Whoever God wants to punish, let him go into manufacturing

This is a catchphrase circulating in the circle of Chinese manufacturing bosses. Especially in today's rapidly changing era, industrial people have almost become confused "night runners": anxious, panicked, alive, dead

However, through rigorous historical deduction, Wu Xiaobo has opened up a little light for the transformation of China's manufacturing industry - in 2016, China's manufacturing industry ushered in a golden five years.

On the morning of the 27th, Wu Xiaobo's "Battle of Transformation - Manufacturing Industry Thousand People's Lesson" opened in Shenzhen. Wu Xiaobo gave a speech titled "2016, Made in China Welcomes the Golden Five Years". How should China's manufacturing industry transform? What opportunities and pitfalls are there? The dry goods are full.

Will China's industrial economy face a tragic fate of total collapse in the next five years? Or to complete the transformation of rebirth, all fate is in one's own hands.

History: Four Transformations: The Hardest Manufacturing Industry

Our country's manufacturing industry is the hardest, and from 1978 to today, we have undergone four major transformations. The first transformation began in 1978, the first year of China's reform and opening up, when the Third Plenary Session of the 12th Central Committee was held. Before 1978, it was a country with a focus on China's military industry, giving priority to military industry. After 78 years, Deng Xiaoping talked about reform and opening up, and the Third World War could not have erupted. We need to carry out people's livelihood construction and develop light industry. In 1978, China's manufacturing industry was very backward. At that time, China's total economic output was one-third of that of Japan. We began our first transformation from a very low starting point. From 1978 to 1992, the main force that completed China's first transformation was not our state-owned enterprises, but township enterprises. We are not talking about township enterprises now, but about private enterprises.

During that period, China had four years of transformation in rural enterprises, especially in light and small integrated processing, light industry, small enterprises, collective economy, and processing industry. Outside the system of military industrialization, these are basically buttons, bags, shirts, cables, iron pots, bicycles, printing and dyeing, and so on. These enterprises gradually rise and then excavate the engineers and equipment of state-owned enterprises. At that time, there was a Canton Fair in Guangzhou, held twice a year after the founding of the People's Republic of China. It was the oldest commodity fair in China since the founding of the People's Republic of China. When these small and light enterprises came to Guangzhou, they were not eligible to enter the Canton Fair. Before 1985, there were no college students allowed in rural enterprises in China. There was no college student, and all universities were allocated by the state.

After 1986, Song Jian, the director of the National Science and Technology Commission of China, went to Hangzhou to conduct research. The CEO of Vientiane Group was born in 1940 and is still there. Song Jian said to him, 'What are your requirements for the country?'? He said he didn't have any requirements, give me a college student. Song Jian said to come back and find a way, and the National Science and Technology Commission replied that for 80000 yuan per person, I will give it to you as a college student. The 80000 yuan in 1986 is approximately equivalent to the current 80 million yuan.

In 1986, I paid 80000 yuan to hire a college student and ran to the Canton Fair, but they didn't let me in. Do you want to go in? Join the association. Some people are unwilling to spend 200 yuan and climb in through the window. Organize a private commodity trade fair next to the venue of the Canton Fair, and it is still here today.

Why are Zhejiang people so powerful? Before 1990, Zhejiang businessmen had a bad reputation nationwide. Why? Wenzhou people were engaged in commerce at that time, but after 92 years, Zhejiang people became very similar. The term "Zheshang" appeared, and the first time it appeared was in 1995. Before 95 years, there was no concept of Zheshang, but after 95 years, there was Zheshang. Why are Zhejiang merchants very similar after 92 years? Because Zhejiang began to develop a market economy in 1992, it is the most developed region in the country. Up to now, the global small commodity market is located in Yiwu. Up to now, the world's largest clothing trading market is located in Hangzhou. At that time, there were over 3000 professional markets in Zhejiang Province that ranked first in the country. This is the first transformation, where township enterprises have established their own circulation system outside of the state-owned circulation system.

In 1992, China began to develop socialism with Chinese characteristics and entered a new direction. How did this transformation change bring about? Through the 14 years of development from 1978 to 1992, we have experienced two stages. The first stage was in 1988, when Chinese township enterprises had the same user base in China's manufacturing industry as state-owned enterprises. In 1988, the total profit of Chinese township enterprises exceeded that of state-owned enterprises. In 1988, Deng Xiaoping said that the biggest surprise of China's ten years of reform was the sudden rise of township enterprises, which had already supported half of China's territory. After 15 years of development, China's industrial scale began to expand, and suddenly there was a shortage economy that gradually entered a supply economy. In 1992, as long as it was produced, it could be sold out. Now brands need to have a positioning, their own brand, and their own market. The competitiveness of enterprises has shifted from production capacity to market capacity, and the Chinese economy has evolved into a market economy.

