Big brands can’t shrink

In the wave of China's economic development, large enterprises play a vital role. This article will explore the mission and responsibility of large enterprises in the current economic environment, and how they can lead industry progress and achieve sustainable development through technological innovation and model innovation.

The economic development of a country cannot be separated from the promotion of large enterprises. The prosperity and progress of an industry cannot be separated from the innovation and promotion of large enterprises.

The reason why our country's economy has developed so rapidly in recent years is precisely because of the innovative development and promotion of a number of excellent large enterprises.

The reason why China has high-speed rail is due to the innovation driven by a group of excellent companies such as CRRC.

The reason why China's home appliance industry can surpass other countries in the world is that a group of excellent home appliance companies such as Midea and Haier have continuously innovated in technology and models, thus driving China's home appliance industry to achieve global transcendence.

If China's economy and consumer goods industry want to continue to maintain rapid development and surpass other countries in the world, they must continue to rely on the continuous innovation and development of large enterprises and big brands.

In the overall economic and industry development, large enterprises and big brands play a very important role in leading innovation. Only large enterprises can take up the banner of continuous innovation and lead the industry and the Chinese economy to maintain rapid development.

In recent years, "involution" has become a keyword that industry insiders often talk about.

Why does "volume" appear?

From a certain perspective, the leading role, mission and responsibility of innovation of large enterprises and big brands have weakened and disappeared. The innovation ability of large enterprises and big brands has declined, and large enterprises and small enterprises are "competing on the same stage". In fact, large enterprises and big brands are not as innovative as small enterprises and small brands. Instead, large enterprises and big brands are running behind small enterprises.

In general, some large enterprises and brands have been “living off their past success” in recent years. Their products are still mainly based on products from 30 years ago to enter the market; their models are still based on traditional marketing models that have been around for decades.

In recent years, some industry insiders have coined a new term, "market shrinkage." I strongly disagree with this term.

What is "market shrinkage": if people eat less instant noodles, the market will decline, which is called market shrinkage; if people drink less industrial "beer", it is called market shrinkage, and so on.

I would like to ask: Chinese consumers have been eating braised beef noodles without any beef for 30 years. Do you want Chinese consumers to eat braised beef noodles without any beef for another 30 years? Chinese consumers who want to drink real beer have "endured" drinking beer water as beer for decades. Shouldn't they drink real wheat beer today?

Isn’t this the so-called “market shrinkage” that should happen?

In recent years, a rather strange marketing phenomenon has emerged: "do it all over again", resulting in today's AD calcium milk and the popularity of various old-brand sodas.

It’s not that old brands shouldn’t be popular, but today, if we take out products from 30 years ago and use some marketing methods to give them to consumers again, so that consumers can return to “history”, is this a kind of progress? Or regression? Is this just considering today? Or is it really looking to the future?

China's modern consumer goods industry started to develop by learning from some developed countries such as Europe and the United States. In recent years, most of our consumer goods companies have basically adopted the "take-it-as-it-is" approach. Products: whatever is popular in foreign supermarkets, we import; equipment and technology: whatever good equipment is available abroad, we buy it back; marketing: whatever good models are available abroad, we copy them.

However, today's Chinese consumer goods industry is no longer the same as it was thirty years ago, and today's Chinese consumer goods market is no longer the same as it was thirty years ago.

If we still adopt a take-it-all approach, rely on buying or copying products and models from abroad, it will no longer be able to meet the development needs of China's consumer goods industry.

Today's Chinese consumer goods market must find a new model and path for the development of the Chinese consumer goods industry by relying on independent product innovation, key core technology innovation, digital model innovation, and marketing model innovation that conforms to the actual situation of the Chinese market.

In this transformation process of innovative development, enterprises are the protagonists, and the government should play an important role in leading, supporting, supporting and nurturing.

In this process of innovative development, large enterprises and big brands shoulder a very, very important historical mission and responsibility for change.

Large enterprises and big brands cannot "shrink their heads", be passive, or wait and see. They must actively participate and shoulder the innovation responsibilities that a large enterprise or a big brand should shoulder, and play the important role in promoting the industry that a large enterprise or a big brand should play.

If China's consumer goods industry wants to lead the world in the future, it must rely on the innovation and development of large enterprises and big brands. If China's manufacturing industry, including fast-moving consumer goods and food industries, wants to lead the world in the future, it must rely on core technologies, rather than the current "marketing" thinking.

—Rely on core technologies to promote product innovation:

If China's consumer goods industry and food industry want to develop further, the only way out is to rely on core technologies to promote continuous product innovation.

China is currently the world's largest consumer goods manufacturing country, but it cannot yet be called the world's largest consumer goods manufacturing technology country.

