and American markets are relatively slow, 2.1%, while the emerging markets such as Brazil and Eastern Europe are on average. An increase of 6% represents an opportunity to diversify the market. However, this is not to say that the traditional market should be completely abandoned. In fact, China's exports to emerging markets only account for 15% of the global export share. The key to a mature target market strategy is to find the balance point of market diversification, while targeting the different needs of different markets. For example, traditional buyers pay more attention to overall competitiveness, overall quality, and R&D capabilities. They pay more attention to cost performance, while emerging markets may prefer price.

The third strategy Mr. Pei offers is to actively target one type of buyer. This strategy is related to the rule of 80 and 20. This strategy hopes that suppliers can target a few more influential buyers to enhance their competitive advantage.

The fourth strategy is to adopt a multi-channel marketing approach. The advantage of multi-channel is that it can cooperate with each stage of the buyer's procurement process. Mr. Pei concluded, "During the nearly 40-year development history of Global Sources, the company has experienced several economic crises, but it has continued to grow, and has helped countless export companies regenerate from adversity and keep up with the momentum of economic recovery. With the company's leadership in the B2B industry With our nearly 30 years of experience rooted in China, we will definitely be able to work with our suppliers to seize opportunities.”

Why innovation is so difficult

On innovation, Dr. Liu Ningrong, Associate Dean of SPACE School of the University of Hong Kong and Director of China Business School He gave a wonderful speech at the forum at Shenyang Station on September 1st. Mr. Liu has worked as a news reporter and business consultant in Washington and New York, and is currently a guest and commentator for Phoenix TV and the BBC, and a contributing writer for Asia Weekly.

China has replaced Japan as the second largest economy after the United States, but an economic power is not the same as an economic power. According to a survey by the World Economic Forum in 2009, China ranks only 48th in the world in terms of innovation, which is quite different from the second largest world economy to which China currently belongs.

Before discussing the reasons for the lack of innovation in China, Dr. Liu first analyzed the relationship between IPHONE's innovation and its commercial success. Until 2009, in the past 8 years, IPHONE's revenue has increased by 400%, profit has increased by 650%, and its market share has increased by 20 times. The innovation of IPHONE is that it combines the traditional things. Apple doesn't just offer products, it offers exciting experiences. The real breakthrough of enterprises must rely on fantastic products, and what Apple provides is fantastic products.

Why do Chinese companies lack innovation capabilities? The first is based on your own culture. Dr. Liu believes that Chinese education has a tradition of attaching importance to memorization and should not challenge teachers. This education system started with the imperial examination system and has continued to this day. Because it is impossible to challenge authority and have curiosity, Chinese companies lack innovation. In contrast, Chinese students show a strong ability to innovate in other cultures. Half of the talents in technology in the United States every year are Chinese. These people are very innovative after joining the company, but when they return to the Chinese company, their innovative ability is completely lost. So the lack of innovation is not only a problem of Chinese education, but also a problem of China's own enterprise system. China's education system and system do not encourage innovative thinking, which is the foundation of corporate innovation. Therefore, the first reason for the lack of innovation ability of Chinese enterprises is that there is no innovation culture.

The second reason is lack of motivation. This is related to China's economic growth model and environment, and the Chinese are particularly afraid of taking risks. According to the survey, basically only 10% of the innovations in the world can actually realize value in the end, and most of the innovations and inventions are thrown into the garbage heap. In addition, the Chinese have a tendency to judge heroes based on success or failure, so people are reluctant to take risks. In addition, China lacks protection of intellectual property rights.

According to the 2010 Global Innovation Survey, there are two real constraints on innovation. The first is that companies are often caught up in day-to-day affairs and lose sight of their main goals; the second is lack of money. In fact, China's R&D investment in GDP is very low, only 1.5%, while Japan exceeds 3%, South Korea also exceeds 3%, and although the United States is less than 3%, their overall GDP is very high. China's R&D investment is not even comparable to that of Finland and Sweden in northern Europe, nor is it comparable to that of Israel.

