Xu Xiaonian: Enterprise transformation needs persistent stupid people, not smart people
Xu Xiaonian: Enterprise transformation needs persistent stupid people, do not need smart people
The following is a transcript of Xu Xiaonian's speech, written by entrepreneur & Editor:
Good morning, everyone.
I am very glad to be here to have an exchange with you. What I will talk about today is two parts, one is macro-economy and the other is micro-economy.
Generally speaking, there is no drama at the macro level, but I hope there will be a great deal at the micro level. In May this year, the People's Daily published an interview with an authoritative person who said that the future trend of China's economy is L-shaped. "L-shaped" means the economy is stuck at the bottom for a long time, with low growth. I personally believe that this L-shaped judgment is in line with reality, and I also strongly support it. The L-shaped judgment is directly related to the "new normal" declared by the central government some time ago. In fact, behind both statements is an economic analysis, which is that after 30 years of economic growth, we will face a long-term period of low growth in the future. For this, businesses must be well prepared.
Will China's economy enter the L-shape? In the L-shape, how long will it stay? How can you break out of the L-shape and enter a new phase of growth? That's what I'm going to talk about today.
A few prescriptions for supply-side reform What should the real supply side do? I have prescribed several prescriptions. The first prescription is to cut taxes across the board, not structurally. In the past, structural tax cuts were increased and decreased, and actually increased more than they were reduced. Across-the-board tax cuts not only burden enterprises, but also leave more resources for enterprises and the market to allocate, rather than for the government to allocate.
The second proposal is to reduce the size of the state-owned economy. Because state-owned enterprises have no pressure or incentive to innovate, if you want to innovate, you must rely on private enterprises. The wages of state-owned enterprises are fixed and decreasing. You let him take a salary of hundreds of thousands of dollars a year, and he is in charge of hundreds of billions of assets. What is the result? If it were me, I would certainly steal, this is the inevitable result of human nature. How could he possibly have the incentive, the motivation, the pressure to do technological innovation?
If we don't see these substantial changes on the supply side, then our L-shaped sideways tail may drag on for a long time, and what really needs to be done is institutional reform.
The yuan will continue to depreciate, but it will not collapse. The exchange rate of RMB mainly depends on China's international balance of payments. Three years ago, China had a double surplus, which means that the trade account and the capital account were all normal. Therefore, the RMB appreciated all the time three years ago. But a big change happened three years ago, the double surplus became a single surplus, and the single surplus has continued to this day, that is, the trade account surplus and the capital account deficit.
It is precisely because of the trade account surplus that I don't think the yuan will collapse. If we look at the countries around the world, the Asian financial crisis in 1997 and the global financial crisis in 2008, the currencies that collapsed were all double deficits. China still has a single deficit so far, and the trade account is still several hundred billion yuan every year, so the RMB will depreciate again, but the risk of collapse is very small. The fundamentals of the stock market continue to deteriorate, and the short-term boom in the real estate market is difficult to sustain. This is the appreciation of the US dollar, which means the depreciation of the yuan.
Transformation is to change the business model, not to change industries
Under such a macro situation, is there no hope for the Chinese economy? A: No. My personal view is that the worse the macro, the more promising the micro.What logic? Because poverty makes change, and you make his life so easy that it doesn't change at all. I'm doing so well, why change? My traditional business model is doing fine. Why change it? A: So is the country's economic development. 10% annual growth is good. What is the need to debate this reform and that reform all the time? Now when you talk to the government about reform, he is more receptive than before. Now when you talk to enterprises about transformation and research and development, he is also willing to listen. When my students met me two years ago, the first question was, "Professor, what policies will the government introduce in the next phase?" I lost my heart when I heard that. I said, "What does government policy have to do with you?" If an enterprise looks at the government policy to determine its business strategy, the enterprise will reduce itself to the level of farmers.
Why? Agriculture is not dependent on the sky to eat, you go to the countryside to see, everywhere is greenhouses, agriculture depends on climate greatly reduced, an enterprise is still relying on the sky to eat, you can adapt to this market competition? Macro policy has nothing to do with you. The macro level is not good. On the contrary, I think many encouraging changes have taken place in the enterprise. Only when enterprises are willing to transform and improve themselves can the government be willing to reform.
But transformation is not the same as changing industries. Don't make a mistake. Transformation refers to the change of business model, not the shift from manufacturing to finance. Some people say that transformation is to seek death, because you understand it as a change of career, that is to seek death. So the transformation is looking for death to see what kind of transformation, if it is a change of career, I think it is really looking for death, because you have no experience in this industry.
