the state has been actively carrying out the special task of solving the problem of internal volume, and the enterprises and industries deeply involved in internal volume are now jointly promoting the work of anti-internal volume. The publication of this book is really timely, and it is also very referential for the enterprises that are actively anti-internal volume.
1. To overcome the internal volume, we must first innovate the eight competition concepts
. 29. Song Zhiping put forward in the first chapter that the most important thing for anti-internal volume is to reshape the concept and rules of market competition. The nine chapters in the back of the book correspond to the nine specific methods of anti-involution, that is, the corresponding benign competition rules that should be established. The structure of the ten chapters is a total score relationship.
Thought decides action, action decides result, and the same is true in market competition. The reason for involution is that some competitive ideas lead to bad competitive behavior. Song Zhiping believes that to overcome the involution and solve the involution, the first thing is to solve the ideological problems, and the first thing is to change everyone's competitive concept. There are 48 references to the idea of competition in the
book. In the first chapter, Song Zhiping set up a special section to focus on reshaping the concept of competition. He said that three major types of competition concepts should be changed: First, the upgrading of thinking, from the negative-sum game of competing for share in the stock market to the positive-sum game of jointly creating the incremental market. My understanding is to move from competition to competition and cooperation, and not to grab each other's old limited stock market share, but to create new market demand. Second, the transformation of objectives should shift from blindly worshipping the extension of scale and quantity to pursuing the development of quality, efficiency and resilience. Third, the change of path, from cost-oriented competition in the Red Sea to open up unlimited possibilities of value innovation in the Blue Sea. The change of these three kinds of competition ideas together constitutes the ideological cornerstone of Song Zhiping's anti-involution.
In the first chapter, Song Zhiping said that the market is not a battlefield, competition is not a war, vicious competition destroys value, and benign competition creates value. He defined involution as a vicious competition in economic life, which is a serious overcapacity caused by the repeated construction of enterprises using homogeneous technology, and finally falls into unfair competition in the form of low-price order grabbing. Song Zhiping summed up this short paragraph, let us see at least three kinds of bad, old and innovative competition concepts. The first is homogeneous competition, the second is serious overcapacity, that is, blind expansion of scale and quantity, and the third is low-price competition. Song Zhiping believes that the market competition concept of some entrepreneurs and enterprises is still in the past, only know competition but not cooperation, and prefer price war, which is the most urgent need to change at present.
In the seventh chapter, Song Zhiping said that in the concept of competition, enterprises generally have two preferences, one is to do large-scale cost reduction, cost-leading competition, adhere to the business philosophy of quantity, cost and profit. Second, we should provide consumers with cheap goods. Prices that are too low will actually make it unprofitable for businesses, which will eventually reduce staff and wages, thus reducing consumer income, and the market will enter a deflationary economy in which the lower the price, the less people will buy. It can be seen that the old concept of competition has to be changed, and too low price competition is not desirable.
Song Zhiping said in his book that under the background of globalization, group enterprises should not only avoid the involution between brother group enterprises, but also avoid the involution between their subsidiaries. Homogeneous competition and the thinking of winning the bid at a low price are what our enterprises need to change very much. Enterprises should learn to price and quote reasonably, and only by obtaining reasonable profits can they go further. Song Zhiping believes that unreasonable pricing is also a major problem in the current operation. He suggested that in the future market competition, enterprises should learn to price reasonably.
Song Zhiping talked about a phenomenon, in emerging industries, a more common phenomenon is that many technology leaders have taken up leadership positions in enterprises, they understand technology, understand products, are the kind of technology-based entrepreneurs, but lack of market experience, and do not have a thorough understanding of the systematicness and complexity of enterprise management. The reason why there is some confusion in the emerging industry market is that the management ability of some enterprises fails to keep up with the pace of technological development, and the management concept fails to match the pace of industry development. Indeed, some entrepreneurs who are deeply involved are not aware of it.
Song Zhiping's book also reflects a holistic view of the industry, he is very concerned about the overall development of the industry, which should be related to his previous work in the central enterprises, are also the leading enterprises in the industry, and now work in the Association of Listed Companies. He believes that the profit structure of the industry should be olive-shaped, that is, there are a few enterprises that make a lot of money, most of them are profitable, and there are a few loss-making enterprises, which is an ideal industry structure, and such an industry is also healthy.
