Chinese Enterprises Have Ushered In The "Golden Period" Of Foreign Investment.

Cross boundary spanformation can be cross industry or cross regional. For example, manufacturing enterprises can make financial leasing related to equipment, and invest in the financial sector. For example, manufacturing enterprises cooperate with the Internet, or invest directly in Internet +. For example, O2O in recent years, connecting online and offline, retailers are the most typical suppliers. The most typical example of regional expansion is "going abroad" overseas market development. In these three ways, horizontal and vertical spanformation is easier and more common. Cross border spanformation should be noted, because enterprises may not be familiar with the new market and are easy to fall into traps. For example, some Chinese enterprises have done a lot of mergers and acquisitions overseas. However, because of inadequate research in advance, or misjudgement, they were very badly hit. Especially in some resource projects, or some large infrastructure projects, we have seen many failed cases.

In the case of Chinese enterprises spanformation, Wanda is a remarkable example. From its spanformation from a real estate developer to entertainment, content and sports, does it have any advantages? The globalization of Chinese enterprises has formed a new pattern of globalization. "China enterprise globalization report (2016)" finds that Chinese enterprises have ushered in the "golden period" of foreign investment and show many new characteristics. It was the first to make residential real estate, and found that competition was very intense. It was difficult to expand rapidly, so it turned to commercial real estate, developed Wanda Plaza and duplicated in many cities. Then it found that commercial real estate is a heavy asset, heavy capital and heavy investment industry. A Wanda Plaza has invested billions of dollars and tens of billions of dollars. Where does the money come from? The cost of financing is so high.

And the bigger the plate, the more challenging the management will be. At the same time, it found that one way to attract people is to open a movie theater, while China's cinema line is not particularly developed, so it invested in the US AMC, the second place in the world. Then it extended to the upper reaches of the film industry, investing in movie production to provide content for the cinema. Next, it has found that in order to occupy a leading position in the cultural and creative industries, first of all, it must be international. Second, it is also aimed at the Chinese market. So it invested in the legendary film studio of the US filmmaker and invested in the movie city in Qingdao, hoping to build a "Eastern Hollywood" in China.

It can be seen that the first step of Wanda's Transformation -- from commercial real estate to cultural and creative industries -- has been successful. According to its published data, its business income in cultural and creative industries has exceeded 50% of the whole group. At the same time, its real estate business is also undergoing spanformation. By launching the real estate investment trusts, it spanformed from a commercial real estate developer into a fund management and Project Manage Company, spanforming from the original heavy assets and heavy capital business mode to light asset mode. Transformation still needs to consolidate relevant competitive advantages. It is now making theaters, making studios and investing in films, at least in the same line. It has not yet seen the size of sports industry, or the layout of its differentiation, so it may not be as logical as investment movies.

Wanda is a profitable company. Private enterprise 。 What are the spanformation ways of traditional enterprises, especially large state-owned enterprises, which are already in financial difficulties and facing market surplus? In fact, every enterprise can find a new world through spanformation. One of our clients, China Chemical Group, is a traditional chemical manufacturing enterprise. It has to go to capacity leveraging as well as social responsibility of state-owned enterprises, which is a great challenge. It first bought a lot of advanced products and technologies to improve itself through a series of overseas mergers and acquisitions. Of course, the premise is that it has plenty of capital. But what I appreciate is another innovation. People may not know that Ma Lan ramen, which can be seen everywhere in China now, is the brand created by China's chemical industry in the process of resettlement of redundant workers.

Because many workers in China's chemical industry have worked in Lanzhou, they thought of making a chain brand of Lanzhou noodles, so that laid-off workers could freely choose to see if they would like to run a chain store with their little boss. As a result, Ma Lan's noodles were everywhere and well done. An enterprise can always identify its most competitive business. If it is best at making a mold, it should only make a mold, not to drag the front line too long and do anything. In the manufacturing industry, the gross profit of a finished product may not be so high, while the gross profit of the upper two level components is higher, so we should concentrate on the more valuable one. There are many state-owned enterprises' burden already very heavy. They may not even have the funds to resettlement employees, nor have any technical advantages. They basically rely on blood spanfusion to survive. How can such enterprises spanform?