After 92 years, Chinese goods began to develop, and the people had some money in their hands, so we need to improve their lives. What should we do? Make them eat and dress well, so the clothing and beverage industry has started, as well as health products. What should we do when we eat and dress well? It's best to have an air conditioner and a large refrigerator in our home during the summer. After 1989, we started to have televisions and home appliance companies. Chinese clothing brands, Chinese beverage brands, and Chinese home appliances, as you can recall, over 90% of brands in these three industries became famous between 1992 and 1998, marking China's second transformation.

After 1998, we faced another transformation. In 1998, there was an economic crisis and a big foam of currency occurred in Asia.

In February 1998, during the National People's Congress and National People's Congress, Premier Zhu Rongji stated that 70% of China's industrial production capacity needed to be increased, and Chinese manufacturing enterprises needed to transform and upgrade, leading the country forward. Even if there is a vast abyss, we must make every effort. Health products are consumed every day, including refrigerators and washing machines. Zhu Rongji said he bought cars. In 1998, China opened up the real estate industry, and in 1998, China cancelled leasing and housing distribution. He started learning from Hong Kong and started buying houses through mortgage. The first year of China's real estate industry was 1998. When people started buying houses and cars, China's entire industrial economy shifted from a light industrial model dominated by clothing, beverages, and home appliances to a heavy industry. Whether it was urbanization or housing, it required a large amount of steel, aluminum, electricity, and coal. All energy was produced on a large scale, and the entire industry entered the fourth tier.

In 1998, the Chinese government opened up the Chinese import and export market. Before 1998, all enterprises engaged in foreign trade needed import and export companies, clothing import and export companies, and machinery import and export companies. Sitting between Chinese private enterprises and foreigners, after 1998, private enterprises no longer needed import and export companies. Chinese private enterprises destroyed France and Italy, and almost everything they bought back (Made in China).

Today, there is a very good-looking person in China - Jack Ma. When was Alibaba founded? In 1999, he founded Alibaba for six months and ranked first in the global C2B e-commerce industry. He became the first Chinese entrepreneur to appear on the cover of Forbes in China. What is C2B? Among the 100 township entrepreneurs, 99 do not understand English. Foreigners need to come to China to purchase goods, and they are even worse off than Chinese township enterprises. 100 foreigners do not understand Chinese, have different voices, and information asymmetry. They need to establish a commodity trading platform. Alibaba, the largest online trading market, can set up a stall and trade on it. After 1999, for a considerable period of time, Alibaba was not today's Alibaba on Taobao or Tmall, but rather related to Made in China.

This is how we have undergone four transformations since 1978. It has undergone two consumer transformations. When did you get into a car and when did you live in a commercial house? It was from 1998 to 2015 across the country. An industrial economy is developing, and we have come to this day not suddenly. The development of China's industry has not rushed to the present day with great momentum. Many military enterprises and state-owned enterprises before 78 years ago, are there still any? 78 years ago, the world's largest industrial and agricultural residential area, where hundreds of thousands lived, is there still one? Many township enterprises disappeared between 78-92.

In 1984, there was a place in Beijing that sold computers, Zhongguancun. Do you know why it was called Zhongguancun? The eunuchs in the imperial palace, where the central government is located, were carried to the outskirts of Beijing to be buried after their death, called Zhongguan. The pile of dead people burying eunuchs is called Zhongguancun, a very remote area in the suburbs of Beijing. In 1984, many people sold computers there and worked in the economic and trade market, leading to the emergence of very excellent enterprises. Lenovo began in 1984. In 1988, Zhongguancun was already quite developed, with the top ten enterprises in Zhongguancun. By 2008, ten years later, looking at the top 100 Zhongguancun enterprises in 1988, there were only three remaining.

After 92 years, many of our clothing companies, beverage companies, and home appliance companies, with only a few brands surviving to this day, reaching the fourth industrial cycle. If interested, please list the top 100 private enterprises in China in 2015, with 60% facing collapse. Jiang Shandai has talent, and by 2015, China's total economic output surpassed Japan to become the world's second largest economy. The entire process is the result of continuous transformation and innovation by generations of entrepreneurs.

Now: Why can't we make money today

Why are we having difficulty today? Firstly, in the manufacturing industry, in 78 years of history, the fourth transformation has come to an end. After the fourth transformation, the three major advantages we have had over the past 36 years, namely cost advantage, scale advantage, and institutional advantage, have basically been lost. It is not that we are not smart, China is getting richer, and Chinese consumers are still willing to consume. The renminbi has not collapsed, and the industry can still maintain 10% -20% growth. Why can't we make money? It's not that you've become stupid, but that your original competitive advantage has been lost. The most terrifying thing in today's world is the loss of ability, with the sudden loss of core competitiveness. Took away your original advantage in another place. We are talking about transformation, and we are sitting here today to acquire new capabilities, tools, and business models. This is the problem we are facing today.