Song Zhiping said that in the case of industry volume, there are often only a few profitable enterprises, and not much, while most enterprises are losing money, a small number of enterprises are still huge losses, such an industry is not healthy. He also analyzed that many internal volumes are often caused by the industry's leading enterprises competing for the first shipment volume. They only compare sales volume, not profits and quality. The fastest way to increase sales volume is to reduce prices, which leads to retaliation from competitors. Such repeated price cuts often make a good industry lose money in a very short time.
From Song Zhiping's view of the industry, we can see that competition needs to take into account the interests of the whole industry, especially the leading enterprises, which have the responsibility and obligation to enhance the interests of the whole industry, and can not only consider the interests of their own enterprises by taking advantage of the dominant position of the market.
To sum up, Song Zhiping mainly talks about eight competitive concepts that need to be changed in the whole book. First, we should change the behavior of vicious competition and learn to cooperate with each other. Second, we should change the worship of scale, quantity and market share and pursue efficiency and quality. Third, we should change the thinking of selling at a low price and winning the bid at a low price and face up to the normal value of products and services. Fourth, we should change the cost-oriented thinking and learn to improve from the business side and the price side; Fifth, we should avoid homogeneous competition and use innovation and differentiation to enhance value; sixth, we should pay attention to pricing issues, from cost pricing to value pricing, so that business leaders can set prices in person, and can not delegate all pricing power to salesmen; seventh, the new generation of technology-based entrepreneurs should not only play a technical competitive advantage, but also make up for the shortcomings of business competition; Eighth, we should attach importance to the interests of the industry. Large enterprises should not only make money by themselves, but also take the lead in safeguarding the interests of the industry, so that most enterprises in the industry can make money. If we form a correct view of competition from the ideological source, we will not be afraid of not conquering the involution.
2.
Song Zhiping said in the postscript of Anti-Involution that the nine chapters behind the book can be divided into three parts, such as policy guidance, anti-unfair competition, protection of intellectual property rights and construction of a unified national market, which are discussed at the macro and meso levels. How to turn the Red Sea of competition into a blue sea. For example, industry self-discipline, elimination of backward production capacity, mergers and acquisitions to increase concentration, are the three key paths to control the balance of supply and demand and improve quality, and explore how to move from competition to competition and cooperation. For example, reasonable pricing and new blue ocean strategy are about how to create new blue ocean by innovating and creating value.
According to the order of anti-introversion mentioned by Song Zhiping in his book, the first method is policy guidance. Song Zhiping believes that the orderly competition pattern of the market depends on the synergy between the government and the effective market players. The task of anti-involution can not be accomplished only by the strength of a single enterprise, especially by the policy guidance of the government. On the supply side, enterprises should focus on three types of policies, namely, supply-side structural reform policy, innovation incentive policy and industrial layout optimization policy. On the demand side, we should focus on the policy of expanding domestic demand, seize the strategic opportunity window of expanding domestic demand, and provide high-quality consumption supply.
The second way is to fight against unfair competition. Competition should be based on rules, and vicious competition with disorder and low cost should not be carried out. Song Zhiping believes that the anti-unfair competition law is the pillar of maintaining market order, and the price law focuses on cracking the price involution and regulating the unreasonable pricing below the cost. The rules and laws of the market serve the healthy development of the market. The relationship between market competitors can be cooperation in competition and competition in cooperation, that is, from competition to competition and cooperation. To do a good job of market competition and cooperation, Song Zhiping concluded that we should develop rationality, orderly competition, balanced production and marketing, and healthy market.
The third method is to eliminate backward production capacity and capacity. Song Zhiping said that at present, the excess capacity of many industries is between 50% and 100%, so it is necessary to limit the excess capacity and increase the efforts to eliminate backward production capacity, and to reduce production capacity, it is necessary to regulate local investment attraction and blind expansion of enterprises. Song Zhiping introduced the international experience of the United States, Japan and Europe in eliminating backward production capacity, which includes both government policy support and merger and reorganization methods led by large enterprises. Song Zhiping believes that the closure of backward factories is also the development of productive forces, in the imbalance between supply and demand, but also through off-peak production, reduction replacement and other ways to regulate market supply, to avoid vicious competition.
The fourth method is industry self-discipline and cooperation. Song Zhiping believes that industry associations should not only have the ability to formulate industry rules, but also have the authority to implement industry regulations. At critical moments, they should uphold the principle that industry interests are higher than enterprise interests and escort the sustainable development of the whole industry. After the industry association has formulated the industry rules, large enterprises should take the lead in self-discipline, and small and medium-sized enterprises should also take the initiative to maintain market order, and should not break the industry rules for a small profit.