Dr. Liu also analyzed the innovation dilemmas faced by companies, which are not only faced by Chinese companies, but also by foreign companies. They include: innovation is time-consuming and labor-intensive; lack of teamwork within the organization; lack of appropriate metrics to evaluate the entire process; lack of a better way to understand consumer needs. Dr. Liu believes that there is a more obvious problem of Chinese enterprises, that is, the lack of long-term goals, especially in state-owned enterprises, the setting of goals is as short-term as the tenure of leaders.

The reason why the lack of teamwork spirit has an impact on innovation, Dr. Liu believes, is that innovation must be cross-disciplinary cooperation, sometimes from the outside, not just from the team. He believes that many Chinese enterprises are still closed, not open. Liu cited the example of Procter & Gamble. P&G has 8,500 scientific researchers and 28 R&D centers, but 40% of its innovation does not come from within the company, but from outside the company. Therefore, innovation requires not only cross-departmental cooperation, but also cross-enterprise cooperation, which Chinese enterprises do not have.

Advice for Enterprise Managers

In the on-site discussion session of the forum on September 15, Mr. Li Zhizhong, Chairman of Beijing Litejia Stationery Co., Ltd., and Ms. Lu Zhimin, Vice President of Foreign Trade of Beijing Chengdong International Camp Integrated Housing Co., Ltd. Experience sharing, and work with experts to offer suggestions for export enterprises.

Beijing Litejia Stationery was founded by Mr. Li in 1997. From trading and agency of stationery products, to opening its own factory in 2005, it has realized the transformation of the integration of production, trade and export. Beijing Chengdong Housing is a company that produces integrated and equipped dismantled housing.

Mr. Li noticed several changes in buyers this year. The first is that the order volume has become smaller, and new customers will have a lot of temptation to place orders. On the other hand, the environmental protection and safety requirements of products are higher, and it will be clearly pointed out that the materials should not contain mercury and chromium. The third aspect is the requirement of corporate social responsibility. Ms. Lu said that she clearly felt that more and more buyers were purchasing rationally. In the past, some middlemen and traders were also interested in Chengdong's products and actively asked for cooperation. Now these middlemen and traders have withdrawn from the market. Therefore, Chengdong began to contact more local engineering companies and conducted a lot of technical discussions in the early stage. For the rational needs of buyers, Chengdong implements higher standards in terms of product quality, and requires that all tests and trial installations must be met before leaving the factory in some key technical links.

In terms of marketing strategy, Mr. Li first diagnoses his own business, understands the characteristics of his own business and products, and understands how he is different from others. At the same time, align your business with the megatrends of the market. Ms. Lu shared her practice of using online resources and B2B platforms to understand buyers and competitors. It is through multi-channel screening that Chengdong finds customers who truly belong to us and who match our products.

The audience asked how to deal with the pressure of price increase - the price of raw materials is rising but customers are not willing to accept the price increase. Mr. Li suggested that we should not only look at this order, but also look at the impact of this order on the enterprise. If it is an important customer, it is best for the leader of the company to come forward and communicate with the customer, why the price has risen, where the price has risen, and explain to the customer with reason and emotion. Enterprises should also look at their competitors. If others can do it at that price, they should think about why they can't do it themselves. If the price is reasonable and the customer is still unacceptable after communication, Mr. Li thinks he can give up the customer. Ms. Lu said she agreed to see if the customer was a key or important customer. If the customer comes from an area where you will invest heavily in the future, it is necessary to spend some effort on this customer. If the regional market develops in the wrong way, the products produced in Vietnam may be cheaper than you, so you need to look for differentiation in other markets, move to other regions for development, and make some adjustments.

Peke interacts with guests on competitive strategies in the post-crisis era.

Liu Ningrong: China ranks only 48th in the world in terms of innovation, which is quite far from the second largest economy in the world to which China currently belongs.

The series of forums attracted a total of 3,000 managers.