Last year, I went to the Economic Symposium organized by the Premier at the State Council. I was the third speaker, and behind me were all entrepreneurs. Before me were all the best macroeconomic economists in China, from the Ministry of Finance, the Chinese Academy of Social Sciences, HSBC, Peking University and Tsinghua University. From a macroeconomic analysis perspective, an economist said that today China is in a period of deflation, where supply exceeds demand and the streets are filled with things. Then Premier Keqiang said that they believe that China will be in a golden period in the next five years, and that China will be in a period of deflation. At this time, everyone should not have any illusions, as supply will still exceed demand in the next five years. Meanwhile, this macroeconomist said that not only China is experiencing deflation, but the world is also experiencing deflation. In the past two years, central governments around the world have been doing the same thing, accelerating currency printing and quantitative easing. The past two years have been the most intense currency competition since 1945, and the renminbi has been relatively good. Going to Japan now, things in Japan are so cheap. In the past two years, Japan has depreciated by 25%, while going to Europe is very cheap. In the past two years, it has depreciated by 48%. I went to Antarctica in February this year. Three years ago, I went to Antarctica to exchange one dollar for Argentine dollars at a rate of 1:1.6. After getting off the plane, I went to exchange it at a rate of 1:4.7. Can this country make a living? Three years of time.

Internet Impact. We are in the manufacturing industry. In the past few years, the real estate and manufacturing industries have not done well. We are doing real estate and buying land to build real estate; The second is speculation in stocks, and the third is the internet. Everyone is very angry and aggrieved. I work every day, starting at 8 am and ending at 6 pm, for over ten hours. My net profit is only 3%, 5%, and I don't even have 3% in foreign trade. Then there are some companies with an annual net profit of 20% -30%, Baidu's net profit of 35%, Alibaba's 36%, and Tencent's 28% in Shenzhen. The internet has caused a great impact.

Last year, I went to the Economic Symposium organized by the Premier at the State Council. I was the third speaker, and behind me were all entrepreneurs. Before me were all the best macroeconomic economists in China, from the Ministry of Finance, the Chinese Academy of Social Sciences, HSBC, Peking University and Tsinghua University. From a macroeconomic analysis perspective, an economist said that today China is in a period of deflation, where supply exceeds demand and the streets are filled with things. Then Premier Keqiang said that they believe that China will be in a golden period in the next five years, and that China will be in a period of deflation. At this time, everyone should not have any illusions, as supply will still exceed demand in the next five years. Meanwhile, this macroeconomist said that not only China is experiencing deflation, but the world is also experiencing deflation. In the past two years, central governments around the world have been doing the same thing, accelerating currency printing and quantitative easing. The past two years have been the most intense currency competition since 1945, and the renminbi has been relatively good. Going to Japan now, things in Japan are so cheap. In the past two years, Japan has depreciated by 25%, while going to Europe is very cheap. In the past two years, it has depreciated by 48%. I went to Antarctica in February this year. Three years ago, I went to Antarctica to exchange one dollar for Argentine dollars at a rate of 1:1.6. After getting off the plane, I went to exchange it at a rate of 1:4.7. Can this country make a living? Three years of time.

Internet Impact. We are in the manufacturing industry. In the past few years, the real estate and manufacturing industries have not done well. We are doing real estate and buying land to build real estate; The second is speculation in stocks, and the third is the internet. Everyone is very angry and aggrieved. I work every day, starting at 8 am and ending at 6 pm, for over ten hours. My net profit is only 3%, 5%, and I don't even have 3% in foreign trade. Then there are some companies with an annual net profit of 20% -30%, Baidu's net profit of 35%, Alibaba's 36%, and Tencent's 28% in Shenzhen. The internet has caused a great impact.

Last year, I went to the Economic Symposium organized by the Premier at the State Council. I was the third speaker, and behind me were all entrepreneurs. Before me were all the best macroeconomic economists in China, from the Ministry of Finance, the Chinese Academy of Social Sciences, HSBC, Peking University and Tsinghua University. From a macroeconomic analysis perspective, an economist said that today China is in a period of deflation, where supply exceeds demand and the streets are filled with things. Then Premier Keqiang said that they believe that China will be in a golden period in the next five years, and that China will be in a period of deflation. At this time, everyone should not have any illusions, as supply will still exceed demand in the next five years. Meanwhile, this macroeconomist said that not only China is experiencing deflation, but the world is also experiencing deflation. In the past two years, central governments around the world have been doing the same thing, accelerating currency printing and quantitative easing. The past two years have been the most intense currency competition since 1945, and the renminbi has been relatively good. Going to Japan now, things in Japan are so cheap. In the past two years, Japan has depreciated by 25%, while going to Europe is very cheap. In the past two years, it has depreciated by 48%. I went to Antarctica in February this year. Three years ago, I went to Antarctica to exchange one dollar for Argentine dollars at a rate of 1:1.6. After getting off the plane, I went to exchange it at a rate of 1:4.7. Can this country make a living? Three years of time.