The fifth method is mergers and acquisitions.The competitive thinking of many enterprises and entrepreneurs is to use market competition to clear the excess capacity of the industry. Song Zhiping believes that household appliances and other industries can use this way, but for industries such as steel, cement and other industries with large investment and the whole process, Westerners say that it will take 40 years to clear the excess capacity by market competition alone. These industries can only use mergers and acquisitions. Song Zhiping has led the mergers and acquisitions of thousands of enterprises in China Building Materials Group, promoted the mergers and acquisitions of more than 600 enterprises in China Pharmaceutical Group, and led the mergers and acquisitions of eight central enterprises successively. He believes that after increasing the concentration of mergers and acquisitions, we can centralize the management of production capacity and market prices. The
sixth and seventh approaches are rational pricing and new blue ocean strategy, respectively. In his book, Song Zhiping introduces the views of Herman Simon and Kazuo Inamori that pricing is management, and that special attention should be paid to pricing. Song Zhiping believes that enterprises should not passively adapt to pricing, but should grasp the initiative of pricing, and that pricing power should be returned to management, not by salesmen. When formulating the new blue ocean strategy, Song Zhiping suggested that enterprises should move from the Red Sea of value destruction to the blue ocean of value creation through differentiation, subdivision, high-end and branding. In the past, everyone's business paradigm was cost-leading and volume-cost-profit, and the pricing model at that time was mostly cost-pricing. But today, it is impossible to continue this paradigm, so we must turn to a new business paradigm adapted to the current surplus era, take a road of innovation and value creation, and realize the transformation from scale cost management to innovative value management through the "four modernizations".
The eighth and ninth methods are to strengthen the protection of intellectual property rights and build a unified national market. Song Zhiping encourages enterprises to actively carry out technological innovation and patent applications, leading enterprises can build patent pools, patent ecology, and some technology-based enterprises can operate intellectual property rights as their own products. Building a unified national market is a major strategic decision made by the Party Central Committee with Comrade Xi Jinping as its core, and is a unified deployment of the Party Central Committee and the State Council from a global and strategic perspective. Song Zhiping believes that the fragmented local protection behavior leads to systematic involution, which needs to be broken, no matter how well the enterprise itself does, it will often be trapped by the environment and system. Once this kind of behavior is eliminated, enterprises will shift from paying attention to local preferential policies to concentrating on improving their core competitiveness, and then return to the normal track of enterprise competition.
Song Zhiping's nine anti-involution methods are a set of systematic anti-involution combination boxing. Its position and pattern not only break through the enterprise level, but also reach the industry level and the national macro-policy level. It not only helps to understand the necessity and importance of innovating the concept of competition from the ideological source, but also helps to reshape the new rules of market competition from the methodology.
Song Zhiping talked about five new rules in the whole book. The first rule is to shift from vicious competition to benign competition, from competition to competition and cooperation, and to strengthen industry self-discipline and cooperation. The second rule is to shift from output reduction to capacity reduction, attach importance to policy guidance, and address both the symptoms and root causes of excess capacity; Rule three, from decentralization to merger and reorganization, from local protection mode to national unified market, pay attention to the boundaries of laws and regulations, improve industrial concentration; rule four, from quantity to price, from cost pricing to value pricing, improve pricing level; rule five, from red sea strategy to new blue sea strategy, use "four modernizations" innovation to increase value. If everyone abides by the new rules of competition, success in getting out of the involution is just around the corner.