Industry integration is still at a very early stage in China, and many state-owned enterprises can do more integration. Under the group headquarters of many state-owned enterprises, there are two levels and three levels of enterprises. Every enterprise is a sparrow. Although it is small and dirty, it has both factories and its own sales, finance and logistics suppliers. But in fact, such functions as finance, human resources, IT, procurement logistics can be shared within the group. For example, two factories belonging to A and B belong to a group company. The A plant produces A products, has a sales team of A, and the B plant produces B products, and has a B sales team. You can not move the production department, but integrate the sales teams of the two factories to share the potential customers. At the same time, the products that sell A and B have the space of increasing efficiency and increasing value. This is just an integration within an enterprise, and the other is industry integration. Many industries and enterprises should now integrate together and make better use of economies of scale.

One of the weaknesses in the upgrading process of Chinese traditional manufacturing industry is brand 。 Even if the quality of the product is quite good, there is a market overseas, but in the country, it will be regarded as not high enough by some consumers. How to make up the short board? We should consider the multi brand strategy. An example is Anta, a sportswear and sportswear manufacturer in Fujian. If the market is regarded as a Pyramid, Anta is at the bottom of Pyramid. It is the most popular, middle and lower brand that may be more popular in the 234 tier cities. It may not be able to do it in the face of the more fashionable customers in big cities. So it bought the brand name of Italy sports brand FILA in China, which is quite foreign. Then it found that the Chinese are now upgrading their consumption and climbing the mountain bike ride on weekends. So it recently set up a joint venture with KOLON, a high-end outdoor brand in Korea, to launch the KOLON brand clothing in China, which is responsible for the operation and manufacture of the rear end. This brand is not only high-end, but also for outdoor new market.

In a global CEO survey conducted by PWC last year, there is a finding that Chinese entrepreneurs are not as confident as other international peers in how to use digital technology to enhance enterprises. What is the reason behind this? 67% of Chinese executives have a clear vision of using digital technology to enhance competitiveness. Although this figure is good, it is much lower than the global level (86%) and the US level (92%). I think there are several reasons: first, many enterprises in China are still traditional enterprises, and there are not many contacts with the Internet. The executives of these enterprises are more than 50 after 60 and 70, and their acceptance of disruptive technology is not so high. The second reason is related to the competition pattern in the whole Chinese market. Whether in the telecommunications market or the Internet market, there are several giants that occupy other enterprises, but if they want to dominate, they will feel difficult and controlled by others. The third reason is that the speed of technological change is indeed too fast, and many people are not very good at judging the disruptive nature of technological progress, so they are anxious and afraid to move.

Another interesting finding from last year's survey is that the three most important foreign countries in China's growth in the next 12 months are the United States (34%), India (12%) and Kampuchea (10%). What does this mean? These three countries represent three different directions for the development of Chinese enterprises. U.S.A It is because it has recovered and is the largest market in the world, and Chinese enterprises are the least involved in the US market. India is a developing country with a fast growing speed. Its population base is large and young, and it is in the "one belt and one way" area of China. So it represents an overseas market that can absorb a large number of Chinese enterprises to export. Kampuchea, because its market is open, the sanctions have been abolished, and is relatively friendly with China, and the manufacturing cost is relatively low. It is a destination market for Chinese enterprises to achieve industrial spanfer.

If you go out, you must take good things out, otherwise people will not want to. Is the nuclear power exported by China redundant? Is high-speed rail an excess capacity? No. Large aircraft that will be exported in the future, some of the more distinctive cars and appliances are valuable manufacturing services. Many small and medium-sized enterprises are embracing the strategy of "one belt and one road". For example, a Chinese mobile phone manufacturer has built its own mobile phone brand in Southeast Asia, and has also done well in producing and selling digital products such as USB in Southeast Asia. Because Southeast Asian market competition is relatively small, these manufacturers have done it. On the contrary, if we go to the big market like Europe and America, we may be too competitive. PWC's global CEO survey this year shows that nearly 60% of Chinese executives believe that "one belt and one road" will bring investment opportunities to themselves.

For the industrial spanformation and upgrading, the Chinese government also put forward the strategy of "made in China 2025". But we have also seen some cases of less successful industrial policies. For example, China's photovoltaic industry has experienced ups and downs. In terms of industrial spanformation and upgrading, how long should the baton should be extended? The Chinese economy is still dominated by state-owned enterprises, so the state, plus the participation of state-owned enterprises, plus some financial funds in this direction to subsidize, is a good thing. But the state's policy should not be restricted, saying what can do, who can not do, what should be done and what should not be done. If you look at the 2025 plan in detail, it has a very high positioning, but the details of the operation are very few. This also gives the enterprise the space to imagine. However, enterprises can not blindly rush to the state to rush ahead, or to see whether they have competitive advantage in that field, whether they have technology, whether there is money, whether there is a brand, whether there is a channel, whether there is a market or not.

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