Internet Impact. We are in the manufacturing industry. In the past few years, the real estate and manufacturing industries have not done well. We are doing real estate and buying land to build real estate; The second is speculation in stocks, and the third is the internet. Everyone is very angry and aggrieved. I work every day, starting at 8 am and ending at 6 pm, for over ten hours. My net profit is only 3%, 5%, and I don't even have 3% in foreign trade. Then there are some companies with an annual net profit of 20% -30%, Baidu's net profit of 35%, Alibaba's 36%, and Tencent's 28% in Shenzhen. The internet has caused a great impact.

Thirdly, there is a mismatch between supply and demand. Why go to Hong Kong to buy milk powder when shopping? Why go to Japan to buy eye drops, rice cookers, and toilet seats. Have you ever been to Paris, Old Buddha? I don't like shopping when I go there. I sit there and watch. There are a bunch of Chinese people who are too rich. There are two black people standing at the door, pulling a rope and letting ten people in. When I come out, I let ten more people in. In Dubai, there is a mountain spring hotel with nearly 500 rooms. Last Christmas, 490 of the 500 rooms were Chinese.

New Opportunities: Three New Strategic Starting Points for the Golden Five Year Plan

China's manufacturing industry now has three strategic new starting points. Which three new starting points?

Firstly, the internet has become a universal project, it is our infrastructure. What are the characteristics of infrastructure? Two characteristics, ubiquitous and very cheap. If you ask the three bosses of BAT what the internet is, they tell you a standard answer is that the internet connects everything. The enterprise we are in is currently dealing with internet companies. The biggest headache is to buy traffic from them, Baidu's bidding ranking, we open stores on Taobao, Tmall, there are direct trains, and there are bidding rankings. It's all traffic. Why can we earn our money through traffic? Because they completed the connection.

But today's BAT faces a new challenge because the era of traffic being king has come to an end. If we do the internet in the future, we sell things, and if your business still relies on traffic distribution, your costs will be even higher than the ground. Why are there many internet celebrities today, why live streaming mode is emerging, and why community economy is emerging? These are all refutations to the idea that traffic is king. At this time, we say goodbye to Jack Ma. Some of the internet economies formed in the past few years, such as the internet with traffic as king, will disappear and disappear. The era of internet enlightenment has come to an end and has become our infrastructure.

The most important ability in the future is how to run faster, how to turn water into drinks and alcohol, and how to turn it into tools. It is a tool that we can use, not our foundation. What is our essence? Our fundamental goal is to make a good pair of shoes and bathroom, which is our fundamental goal. We should not lose confidence because of these Internet entrepreneurs, nor should we place our destiny on BAT, whether Jack Ma, Hua Teng Ma or Robin Lee. They are all our tool providers.

This is a new starting point. With the development of the Internet to this day, the tool revolution has come to an end. In virtual sports, there will be no tool revolution in any sense in the next five years.

Secondly, the fourth global industrial revolution. How can I improve my labor production efficiency, how can I iterate my products? The global manufacturing industry is thinking about this issue, and how to revitalize it. Why didn't this topic be discussed before, and why is it starting today. When he went to the United States, Obama attached great importance to the manufacturing industry and proposed the American Manufacturing Reengineering Plan. Japan called it the Japan Industrial Revitalization Plan, Germany called it Industry 4.0, and China called it Made in China 2.2. Why did Germany, the United States, Japan, and China refocus their national strategies on the manufacturing industry. It is because the information revolution has come to an end and the internet has become a universal tool.

We are in the global manufacturing industry. If we were 30 years behind the Americans and Japanese in 1978, and if we were still five meters behind them by 1998, we would be half a size behind them today.

In the future industrial revival plan, in the Fourth Industrial Revolution, the paths of Americans and Germans were different, and China was sandwiched in the middle. Americans believe that my strategic plan requires a lot of hardware, such as building space shuttles, unmanned cars, and VR systems. Americans will continue to amplify the achievements of the information revolution it has led over the past 20 years. The current leader of the revival of the American automotive industry is Musk.

German, hidden champion. They never produced entrepreneurs like Steve Jobs and Musk. But in Hanover, we see many production revolutions. A production line in Germany, standard engineering for Industry 4.0 worldwide. Private entrepreneurs run to Hanover, and when they get there, they come back. Some people ask what they have learned from going to Hanover? Three experiences, focusing on the Germans, learning from their production line revolution, and learning from their workshop revolution. Learn from Americans and buy and sell around the world. In the coming years, buying a portion of the world's manufacturing intermediate industry can greatly win. We use RMB to buy it. The RMB is the largest currency foam in the world, the real estate foam is the projection of the RMB foam, and China's currency exceeds that of the United States. We use the world's largest foam to buy the world's best weapons. We have helped the Prime Minister deliver foam to the world.

In the next few years, we will not only sell our products to the world, but also deliver the foam of RMB to the world, buy their workshops, factories and machines, which is very important.

