At the end of 2023, even in the southern part of China, you can still feel a little cold, but in such a slightly chilly atmosphere, there are still sparks. At the end of December, at the global headquarters of vivo in Dongguan, Wang Gao, professor of marketing at China Europe International Business School, Hu Baishan, executive vice president, chief operating officer of vivo and president of vivo** Research Institute, and Zhou Zhang, an expert in science and technology strategy, had a heated discussion on the theme of "Observation of China's Economic Confidence Sample, How to Walk Through the Cycle", with financial commentator Ma Hongman as the moderator.
How will the future economic cycle evolve? How can innovative enterprises navigate through the cycle and get out of the fog amid such economic cycle fluctuations? How can companies maintain long-term competitiveness? CEIBS South China selected the highlights of the discussion to explore the dynamics behind the company's cycle and how it should stay true in the era of change.
Spring is not far away
Ma Hongman:Everyone is very concerned about the macroeconomic trend, we see an optimistic signal at the end of 2023, there is no big problem in achieving the 5% growth target set at the beginning of the year, but there is also a reality that there is a temperature difference between macro data and micro feelings, Professor Wang Gao, what do you think of this temperature difference, the future economy will continue to rise and improve from the power of **?
Wang Gao:After the epidemic has passed, I feel that the economic recovery should be better, but I did not expect that the actual temperature in 2023 will be cooler than in 2022 and 2021, which is also the lagged impact of the epidemic. The epidemic has slowed down the speed of the first end, and at the same time, the demand side is gradually slowing down. Because the future is uncertain, people are less willing to pay for it.
In 2023, China's GDP growth rate will be about 5%, which is a very good growth rate. Globally, 5% is considered a high level of growth, but compared to the historical growth rate of 7-8%, the pace of growth of 5% has slowed significantly. In the short term, the impact of the epidemic, the relative slowdown in growth and other multiple factors will indeed lead to temperature differences, and people's bodies feel cooler, but it will not last long. I believe that the economy will slowly stabilize in 2024, and it is winter now, but will spring be far away when winter comes? Spring will be reserved for those who are prepared.
Ma Hongman:In order to promote the development of the private economy, 28 specific measures have been put forward to strengthen the support and protection of the private economy and create a better development environment for private enterprises.
Shopkeeper Zhou:This includes two dimensions: first, the role and value of the private economy in China's economy; The second is the unique characteristics of the private economy in passing through the cycle.
Stretching the timeline to China's nearly 200 years of history: the Westernization Movement, the rise of private enterprises, the development of national industry to reform and opening up, the whole context fully proves that the private economy, as a very unique and vital subject, has a huge role in promoting the progress of the country. At the same time, the private economy also plays a non-negligible role in promoting economic development and increasing employment. Finally, from the perspective of 40 years of reform and opening up, private enterprises can better carry the entrepreneurial spirit, continue to innovate and move towards internationalization.
The historical trajectory tells us that the private economy is the vanguard of China's economic development and has played a breakthrough role. If the private economy wants to go through the cycle, the underlying logic still needs to regard scientific and technological innovation as the ultimate force through the cycle, which is the most simple truth based on the development process of the private economy after the industrial revolution.
The side that crosses the cycle**
Ma Hongman:Vivo was established in 1995, and it will be exactly 28 years by 2023, so what kind of method can vivo use to operate for 28 years and go through the cycle fluctuations?
Hu Baishan:I joined vivo in 2000, and since I joined the company, I have made all the company's products all over and have a very deep experience.
First of all, we are a user-oriented enterprise, and we are very clear that users are in the first place, and the user needs are in the first place. From the time I joined the company to the present, communication products have been continuously updated from the original machine, pager, wireless fixed, feature machine to smart machine, and the needs of users have been constantly updated and iterated for more than 20 years. Over the years, vivo has not worked behind closed doors and has always put the needs of users first. When the environment changes, enterprises must change according to the needs of users, and cannot go around in place and seek swords. User needs and user orientation have always been the biggest core of vivo.
Second, its own capabilities, vivo has been making continuous progress for more than 20 years. We divide our capabilities into several aspects: 1. Scientific governance system, which is particularly important after the scale of the enterprise; 2. Innovation system: 2023 is a year for vivo's innovation system to fully blossom and bear fruit, and we will continue to build this capability; 3. Cultural values, the industry always fluctuates, but no matter how the external environment changes, vivo always buries itself in the cause, first to do the right thing, and then to do the right thing.
Going through the cycle is the pursuit of every business, as long as you stick to it, you will find that these fluctuations are normal and can be overcome.
Ma Hongman:I have interviewed many successful entrepreneurs, and I have a very important experience, successful entrepreneurs who can be interviewed have glorious moments, but the core point of long-term success is not the most glorious point in time, but how to come through when encountering the greatest difficulties and challenges. What was the biggest difficulty you encountered with the development of vivo for so many years, and how did you come through it at that time?