3. There are ten best practices
to successfully get out of the inner volume. One of the remarkable characteristics of Song Zhiping's book is to reason with facts, which benefits from his years of practice and observation. During the period when he was the leader of two central enterprises, the company's business covered almost all cities in China. In the process of going out, he also went to many countries. During the seven years when he was the president of the Association of Listed Companies, he investigated more than 600 listed companies and more than 100 non-listed companies. He always liked to see people and things when he was doing business and doing things. The case stories in his book Anti-Involution are all derived from this. There are more than 300 enterprises and cities mentioned in this book, and at the end of each chapter, there is a big case related to the content of the chapter, which is the best practice case that Song Zhiping thinks is well done. The top
ten best practice cases are very hierarchical and representative, and the main body is also divided into three categories, one is the anti-involution of specific enterprises from the enterprise level, one is the anti-involution of the whole industry from the industry level, and the other is the anti-involution of attracting investment from the local government level. Song Zhiping selected six enterprises, three major industries and one major city. The selected enterprises are not only in the field of infrastructure, such as China Building Materials, Beixin Building Materials, Jianlong Group, but also in the field of consumer goods, such as Luhua Group, Yili Stock, and Shenzhen Dajiang in the field of high-tech. The selected industries are not only the express industry and the power industry, which are closely related to people, but also the electrolytic aluminium industry, which you may use a lot but are not easy to access. The local government chosen is Suzhou. The way these enterprises, industries and local governments get out of the involution has a strong reference significance. After 15 years, the
electrolytic aluminum industry has stepped out of the inner volume, mainly because the ceiling of the industry's production capacity has been set, and the national compliance capacity of electrolytic aluminum has been locked at 45 million tons. The policy of limiting production capacity has brought about the steady development and considerable profits of the industry since 2017. The industry self-discipline and cooperation of express industry, mainly through the combination of price self-discipline, network sharing and digital empowerment, gradually get rid of the single price dimension. The national unified electricity trading platform built by the power industry has gone through more than 20 years from the initial idea to the present successful online trading. Finally, market forces penetrate the barriers between provinces, and electricity flows freely like water throughout the country according to price signals.
"Do not compete with others, but compete with no one" is the wisdom of Luhua Group to break out of the industry. The company chooses to make high-end high-oleic peanut oil, takes the lead in resolutely not fighting a price war, and actively safeguards the interests of the peanut oil industry. The price of peanuts purchased by the company must be more than 10% higher than cost of peanuts planted by farmers. Yili shares have successfully opened up a new growth curve mainly through deep subdivision strategy, accurately cutting into various consumption scenarios and groups. As soon as
Song Zhiping graduated from university, he was assigned to Beixin Building Materials, where he worked for 23 years, grew up from a technician to a chairman, and later led Beixin Building Materials to go public, leaving behind the principle of "quality, price and service first" for his successors. This principle is the rudiment of price, cost and profit, and later he formally put forward the concept of price, cost and profit in China Building Materials Group. Song Zhiping believes that an enterprise should win with stable quality, reasonable price, controllable cost and high-quality service, which is why Beixin Building Materials has achieved the world's first gypsum board sales and surpassed its multinational competitors in price.
Song Zhiping took the helm of China Building Materials Group for 18 years, when he jointly reorganized thousands of cement enterprises in line with the trend of the times and the market, making China Building Materials the largest cement enterprise in the world. From the largest scale to the most profitable, Song Zhiping's method is to first increase the concentration through joint reorganization, and then to resolve the surplus by combining the past output with the past production capacity. The Jianlong Group has developed and expanded through organic mergers and acquisitions. It has acquired and reorganized more than ten loss-making iron and steel enterprises in Hebei and other places, but most of them have turned losses into profits. Mainly through a set of systematic post-investment integration methodology, it has activated the shock fish into a new force and realized the co-evolution between itself and the acquired enterprises. Shenzhen DJI has an unshakable market position in the field of UAVs, which hides its unique competitive philosophy. It regards patents as core strategic assets, carries out forward-looking patent layout, and builds a very high industry barrier. This patent strategy model helps it realize the transformation from struggling in the Red Sea to dominating in the Blue Sea. Suzhou is known as the strongest economic prefecture-level city in China, the highland of innovation, and the first city of specialization, specialty and innovation. It has created a good business environment, mainly through institutional opening, active integration into regional innovation networks, and precise cultivation of industrial clusters, and has taken a unique path from cost depression to innovation highland, from involution competition to ecological win-win. This book teaches us to innovate eight competition concepts, reshape five new rules of market competition in nine ways, and give ten best practices that can be referred to in depth to carry out systematic, comprehensive and multi-dimensional anti-involution, and ultimately promote enterprises from vicious competition to value co-creation. This is a thoughtful, methodical and practical book, which is like a timely rain for our industries and enterprises deeply involved in the volume, and is also a comprehensive guidance. I suggest you read it, and you will benefit a lot. How can cement industry establish a new consensus and restore the healthy ecology of the industry in the game of the stock market? China Cement Network will hold a " < a href =" https://www.ccement. in Hangzhou on April 9-10.
浙公网安备33010802003254号