Thirdly, consumption upgrading induces supply side reform. The term "supply side reform" was first proposed by the central government at the meeting of the "Three Reform" group in November last year, referring to the reform of the supply side structure. I believe this term is a core strategy for the reform of China's manufacturing industry during the 13th Five Year Plan period for the next five years. What does this mean? The determination of the central government to eliminate outdated manufacturing capacity has been made. The central government has clearly recognized supply side reform, deflation, and supply side reform. Supply mismatch, mismatch will generate potential energy, which is called adaptive potential energy. As long as it is matched, there is a chance. Is there a supply side configuration in Europe? Is there a supply side configuration in Japan? No. The supply side reform cannot meet the current consumer demand, and China has created new consumer groups. Who are these consumer groups? Those who went to Japan to buy toilet covers are middle-class Chinese. This is the true significance of supply side reform, the middle class.

I will tell you a story. In 2009, I led a research project where an American company helped Chinese entrepreneurs create digital models. Find twenty well-known entrepreneurs and interview each entrepreneur for 20 hours. Form a conclusion based on the results of these interviews and compare them with other countries to propose what your entrepreneurial digital model is. The result of the model at that time was, for example, that the entrepreneurs of your generation in China focused on attacking, lost on defense, and roared around the world, but the food and grass did not keep up. Secondly, most entrepreneurs in China are lion like, with a strong desire for dominance and weak team building abilities. One lion leads a flock of sheep. Thirdly, the tradition of Eastern entrepreneurs is to speak the world, save this, and save that. One of them, I was surprised when I saw it. He said, 'When Chinese entrepreneurs faced the lack of innovation in the local market, there were four or five experts at that time. Look at me, I look at you, I'm surprised.'. This generation of Chinese entrepreneurs is facing the world's largest local market due to insufficient innovation.

Where did the product come from? I copied it from somewhere else. So far, have you seen a foreign company in China that has successfully sued Chinese companies for intellectual property infringement in the past 30 years? No, China's intellectual property rights are about protecting Chinese enterprises.

The brands of mountain bikes are either French or Taiwanese. Today, I bought a few thousand yuan mountain bike in China, and all the indicators, such as its brakes, stools, and height, are European. We Asians have bodies, they sell us expensive cars and never study our Chinese physique.

Later on, for many years, I was wondering why they faced insufficient innovation in the Chinese domestic market? Why do generations of Chinese entrepreneurs face insufficient innovation in the local market. It's not that these entrepreneurs are not smart, they are the smartest. Why? Because there are no consumers in China willing to pay for your innovation. Because Chinese consumers believe that the four words' cheap and high-quality 'can easily buy the best products in the world at a low price. Because no one can pay for your basic research and development, you won't invest in it at all. You will focus all your experiences on two areas: first, reducing costs, and second, expanding scale.

Is this a problem for Chinese entrepreneurs? No, global entrepreneurs are the same, and so is the United States. After the founding of the United States, the first thing it did was to plagiarize the British, completely copying them. By 1894, the United States had become the largest manufacturing country and was still plagiarizing Britain. The British were very angry, to what extent? If an engineer working in a US textile factory applies to travel to the UK, the visa will be refused. If applying for British citizenship, it is absolutely not possible. Why? You are here to be a spy. When did Americans start studying American businesses to get rid of plagiarism against the UK? The 1920s were the era of the rise of the American middle class, and the United States became a nation on wheels. Americans began to be willing to pay for the American spirit, culture, values, and aesthetics. Later on, a pile of American jeans emerged, including Coca Cola, Hollywood, Disney, McDonald's, and Starbucks, all of which began in 1920.

We say that Japan is a spirit of craftsmanship. For a long time, from the 1940s to the 1970s, Japan mainly copied from the United States. In those days, "make in Japan" was synonymous with cheap goods. When did Japan start to care about serving Japanese consumers? In 1970, the United States in 1920 and China today began to produce a middle class.

Today's China has seen the emergence of the United States in the 1920s and Japan in the 1970s. There are 150 million middle-class consumers.

Why do we say that at the beginning of the golden five years in manufacturing, all the advantages of past success have been lost, and we can clear them to zero. We are now standing at a new starting point, and the internet has become a universal tool. We no longer need to be afraid of the internet; Secondly, in terms of hardware revolution, China, like a global manufacturing powerhouse, is on the foundation of the new Industry 4.0; Thirdly, there have been revolutionary changes in domestic consumers. Those who succeed in the next five years are built on these three starting points.

Big Companies: Emphasizing Two Revolutionary Driving Forces in the Future

In the next five years, major Chinese companies will have these characteristics. Firstly, they will lose their benchmark for growth. Last year, I went to Haier, Midea, and Suning to conduct research. Entrepreneurs and bosses all told me that after 2016, for large Chinese companies, the era of competition has come to an end. All major companies have lost their benchmark, what are the challenges? We need to pool resources. When I led the world, I was thinking, have I innovated a management model that is not available in the world, have I innovated a product model that is not available in the world, and is it possible? It is not impossible, it must become necessary.

