Wen Shang Pai Mapping China'S Private Enterprises "Four Big Ceilings"

In the 08 years of financial crisis, I once summed up China's private sector.

1, RMB appreciation;

2, the price of bulk raw materials is rising.

3, staff costs rise faster;

4, the conflict between management and employees is aggravated, resulting in the continuous rise of management costs.

My assessment at that time was that if private enterprises did not break through these four ceilings, a considerable portion of China's private enterprises would enter the era of no profits in about five to eight years.

A few years later, the prediction of the "four big ceilings" seems to be coming true. For example, nearly 20 private entrepreneurs in Wenzhou have recently come out.

The reason is very simple. Behind the emergence of "speculation tendency" in Wenzhou enterprises as a "pioneer of reform", it shows that China's private enterprise camps are polarizing: either by way of business mode innovation, they can get new profit making ways to go to new life, or choose to "invest profits" and eventually go to death.

In fact, the crisis of private enterprises is not the only thing that happened.

The first holistic crisis began in 2006. Unfortunately, this crisis did not cause enough attention from entrepreneurs. Instead, the real crisis triggered a considerable number of entrepreneurs entering the "real estate industry".

The 2008 financial crisis should be a watershed for private enterprises. In my view, this crisis marks the end of the development of China's private economy. With the help of the financial crisis, China's private enterprises have completed the pformation of industrial upgrading and winning mode through five to ten years' efforts, thus laying the foundation for China's sustained economic growth.

Unfortunately, the rapid recovery of the macro-economy has once again made entrepreneurs insensitive.

However, it is always worth paying for it.

If this macro-control is a remedy for the economic growth after the financial crisis, the dilemma of SMEs in 2011 is the continuation of the financial crisis.

Or if we truly understand the 08 year financial crisis is a hint of God's pformation of China's private enterprises, then we seem to have only two ways to go.

It is either to revert to the law, to "replace the heaven and walk the way", to recover the lack of stamina, so as to win new growth, or to indulge in the appearance of prosperity, and continue to look for "good days" everywhere, and finally, "the heaven will make it die, but it will make it mad."

I think it is time for private enterprises to seriously consider their own development strategies.

Have private entrepreneurs ever wondered how the "four big ceilings" came into being?

Many people attribute the cause to the government, but in the past thirty years, how many benefits have private enterprises gained from export subsidies, from the advantages of global raw materials and low labor costs?

Data shows that the proportion of China's third industry is lagging behind the level of economic development, only 43%, which is ten percentage points behind that of India.

People with a little knowledge of economics know that the third industry marks the "customization level" of enterprises, while the second industry marks the "product level" of enterprises.

The proportion of the second industry in China's economy is too high and the development of the third industry is insufficient. Behind such a macro pattern, the profit model of Chinese private enterprises is seriously "product oriented".

That is to say, the operation mode of China's private enterprises is the "product oriented" management mode which is far away from the terminal customers. This mode means that the international competitiveness of private enterprises is actually more cost competitiveness, not "customer competitiveness".

This is why in the financial crisis, some western economists attacked China's development model as one of the reasons for the financial model.

This is certainly biased and political, but from the perspective of international competitiveness, if the competitive advantage is the manufacturing advantage over the lowest cost of labor, the fastest developing country will undoubtedly lead to the globalization of the global economic crisis through the globalization of resource allocation mechanism, leading to the inefficient use of global resources and the imbalance of economic structure.

So I suggest that the 08 year financial crisis is a hint of God's pformation of China's private enterprises.

We must understand the strategic implication of this hint, that is, the real crisis is internal, the crisis of our country's economic structure, and the crisis of the development mode of our private enterprises. The real meaning of this crisis is to remind us that the spring of the strength of the labor force of the private enterprises has passed, and then it will be a summer of "depending on the strength".

Far away, say neighbouring India.

India has become the third largest technology country in the world, with 4 million scientific and technological talents, and has become the world's manufacturing base in China. India has become a global R & D center.

While we export our products, they are exporting software and outsourcing services.

On the international economic stage, who is the harvester of the future autumn? Maybe the real competition is just beginning.

You know, the difference between China and India is not only the competition of the total economic volume, but also the competition between the entrepreneurial spirit and the quality of people's lives.

Behind the manufacturing and service industries are two different entrepreneurial spirits.

The spirit of Chinese entrepreneurs behind the manufacturing industry advocates "Heaven rewards diligence", but what is lacking is innovation and respect and protection of intellectual property rights.

All this is precisely what the service industry stresses.

In 1994, India passed the copyright law to promote the development of new and high technology industries. We know that the service industry, especially the software industry, respects and protects intellectual property rights, which is unmatched by the manufacturing industry.

The same is the manufacturing industry. The development mode of Japanese and Korean enterprises is to catch up with the world.

Japanese enterprises catch up with the United States, South Korean enterprises catch up with Japan, and our private entrepreneurs catch up, but most of them are pursued by each other. In the domestic policy environment and economic environment, the progress of this "civil war" is of course, but the by-products are often accompanied by vicious competition and government intervention.

Inner Mongolia's two giants, Mengniu and Yili, often have a "vicious struggle". Local governments blockade the market and help local enterprises to attack their competitors through public security and judicial power.

In addition, labor cost advantages are not worth boasting forever, because the other side of the labor cost is the income of each of us. According to the data of the National Federation of trade unions, the proportion of the GDP of the domestic labor remuneration in China, which reached a peak of 56.5% in 1983, has continued to decline. It has dropped to 36.7% in 2005, and has fallen by nearly 20 percentage points in 22 years.

And now most employees' income growth is lagging behind the growth of CPI, which is also an undisputed fact.

I feel that, no matter from the moral or the way of enterprise development, entrepreneurs can no longer take pride in the "low labor cost advantage". Can we not improve the profitability of enterprises at the same time, improve or even raise the income level of workers at the same time?

The answer is yes, that is to change the way of development of enterprises, from the growth of pure pursuit of "quantity" to the pursuit of "quality" growth direction, the core of this change is "innovation".

Innovation is the core of entrepreneurship, because innovation requires entrepreneurs to regard employees as a "thinking maker" rather than a money making machine that only obeys orders.

Once the source of corporate profits is pferred from the physical strength of employees to the use of mental power or mental strength, the growth of employee income is the premise of enterprise growth: enterprises will invest in excellent employees to form new competitiveness.

In a word, the impact of the 08 financial crisis on Chinese enterprises has not ended, because this crisis is deeply rooted in China's economic structure and is rooted in the development mode of China's private enterprises.

I hope private entrepreneurs often ask themselves a question: if 08 years of financial crisis continue, what can I do to survive? Sometimes, it is more important to ask questions correctly than to solve problems. I think this is a correct question.