Chinese Enterprises: Without Pformation, They Will Die.

Many factors have created opportunities and variables for the future of Chinese enterprises.

Larry Idy (Larry Bossidy), the former executive director and chairman of Honeywell International (Honeywell) International, puts forward the following questions to Chinese enterprises in the Chinese version of "Transformation: using strategy to do Confronting" (Reality).

"How will the competition pattern of the Chinese market change after the dazzling growth rate of GDP has cooled down? Will the speed of new job opportunities on the whole labor force slow down? Will the improvement of the standard of living in the vast rural areas be restricted?

How will China's banking system be reformed?

Does RMB need to appreciate? If it appreciates, what kind of economic impact will it bring?

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What are the new situations in China's labor market? Whether the shortage of labor in the southeast coastal areas will become a national phenomenon recently? What kind of impact will the rise of labor cost in the future bring to enterprises? How long will China remain as the world's best low cost labor outsourcing base?

As the Chinese government gradually strengthens its protection of intellectual property rights, will it stimulate more foreign capital to enter the high-tech industry in China?

In 2003, the number of foreign direct investment absorbed by China overwhelmed the United States for the first time.

What changes will this continuous influx of capital tide bring to domestic enterprises? Is it a rapid increase in incomes or a multiplying increase in competitors? "

According to this clue, in the economic events of 2004, the author searched for several notable phenomena for Chinese Enterprises: macroeconomic regulation and control policy; "labor shortage" phenomenon; 25 Chinese enterprises encountered in the international market in 2004.

Over the years, the business model of Chinese enterprises has obvious outward oriented characteristics, that is, the development of enterprises depends on foreign capital, low-cost labor intensive enterprises and their products export.

But the "shortage of migrant workers" has given an obvious signal to Chinese enterprises. Chinese enterprises must accelerate the pace of industrial pformation and upgrading so as to get rid of the unfavorable situation at the low end of the global industrial chain.

At the same time, the "shortage of migrant workers" also reminds Chinese enterprises that they must change their original "brutal enterprise culture" culture and establish a "people-oriented" civilized corporate culture.

The shortage of migrant workers is the result of voting by feet of Chinese workers.

Spain's "shoe burning incident" is an extreme anti-dumping action against Wenzhou shoes by practitioners from the local import substitution industry. Some people call this behavior "a private barrier".

This extreme civil anti dumping behavior has greater uncertainty than the local government's levying anti-dumping duty on imports.

The so-called Wenzhou mode or all other modes exist on the basis of relying on such a large number of low skilled labor force in China, such a low skilled labor force with such a high proportion of labor force, such a strong labor force with such a strong substitution force, and the bargaining power of such a weak labor force.

Moreover, in the process of rapid industrialization, due to the serious lag of environmental supervision and other reasons, the external costs caused by those enterprises are far from being internalized. That is to say, these costs are not included in the cost of production.

These costs are borne differently by residents in different regions of China. In other words, the welfare losses caused by the deterioration of environmental quality in China are subsidized by these enterprises.

Due to the unsatisfactory employment situation of Chinese laborers and the two level subsidy of China's environmental costs on export products, the continuous dumping of Chinese products to many countries has been caused.

Because of this, China's export products are repeatedly subjected to foreign anti-dumping sanctions.

We must also clearly realize that China's exports at low prices are not cheap, and whether or not they have been subject to anti-dumping sanctions, we have paid a high price.

There are three direct reasons for this situation: low industry, homogenization of industry and disorder of market.

Low end refers to the low product quality and low technology content. The low level of industry leads to the homogenization of the industry. Homogenization will inevitably lead to the upgrading of the price competition of low-grade products, thus forming a trap for market disorder.

Industrial low end, homogenization and market disorder reflect a trend of anti technology, contrast alienation and anti coking, which makes the development of Chinese enterprises face a strategic crisis of non sustainable development.

The shortage of migrant workers and the large number of anti-dumping cases in the international market are external manifestations of this crisis.

Business Model, which is a primitive and backward business model, keeps Chinese enterprises in the market at home and abroad.

We can say that China's enterprises are facing a strategic crisis, and we must change the business model, that is, pformation to get out of this mess.

Let's talk about the impact of macroeconomic changes on enterprises.

For example, for the issue of RMB appreciation, the RMB has always been keeping a close watch on the US dollar exchange rate, and the continued depreciation of the US dollar has made the RMB depreciate accordingly. In recent years, the rapid development of China's economy has brought about a substantial increase in imports. Natural resources such as non-ferrous metals, oil and foreign dependence have risen sharply. The depreciation of the RMB exchange rate has increased the cost of the import enterprises, especially the continuous rise of the international crude oil prices has brought great influence to Chinese enterprises and society. Meanwhile, the western developed countries have been pressing the renminbi to appreciate.

For these reasons, we can judge that RMB appreciation is inevitable.

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Many factors have caused Chinese enterprises' future to be full of opportunities and variables.

Then, what is the path of pformation of Chinese enterprises? Just as Larry Idy said, "what are the future realities faced by Chinese entrepreneurs?"

After a long time of rational thinking, the author studied and analyzed the strategies of Chinese enterprises pformation, trying to answer Larry Bossidy's "whether there will be any changes in your market in the future. What do you need to do to catch up with your change" and competitors?

I believe that the relationship between social economic environment and enterprises is just like natural environment to species.

Any enterprise has its own unique genetic structure, which is like a creature, and the external business environment of an enterprise is equivalent to the external natural environment that this creature is facing.

The behavior of every enterprise is its external gene expression.

The composition of genes is the basic construction of enterprises, including strategic planning, organizational structure, corporate governance, decision-making system, information communication mode and incentive mechanism.

The most important thing is that the enterprise gene must be able to adapt to the external environment.

Enterprises, like creatures, are often unable to endure a long time between the decline of one business and the rise of another business.

They must create new businesses without delay or delay the decline of major industries before the core industry recessions.

Chinese enterprises must develop and maintain core businesses while establishing and selecting new businesses for the long term development of enterprises and widening their fields so as to maintain their evergreen businesses.

This strategic pformation is like replacing fresh water with fresh water on the snow capped mountains to keep the whole river from drying up.

Only in this way can enterprises keep the momentum of growth when the existing business is declining.

Once the core industry has entered the stage of maturity or decline, it will lose no time to replace the old one.

The pformation of enterprises is equivalent to the genetic mutation in nature.

The ability of gene mutation is the so-called pformation power. The enterprises with strong pformation are optimized for gene mutation, whereas on the contrary they are alienated. The result of alienation is that they can not adapt to the external environment, and die like some extinct species in nature.

In nature, new individuals with genetic variation are much more likely to survive.

The market mechanism is very similar to the nature. It is also a positive feedback mechanism of the weaker Yu Qiang and the weaker.

Therefore, Chinese enterprises either have to pform to survive or develop, or they can not adapt themselves to the business environment and are eliminated by the market.