I am very confident to tell everyone that there will be a Chinese style management philosophy in the next 5-10 years. With the emergence of business models, many Chinese companies have already innovated their business models in the internet, followed by the service industry, cultural industry, and manufacturing industry, where a group of benchmark companies will emerge. Whether it's Midea or Haier, they are starting to buy manufacturing, cinema lines, and insurance companies nationwide. The future globalization characteristics of Chinese companies will become increasingly evident. So far this year, China has 216 companies in the Fortune 500. We have calculated that in 2017, at the latest in 2018, China will surpass the United States as the largest country in the Fortune 500.

Secondly, management begins to undergo a paradigm shift. I went to Haier three times and saw that it was still the same park and the people wearing the same clothes. But today's Haier, the entire organizational structure has changed. Zhang Ruimin said that hierarchical management has come to an end. Originally, there were 12 levels from the CEO to the lower level, 4 levels of management, and 8 levels of employees. Today's Haier is divided into three levels. What are the characteristics of completely flattened management? The characteristic is that the company will have countless assault teams. In the future, the company will no longer be a pyramid, but a assault team model. One by one, the assault teams will attack a certain industry. What will it be like? It is a classic explosive, a commando model+a classic explosive model, and the future of enterprises is like this. Large scale group operations face uncertain market innovation, and the organizational capabilities of large companies have disintegrated. In this innovative sense, large-scale organizations have been lost. Firstly, organizational structure needs to be differentiated, and future organizational innovation is very important.

Thirdly, we will participate in global technological innovation. Last month, it was just announced that Huawei ranked first among the companies with the highest number of patent applications in the world in 2015; Qualcomm ranked second, ZTE ranked third, and Huawei ranked first for two consecutive years. Last year, Huawei applied for over 2600 patents, and these companies are worthy of everyone's respect and learning. Chinese small and medium-sized enterprises are also actively participating in global technological innovation. The number of large enterprises in China will continue to increase in the next five years, but its growth mode will be completely different from the past. It will no longer be based on cost and scale advantages, but rather on innovation and integration, but rather on management mode transformation and technological innovation.

In this process of change, there are two revolutionary driving forces, which are the most crucial for all enterprises. Firstly, in the field of information, the Internet revolution. What does the Internet Revolution bring now? For all manufacturing industries, if you think of Internet plus, I used to be an e-commerce business and sell it through Suning and Gome. Now, I have formed two teams to drag e-commerce to the Internet and sell it on Tmall, Taobao and JD. The KPI I gave to my department is 15% online sales this year, 30% next year, and 50% the year after. That's wrong. The transformation of the internet is definitely not about industrial effects, marketing requires results. Firstly, there is the concept. The aging of leaders is the aging of concepts and abilities, followed by tools. You will use the information tools of the Internet, big data, cloud computing, to re engineer the genes of the enterprise, and ultimately transform three things.

Firstly, redefine channels. I have written a book before titled 'Unusual Marketing', which describes the largest and best marketing company in China. This person is called the father of marketing. Wow, my biggest ability is to establish a huge marketing system across the country, producing a bottle of mineral water in Hangzhou for one yuan, and selling it to Lanzhou and Lhasa for one yuan. All the channel merchants, provincial agents, and retailers in the middle do not make money, but these bosses make a lot of money along the way. There can only be one line between the products in the workshop and the consumers at most. What will happen in the future if you utilize big data? The truly ultimate model is that there is no channel between the workshop and consumers, and this day will definitely come.

We are looking for such enterprises in China, and ultimately they are produced by factories and directly reach consumers. There are no channel providers in between, as there is no need for any channel providers. All information between me and consumers is interactive. Even if you buy my flowers, after buying them, I will know how much ability you have to buy flowers. Do you buy flowers once a month? I still buy flowers every two months. Our family eats rice and bought Wuchang rice. Big data tells me how many people in your family, how many kilograms of rice do you eat in a month, and when you need to buy rice again, even if you buy a bed. Big data can tell you that it seems like you have bought a new house recently, which has a sense of your consumption. The ultimate revolution is that all channels will be lost, and if all channels are lost, in whose hands will the ability be held? In your hands, the profits of the manufacturing industry will increase exponentially. If all intermediaries are removed, inventory costs and channel costs will disappear, and 20% can be used for e-commerce. This is a redefinition of channels.

Secondly, to redefine technological innovation, we have many technological innovation platforms that will be open in the future. I went to a company in Beijing a few days ago, and their boss recently led a team to create a platform that brought all industrial designers in China to one platform. All industrial design manufacturing companies said they wanted to design an image of a toilet lid and an image of an electric rice cooker, and put it on this platform.

The future competition, complete platformization, and the ability of enterprises will be redefined, especially for parts and components, which will be completely platformized. When capabilities are platformized, one thing will happen, which is currently the topic of discussion in the Chinese technology community, structural innovation.

Have you ever played LEGO games? Buying back LEGO games, each child's assembled LEGO toy is unique and can create a unique LEGO toy in the world. That is to say, when making any product, there can be structural innovation, and the rest is different from others? We have hired Panasonic, a bathroom worker. After listening tomorrow, you will ask yourself, 'Is it possible for me to enter the toilet lid industry in June 2016?'? It's completely possible. You don't even need to build a workshop, you don't even need to build a channel, just remember, he's doing so well, why can I still do it? You only need 1% of your abilities. The part of technology entrepreneurship needs to be redefined in the internet.