China's current technological innovation capabilities have laid the foundation for China to become a country with the highest level of consumer goods manufacturing technology. China is already capable of becoming a country with the highest level of consumer goods manufacturing technology.

The key is that we need a group of large enterprises and big brands to completely change some of the current traditional thinking. We must really calm down, recognize the current market reality, consider the future market development direction, and start from the innovative development of core technology in R&D products. We must actually make breakthroughs in core and key technologies, so that we can stand at a new height in the future global industry development and changes.

For example, raw material technology, raw material extraction technology, freezing and preservation technology, new processing technology, etc., also includes how to use new high-tech means to further explore the excellent products in thousands of years of Chinese traditional cultural history and promote them to the world.

Instead of continuing to focus the so-called "innovation" on the innovation of traditional models, traditional processes, traditional products, and traditional standards.

Recently, I saw Shandong TV report on Haier's innovative fresh-keeping refrigerator. The manufacturing standards of traditional refrigerators are set by Europe, focusing on energy saving and noise reduction. Haier's fresh-keeping refrigerator breaks through the manufacturing standards of traditional refrigerators and incorporates fresh-keeping, a standard that is more in line with current consumer needs, into the scope of innovation. It has produced a 14-day fresh-keeping refrigerator, which is very popular in the market.

Product innovation, especially product innovation based on core technology changes, is the main way out for the future development of large enterprises and big brands. It is also the mission that large enterprises and big brands must undertake.

—Technological innovation of “intelligent transformation and digital transformation”:

China has become a digital society, and China's manufacturing industry is rapidly entering a new era of intelligent manufacturing.

According to relevant reports, there are currently 153 lighthouse factories in the world, 62 of which are located in China. Among them, there are consumer goods companies such as Midea and Haier, as well as fast-moving consumer goods companies such as Tsingtao Beer. However, the number of fast-moving consumer goods companies is not high.

The lighthouse factory represents the world's most advanced intelligent and digital manufacturing capabilities.

The future direction of China's manufacturing transformation is "intelligent transformation and digital transformation".

However, currently in the consumer goods industry, most companies have not yet found a sense of intelligent transformation and digital transformation, let alone a direction.

There are many companies that regard turning their bosses into internet celebrities as digital transformation, opening an e-commerce store as omni-channel transformation, and live streaming on Douyin as a trend. They have not really studied what digital transformation is and how companies should achieve intelligent transformation. In particular, they have seized the major opportunity of large-scale equipment renewal in the country to promote the "intelligent transformation and digital transformation" of companies and push their manufacturing capabilities to a new level.

In this regard, most companies, especially large companies and big brands, really need to learn from Midea's comprehensive digital transformation practices and Haier's industrial Internet transformation.

If an enterprise has not yet found the feeling of intelligent transformation and digital transformation, cannot find its own direction of intelligent transformation and digital transformation, or is even still hesitating and waiting, it will surely be eliminated by this round of technological transformation and upgrading.

—Promote reconstructive model innovation:

Currently, the consumer goods industry is facing a period of transformation and restructuring of models driven by market changes and technology.

Model reconstruction is the main feature of this round of transformation.

Model reconstruction means breaking the traditional marketing model, business operation model, and organizational management model, and reconstructing new marketing models, organizational models, and business operation models that adapt to the current changes in the market environment and technological changes.

Whether it is Haier's "people-oriented, user-pays" model, or Midea's "T+3, one-stop shopping" model, they all represent the subversion and reconstruction of traditional corporate marketing models, organizational models, and operating models.

The key to model change lies in the boss, the focus lies in the boss, and the responsibility lies in the boss.

Judging from the innovative practices of Haier, Midea and other companies, they have achieved rapid transformation and development through model changes.

Midea Group started to promote the T+3 and one-package reform in 2014, and after five years, it has achieved important results.

By 2019, the number of warehouses of the group has been reduced from 2,244 to 140, a decrease of 94%; the warehouse area has been reduced from 5.52 million square meters to 1.66 million square meters, a decrease of 70%;

The overall order cycle dropped from 45 days to 12 days, a decrease of 56%;

The inventory turnover days decreased from 51 days to 35 days, a decrease of 31%; the inventory capital ratio decreased from 17.6% to 11.2%, a decrease of 6.4 percentage points.

From the above data, we can clearly see that the T+3 and one-stop shopping model changes have a significant effect on companies reducing marketing costs.

What we should see more is that the promotion of one product has driven the faster development of Midea Group. From 2015 to 2019, the group's operating income increased from 139.35 billion yuan to 279.38 billion yuan, and corporate profits increased from 13.62 billion yuan to 25.28 billion yuan.

The current period is an important period of industry transformation. In this special period, large enterprises and big brands should play an important role in leading the transformation and development of the industry. Only in this way can we promote better transformation and development of enterprises and industries.