Consumer Industry Investors: Temporarily Enter The "Dormant Period" After The Outbreak Or Retaliatory Rebound.

The outbreak of pneumonia caused by the new coronavirus spread from the end of last year has had an important impact on the development of all walks of life. The consumer service industry, the largest industry in the national economy, bears the brunt.

Data show that during the SARS period in 2003, the contribution of consumption service industry to the national economy accounted for 39%. Today, the contribution rate of the third industry to the macro economy has exceeded 50%, of which the contribution rate of consumer service industry to GDP growth is more than 78.5%. During the Spring Festival of 2019, the national retail and catering enterprises achieved a trillion yuan in sales volume. After this year's new crown outbreak, these industries basically shut down and shut down and suffered heavy losses.

Under the impact of the epidemic, where should PE institutions focus on investing in consumer services? What investment strategies do they have to adjust and adhere to and how to tide over the difficulties of the enterprises being invested?

In the long run, offline businesses will not be idle, but the content will change. - Gan Jun photo

Adhere to consumer investment, after the outbreak or retaliatory rebound

"Under normal circumstances, we are flying to see people, or to do due diligence in the streets and lanes. But now we basically do not travel, more investment and research, online learning training. In this temporary "dormant period", the pace of investment is slowing down further. Recently, Feng Weidong, capital investment partner and chief investment officer of sky chart, said in an interview with the twenty-first Century economic report.

But Feng Weidong said that after the return to normal in the future, investment and financing will be better, and everyone is in urgent need of money. For Tian chart capital, long-term investment strategy will not be greatly affected. In the long run, the team is still optimistic about the consumer service industry, and the strategy will not waver.

Compared with venture capital industry, the real economy may be more affected. Feng Weidong said that for the consumer service industry, first of all, due to discouraging outings, offline retail business is rather bleak. Demand may be only a few percent of the normal period, especially the catering industry is facing a very serious situation. But more serious than this is the expected problem, because it does not know when to return to normal, which makes it impossible for everyone to make a clear plan.

Second, relatively speaking, online retail will get some development opportunities. Many people turn to takeaway and e-commerce channel consumption, but this will still be affected by the upgrading of supply chain and logistics costs. Companies investing in sky charts are also working together to find ways to continuously improve efficiency and reduce costs, and also to promote the development of online businesses.

"But in the long run, offline businesses will not be idle, but the content will change. For example, the proportion of task oriented and physical shopping consumption will drop further, but service oriented and experiential consumption will still be dominated by offline. Feng Weidong said.

Song Xiangqian, the founding partner and chairman of Jiahua capital, also told the twenty-first Century economic report that fresh takeaway, online education, game entertainment and so on play a very important role in the special period. But in the long run, people's lives will return to normal after the outbreak, and some basic needs for offline consumer services remain unchanged. In order to ensure safety, people still want to go out and breathe fresh air, socialize and experience offline services. Restaurants, services, tourism and other industries will have a retaliatory rebound in the future.

"Jiahua capital has focused on the investment and consumer services industry for 13 years. In the long run, our investment strategy will not change. We will still see more China and take root in China's consumer service industry. In the short term, our investment pace will not slow down. Instead, we will reverse investment and increase investment. Under the impact of the epidemic, there are also investment opportunities for the consumption project valuation being wrongly killed. He said.

Appeal for targeted "rescue and revitalization" fund and green channel for listing

In order to help the consumer service enterprises to pass the difficult period, song Qian also put forward several appeals. First, it calls for the implementation of tax reduction and profit making policies, reducing the tax pressure of enterprises and stimulating economic vitality. At the same time, the government can also reduce interest rates in real time and implement the fiscal policy of precision drip irrigation.

Second, calls for the promotion of rent reduction and preferential policies. The main cost of consumer service enterprises lies in human resources and rents. State owned property and private property developers can act together, and the state can also introduce a policy of universal benefit.

Third, in areas where the epidemic can be prevented and controlled, enterprises are allowed to resume work and resume schools. To ensure employees' employment, enterprises can work flexibly according to their own circumstances, or reduce social security levy, reduce the rate of medical endowment insurance, and so on to help entrepreneurs to get through the business crisis.

Fourth, broaden financing channels, reduce financing costs, and strengthen capital support for consumer services. "We appeal to commercial banks to offer preferential loan policies to enterprises that have good historical performance but suffer from cash flow difficulties affected by the epidemic, and intensify the examination and approval of credit." Song Xiangqian said.

Fifth, we call for joint venture venture capital institutions at the national level to set up a rescue and revitalization fund for the consumer service industry. "Jiahua capital is very willing to take part in it. We call on the industry to carry out responsible investments, and agencies use their professional strength to help SMEs in the consumer service industry tide over the difficulties." He said.

Song Qian also said that in the environment of Sino US trade friction last year, the state began to pay more attention to the development of hard technology. Now, in the face of such a severe economic and public health crisis, we can also try to give more support to the heavy consumer service enterprises and provide them with a green channel for listing.

Pay more attention to the cost structure of enterprises when investing.

From SARS, MERS, Ebola to the new crown pneumonia, the epidemic is becoming more and more popular in the process of urbanization. In addition to the uncertainty brought about by financial turbulence and trade disputes, enterprises will pay more and more attention to risks, and new trends in some industries will also gradually appear.

According to Feng Weidong analysis, for example, enterprises will adopt more flexible cost structure to promote the development of sharing office, specialization and outsourcing. In the long run, even without epidemic situation, enterprises will adopt more flexible cost structure and more specialized division of labor in the increasingly turbulent competition environment. This is the trend, and the epidemic has accelerated the process.

For Tian chart capital, the weight will be increased in this trend. When we analyze the business model flexibility and cost structure, we will pay more attention to its ability to resist risks.

For example, if there are some offline entities, if they are direct battalion models, the cost of rigidity may be very high. If joining mode is undertaken by multiple subjects, the rigidity cost will be lower. When renting a store, an enterprise can also cooperate with the shopping center in the mode of "guarantee bottom + Split", which can be flexible.

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