Thirdly, redefine consumers. Previously, after producing something, it was sold to consumers through advertising, channels, and for the first time, if the product was good, they would continue to consume and then buy my product. But today, most of it has already been structured, and the true consumers of the future will be a trinity. Firstly, they are the buyers of your product, and secondly, they are the participating producers of your product. This bed, even if it is a TV, what it looks like, consumers participate in the design. Is it possible to achieve it now? It is fully possible to achieve customization and participate in design through the internet. Thirdly, you are my investor, because in today's world, any commodity may be securitized. Can a movie be securitized, a suit be securitized, and a trip be securitized. The future consumers will not be one-way B2C, but consumers have mastered sovereignty, purchasing sovereignty, product design sovereignty, and even product investment sovereignty. Now is the arrival of the entire era of consumers, which is the result of the Internet.

What is the second revolution of the Internet? The hardware revolution. The important thing is not to become the second Lei Jun, but to surpass the Lei Jun. While using internet tools, we need to understand these things: flexible production lines, robots, sensors, cognitive technology, VR technology, new materials, new energy. What are we looking at in Industry 4.0? These are the things that will become our standard equipment, and all of our production lines will undergo comprehensive transformation. If there were no flexible production lines, the transformation of consumer relations would be a concept. If there were no robots, customized production and improved labor efficiency would only be a concept. Without sensors, chips, microprocessors, and data mining, big data is just a concept. These things are what we see in Germany, and the United States is also changing.

Why do I say that many companies will be eliminated? I am going to Germany this time, and there are a group of very powerful hidden champions in Germany. The term "hidden champions" was proposed by German scholar Hermann Simon. Why is Germany so strong in Europe because we are hidden champions. What is a hidden champion, with three characteristics that rank first globally in a segmented industry. The annual sales revenue is approximately one to two billion US dollars. Thirdly, it is unknown and no one knows it. This concept has not changed to this day, as the number one in the world has not changed, as it is unknown. The second possibility has changed, from one hundred million US dollars back then to three hundred million or five hundred million now.

There are nearly 3000 companies like Germany. We conducted a survey and believe that within the next five years, 40% of nearly 3000 hidden champions will disappear. The Germans told us that 40% of the best 3000 companies in Germany will disappear within the next five years. It's the hardware revolution, which has disrupted the manufacturing advantages of these hidden champions. The fundamental path is not the original one, but an understanding of the manufacturing process. It's no longer the current change, but a detour. The ability formed originally, the molds formed, and the machine tools formed are not much needed. These are two major revolutionary driving forces.

Consumption upgrade: layering+performance ratio+personality+

Consumption upgrading has these characteristics. Firstly, stratification. When we talk about the emergence of 150 million consumer groups in China, where are they and most of the market? Circle. Have you ever bought these watches from these brands? What is the relationship between Swatch, Omega, and Longines? They are the same company, Swatch Group, with the cheapest one thousand RMB and the most expensive one million RMB. They belong to different consumers. Why does a company have so many brands? Because consumers are stratified, different consumers have different needs. A newly married couple's demands for watches and a mattress are different from those of the middle class.

Why is such a brand cluster strategy emerging? This is because all products will exist in the circle. In this sense, China does not have mass brands, no mass orientation, no mass consumption, and everything is niche. Why did it say earlier that enterprises need a commando model and an accurate model? In this sense, whether it is a large enterprise or a small enterprise in the future, a classic model is cellular organization. Is there a problem when a honeycomb falls down? Another honeycomb will grow, and the bottom plate of one honeycomb is made of three things. Firstly, what do I do? I am a mattress maker, clothing maker, bathroom maker, and have professional skills. Why are these honeycomb cells together? The only reason for sticking us together is that we are capitalists. Each honeycomb is a group, and this time we will invite Liu De, the CEO of Xiaomi Ecological Chain, to talk about Xiaomi's ecological chain. Starting from a router and becoming a drone, why can you do it? He will come to tell us how Xiaomi forms a honeycomb pattern in its organizational structure. He may not be called a honeycomb, but it may be another term, but the principle is the same. Professional skills, assault teams, and capital have brought us significant changes.

Secondly, performance ratio. Last year we talked about the toilet lid incident, what are the biggest characteristics of middle-class consumers? He is willing to pay for good service. Willing to pay for good performance and willing to pay for good technology.

Thirdly, the personality aspect. The two hottest words this year are internet celebrity live streaming. This girl's name is Zhang Dayi and her nickname is Da Auntie. Last year, she sold clothing for 300 million yuan on Sina Weibo. Nowadays, such models are popular in China, the United States, and Japan. As I mentioned earlier, internet tools, connections, and the rest are surplus products. Why buy this dress? Why? Do I need to wear a skirt? Why did you buy this skirt? Why? It's because I like it. In the future, middle-class consumption will surpass necessity in terms of "liking" and "aesthetics", and the soft will surpass the hard. Behind aesthetics lies values and personality. With the development of Taobao to this day, such a corrupt enterprise faces bottlenecks in its development. Behind every brand, there is a personality.