Hu Baishan:We've been through a few difficult times. In 2011, the feature machine turned to the smart machine, the opponent was very strong, and our own ability was not enough, so we almost couldn't turn it over, but in the end we got through. Why were there such difficulties and crises at that time? Because we had problems with technical reserves, we also began to summarize our own methods, which are also effective support for us to cross the cycle. I'm now managing overseas sales, and in the past few years, in terms of overseas sales, some countries have not made very good progress, the problem is **? I can also share it with you.
We have summarized 3 closed loops internally: 1. Experience closed loop; 2. Commercial closed loop; 3. Closed-loop mind. Why experience the closed loop in the first place? When a product does not solve the user's problem, there is no "cause" to talk about the business closed loop and the mental closed loop, so we put the user's experience in the first place, whether it is to enter a new category or enter a new country, after completing the experience closed loop, we can consider the business closed loop and the mental closed loop. The closed loop of business is marketing, cost, gross profit margin, etc. After having a closed-loop experience and a closed-loop business, it is ultimately necessary to pursue the brand to leave a deep impression in the hearts of users, that is, the closed-loop of mind, so that the product can be sold at a premium.
To do a good job in these 3 closed loops, vivo has some methods**. When vivo expands overseas markets, it must start from the waist, rather than the low price and the upper part, so that there is room for the waist to satisfy consumers, business partners, internal employees and shareholders and other stakeholders. If you directly do low prices, there is no way to satisfy partners, and there will be problems with the acceptance of users who directly do it. This is also the historical side of the safe passage through the cycle**.
The law of building a century-old store
Ma Hongman:We talked about the development of vivo earlier, which has a history of several decades, and the future is also aimed at the goal of a century-old store. In the process of building a century-old store, there are actually many rules that can be explored, Professor Wang Gao, how do you think about the development law of a century-old store?
Wang Gao:It is necessary to clarify what the goals of the enterprise are: such as creating value for customers and creating value for stakeholders. Only with a clear and firm goal can we do important things and do the right things right.
The Chinese market is sometimes very busy, and if a company wants to get through the cycle, it must not blindly pursue heat and adopt speculative behavior. If this is the case, it will be very difficult for businesses to live well once winter comes. If a company can maintain its focus when the market is very lively, do what it should do, and even do what it should do when the temperature is "low", it can continue to accumulate.
Enterprises should pay attention to the long-term track, and it is difficult to blindly follow the trend and speculate to bear fruitful fruits. If the product is done well, the market will definitely give positive feedback, and doing a good job is the "cause". From a historical point of view, the enterprises that can really go through the cycle must first plant the "cause", and the "cause" is planted, and the "effect" will naturally come. Of course, enterprises with cool weather should live better, don't take risks, and adjust expectations accordingly during the downward cycle, and calmly walk through this period of winter, and spring will be ushered in.
Ma Hongman:For enterprises, it is very important to be able to go through the cycle is to admit the fluctuations and ups and downs of the cycle, and it is not realistic to completely confront it.
Wang Gao:Before returning to China, I worked at Coca-Cola in the United States, no matter how lively the various industries outside were, all of Coca-Cola's strategies revolve around "thirst", and no matter when I always have to quench my thirst, this need has always existed. The demand is there, and we should do a good job of this demand. This is one of the reasons why Coca-Cola can go so far today.
In addition, companies should encourage trial and error, and have a high degree of tolerance, in order to go further in innovation. If you run away with a little **, this thing is very difficult to do. Sometimes you need to be stupid like Forrest Gump and keep running on the road you are aiming at, so that you can do a lot of things that others can't do.
Enterprises want to go through the cycle, from a long-term perspective of competitors are never external competitors, but the enterprise itself, constantly defeating themselves, continuing to lead, in order to be unbeatable.
Focus on the present and look to the future
Ma Hongman:As the macro economy stabilizes and recovers, entrepreneurs still have to deal with short-term challenges, what advice do you have for them?
Wang Gao:For companies that are full of growth aspirations, my advice is to manage their cash flow and keep food for the winter when things are bad. But this is also a contradiction, do you want to vote today? Today, the cost of food is reduced, and it seems that you can live, but when spring really comes, your future is **? Therefore, on the premise of ensuring the winter, the investment that should be there is still investment, and only investment can have a future. It's good to invest in the future, but will you survive that day? This is also a concern for us.
2023 has passed, and many industries have chosen to live first this year, and if they can survive, they still have surplus resources and abilities, and then prepare for tomorrow to exercise and increase their abilities. As Hu Baishan said, enterprises need to build a closed loop of experience, business and mind to go through the cycle, when the brand establishes a closed loop of user mind, there will be people to follow you for a long time, which is also the core ability to go through the cycle.
Although the people do not spend money in the cold weather, the overall disposable income and consumption power are still stable and upward. In 2024, the overall recovery should be felt, consumption will be more confident, and we will be able to see the arrival of spring.