I recommend Drucker's book Innovation and Entrepreneurship, which emphasizes several points of view, I strongly agree with them. One point of view is why innovation needs high technology? There are plenty of opportunities for innovation in traditional industries. Another point of view is that innovation requires focus and the accumulation of experience. Only by working in this industry for many years can we know where the core problems of this industry lie.
Because there is very little to study and say at the macro level, in recent years I have spent more and more time on enterprise research, investigation and interviews. I have seen many cases of innovation in traditional industries that support Drucker's view in this book. There is still a lot to be done for innovation in traditional industries. For example, in the garment industry, the old business model was to hold an order meeting once a year, which can no longer adapt to the new situation. Is it OK for the garment manufacturers to change the style once a year? No, so some enterprises began to change the business model, the development is good, you can do the trend of growth, you can have 10%-20% growth. The richest man in Europe is the boss of ZARA, which is a traditional industry. Where is ZARA's innovation? Is the rapid introduction of new styles to meet the market demand, so the business is growing. The richest man in Japan is the boss of Uniqlo, or a traditional industry. What strategy is Uniqlo playing? Not a quick update, how many years of UNIQlo style unchanged, all basic, its innovation in what? Its price is obviously higher than other home, it is superior in fabrics, materials, UNIQlo's investment in fabric research is other clothing manufacturers can not be compared, it and the university long-term cooperation, the development of fabric research.
Take a look at the traditional industry opportunities are really many, if you have big data, cloud computing, artificial intelligence, very good. No, don't be arrogant, focus on doing it in your own industry, differentiation competition, development of products and technology, you can make ZARA, you can also make UniQlo.
Continue to innovate in the traditional industry, do not have to be pessimistic because of their lack of high-tech, the traditional industry can still carry out innovation, but it requires the accumulation of experience, the need to comb and optimize the process, the need to understand the technology. Transformation needs to focus, persistent stupid people, do not need smart people. Stop looking for the policy outlet, or the business outlet, to give up the habit of opportunism, to cultivate their independent thinking ability, following the trend is not innovative.
Chinese consumers are only loyal to money
On the road of innovation, there are many specious concepts that will form obstacles for us. For example, "Internet thinking", the Internet is only one of the many technological innovations since the industrial Revolution, if other innovations have not formed any thinking, why should the Internet think? I don't get it. Create "ecospheres". Ecospheres are not built by marketing and subsidies. It's like putting a pile of grass on the prairie floor, and the sheep come and eat it, and then they all go away. What makes an ecosystem? By a fence, you create a fence in the grass, an entry and exit barrier in economic terms. That's how you build an ecosphere. Now many taxi companies are in trouble, giving subsidies to talents, and the day the subsidies are canceled, the people will be gone. How do Chinese consumers have loyalty? Chinese consumers are only loyal to money, not to any brand loyalty, why loyalty to you? Why spend with you when your price is higher than a taxi? So this ecosystem is a misleading concept." So is "the sharing economy," a slogan that we always put a big question mark over. The sharing economy is just the use of a small amount of private excess capacity, the sharing economy is based on private property rights, Airbnb, you go to live in other people's houses, do not pay, there is no door, who share with you? Uber, if you don't pay, who will let you take a taxi for nothing? Someone asked me, professor, is the future the sharing economy? And I said, what did you say? A market economy has never been exclusive, not shared.We often get carried away by these very fashionable concepts and lose our own judgment." "Industry 4.0" is sounding like a miracle. I went to the following companies and said," You still say 4.0, even 2.0 has not done it, what about 4.0?" In the process of constantly clarifying these specious concepts, I made a summary: Industry 4.0 May be the future direction, but for most enterprises in China, the current problem is not Industry 4.0 at all, but industry 2.0 and industry 3.0, if you do industry 3.0 well, efficiency will be greatly improved. These several stages can not be surpassed, do not tell me that the corner overtaking, honestly from their own enterprises, what to do, little by little to improve efficiency, to a certain stage may have a prominent leap. The macro economy will continue to be depressed, but this does not mean that nothing can be done at the micro level. The worse the macro economy, the stronger the impetus and pressure for micro-transformation and innovation. On the contrary, I am optimistic about the future of China's economy. We have fertile commercial soil and rich resources of entrepreneurs. The most precious resource for China's economic development is entrepreneurs. I believe that in the face of the economic situation, in the face of the long L-shape, the government policy will turn to pragmatism and reform, and there is no reason to be pessimistic about the future.