Update the export business chain

In 2002, it achieved a total sales revenue of RMB 15.2 billion, and Midea's position in the domestic home appliance market is unquestionable. However, the fierce competition in the domestic home appliance industry made Midea feel the difficulty of continuing to grow as a giant. Higher profits in international markets are another temptation. Mr. Chen Tianwen, general manager of the overseas marketing company of the fan business department of Midea Group, calculated an account: the direct cost of international marketing is 2.5%, while the domestic market reaches about 12%, not to mention the unavoidable problems such as triangular debt and slow sales. For the same sales, the profit contributed by exports is several times that of domestic sales.

In the past three years, Midea's exports have maintained an annual growth rate of more than 50%. President He Xiangjian is ambitious, hoping that the group's total export volume in 2005 will reach 1.5 billion US dollars. Calculated in this way, on the basis of the export value of 340 million US dollars in 2002, the annual export growth rate must be maintained at about 70% within three years. In 2002, Midea's exports only accounted for 18% of the total sales revenue, so there is great potential to be tapped.

And Midea is ready for a big export breakthrough. In the words of Midea people, it is realizing the transformation from "marketing" to "operation" (see the sidebar "Midea's Export "Four Parts"). In fact, Midea has realized the renewal of the export business chain from the past product-oriented to the current customer-oriented.

Do things according to the chain

Midea has made many mistakes in exporting. Among them, the most serious and common problem is that the export business is carried out entirely by the subjective assumptions of the leaders, lacking comprehensive and thorough planning, and the lack of thorough planning. Feasibility research, returns, indemnities, or air transportation all happen from time to time. The failure of the company's partnership with Kmart a few years ago was a clear example of the immediate trigger for export process reengineering.

At the time, Kmart was bidding for 210,000 microwave ovens, with deliveries beginning in August of that year. Midea is eager to acquire the project, hoping to enter the US market. In April, with only one drawing in hand, Midea rushed to participate in the bidding, with a total contract value of 7 million US dollars. But the day the United States won the bid is destined to be the time when it failed.

Since Midea had only made microwave ovens for more than a year at that time, although it had been in the European market, it knew little about the requirements and specifications of the United States. Had to temporarily buy one for analysis. However, due to lack of experience, the technical specifications have not met the buyer's requirements. By the end of August, we had to bite the bullet and start production. As a result, the delivered products could not meet the requirements of the other party. The quality and delivery time of the second and third batches could not meet the standard, and finally had to accept compensation. The direct loss of the project reached 400,000 US dollars, and the spare parts were digested more than two years later, and the market reputation was greatly affected. The first foray into the United States ended in failure.

The failure prompted Midea to think hard and think that the non-standard export business process was an important reason, so it was determined to carry out transformation and establish a set of standard business operation process and decision-making mechanism, which was implemented by the method of target management and project management.

Today's export business is implemented in strict accordance with the standard project process of project establishment, R&D report, financial analysis, market strategy and so on. Specifically, according to the needs of overseas orders or joint development, the business department establishes the project by the technical support department, the R&D personnel submit the R&D feasibility report and time plan according to the project establishment report, and the financial department conducts financial analysis. Led by the general manager and regional manager, everyone focused on the summary report, and discussed customer reputation, risk analysis, profit indicators and competitive strategies, and finally made a decision.

Information disclosure is a prerequisite for ensuring team members share. Project initiation reports or market expansion reports are all presented in written form, so that everyone can refer to them at any time, and welcome to put forward their own opinions. The implementation of the project is completed in strict accordance with the business process and time plan, and the general manager strictly monitors it. With this standard operation process and strict management, the export team can judge the market in advance.

In Midea, the factory requires 15 days in advance to place an order. Based on its own judgment, the export department can submit the overall production plan to the factory one year in advance, and then adjust it according to the specific situation. Basically, it can be implemented three months in advance. Order. In this way, the problems of product quality, delivery time and research and development are solved. Due to the perfect project management system, the export of the fan business unit in the first half of 2003 increased by 40% compared with the previous year, and so far there has been no complaint about the delay in delivery.

In terms of research and development, the general manager needs to participate in the design review of the product proposal, and submit a design process report every week and a monthly report every month. Under such a standardized operation, it is implemented layer by layer, step by step, clear responsibility, busy but not chaotic. This standard process control effectively controls export risks, accelerates the response speed, and ensures the continuous growth of exports. In 2002, Midea's exports increased by 70% to a record $340 million.

In terms of financial management, the export business is independently accounted for to reflect the export profitability. In terms of the operating income of the fan business unit, export and domestic sales account for half, but in terms of personnel and expenses, the cost of export is much smaller, so the profit is greater. In the past, the export and domestic sales were mixed together, which breeds the internal mentality of big pot rice. Independent accounting can better understand the feasibility of a single project. For example, some orders that were never dared to be accepted in the past are now profitable by calculating the cost of export, which is also very beneficial for decision-making.

Identify people by chain

There are more than 50 people in the overseas marketing department of the fan business department, half of which are R&D teams, more than 10 business personnel, and the rest are management and technical support, responsible for documents, shipping, etc. In most companies, R&D personnel are generally co-located with manufacturing. Incorporating the R&D team into the management of the export department is a pioneering initiative of Midea. It has been implemented since 2001 and has now been promoted across the group. The same goes for finances. There are more than 30 financial personnel in the Fan Division, two of whom are dedicated to exporting services. The direct effect of this is that R&D personnel can focus more on overseas markets, and financial personnel can conduct financial management from the perspective of exports, which is more conducive to evaluating the marketing of export departments. The reform of institutional settings shortens the time for customer feedback and improves the adaptability of exports.

Chen Tianwen said, in the past, if a customer came up with a concept, the company from the export business department to marketing, project approval, finance, R&D to manufacturing, across different departments, the communication efficiency was greatly reduced, and the whole process took a year. Now it only takes half a year on average, and small changes can be completed in 3 months. Faster response and more frequent introduction of new products can often gain the upper hand in the international market.