Fourthly, customization. Red collar workers were the ones who taught us last year and were the earliest in China to build customized chemical factories. The entire production line is flexible, and in the future, such production workshops and flexible production workshops will appear in almost all fields in China. Customization is the fundamental process of de channel.

Fifth, direct sales. Mingchuang Youpin, an entrepreneur born in the 1970s, is the boldest person in the past two years. Will he still rent a stall to open a grocery store? He did it. He told me how to integrate the best manufacturing capabilities in coastal areas, how to choose the best prime locations in Beijing, Shanghai, and Shenzhen, and how to put these products inside. How to make my products react within seven days, and if it's good, it should be shipped over immediately, and if it's not good, it should be removed immediately. Over the past two years, the development has been very rapid, with a direct sales model.

China's suit, furniture, and clothing industries have undergone various transformations and transformations. We are facing the future with great uncertainty, but we have formed a new strategic starting point, and some companies have explored new business models in front of us, supply and distribution. The future is not the five years of being a yellow faced woman, not the five years that disappoint us, but a golden five years.

In the next five years: To live, you must possess the ability to

But in the next five years, there will definitely be a major elimination, and in Germany's next five years, the best 3000 companies will be eliminated to 40%. Five years from now, if we have another chance, if all one thousand of our friends can still sit here, we will be the last happy ones. We need to be able to get together and be here in five years, and we must develop such abilities.

Firstly, we need to form flexible capabilities in production; In terms of research and development, we need to achieve the explosive product capability of single point breakthrough. In terms of marketing, we need to learn to use big data, get rid of the cost pricing model in terms of price, and firmly feed the foam of RMB into our own stomach. We need to become part of the foam.

We must make our own enterprises securitize as soon as possible, and the future world will be the world of securitization. The ability of a company to make profits comes from two parts. The first part comes from the industrial part, which includes how many refrigerators are sold, how many air conditioners are sold, how many clothing are sold, and how many machinery are sold. Another ability comes from the ability to capitalize. By selling these things, an industry expectation is formed. How to turn this industry expectation into capital capability through securitization, P/E ratio, P/E ratio, and driving force for industrial expansion through capital capability.

If there is no such process, you are only working on the concept, we call it the theme. If Chinese manufacturing companies are a subject matter operator in the capital market, you are shameful. But if you can turn the power of securities into the driving force of your manufacturing industry, your P/E ratio, 20 times, 100 times, and these abilities into your driving force, then you are the driving force and advanced player of Chinese manufacturing. We must not leave our buttocks to capital, we must embrace capital.

In today's China, the channels for securitizing its own enterprises are already very extensive. In the past three years, the biggest change in all industries in China has not been in the internet industry, but in the financial industry. If three or five years ago they said they wanted to capitalize and go public, there were over a thousand private enterprises in Shenzhen and Shanghai that needed to queue up and demand people.

Today, there is a new third board in Beijing, with over 8000 companies that can issue bonds, issue funds, directly raise funds, and engage in mergers and acquisitions. You have countless ways to securitize your business. Let oneself form a force in the manufacturing industry, quickly obtain cash, turn this cash into another part of the manufacturing industry's ability, and continuously move forward.

If we do this, it will be a great help to China and a great help to ourselves. Go to Germany and take your own money? Isn't it a fool. Take whose money? The money from the merger and acquisition fund, the money from the investors. Today in China's manufacturing industry, our capital operation ability is our two wings, and we must not change our single wing. If we say 'Made in China', what does it mean? I believe that Chinese manufacturing has become three new advantages from its cost advantage, scale advantage, and institutional advantage, which have been developed in the past 36 years.

Firstly, internet tools. The internet is a genetic reengineering that transforms all of our relationships with consumers, our production lines, and almost all of our capabilities.

Secondly, the spirit of craftsmanship. If you only have the ability to use the internet to transform a company, it is actually just a part of the transformation. For the manufacturing industry, why do I wear a pair of leather shoes when it comes to manufacturing? It's not because you're good at marketing. Because I wear these leather shoes very comfortably, Drucker said, the essence of business is that you make a pair of leather shoes and sell them to that consumer, who wears these shoes very comfortably on their feet.

Thirdly, we need to change our innovation capabilities, building block innovation, opening up our innovation platforms, and becoming a part of global industrial transformation. What is "Made in New China"? "Made in China"? If we change its fate, we still need to return to the industry itself or manufacturing. But it has only become some new factors.

This is my favorite philosopher, he is a madman. He once said a sentence, "God is dead." After he said, "God is dead," the original structural system and philosophical system of the world instantly disintegrated. After God's death, the world will regenerate, and all hard things will disappear. All our past achievements and advantages will disappear. What is about to destroy us will make us stronger in the future.