Although the current difficulties in the survival of small and medium-sized enterprises and the increasing number of bankruptcies have gradually increased, although the large-scale collapse did not occur, the actual difficulties exceeded the financial crisis of SMEs during the 2008-2009 financial crisis. The difficulties of SMEs reflect the plight of traditional manufacturing in China.
The plight of manufacturing companies First of all, the export tax rebate rate was lowered, and the government continued to appreciate, which squeezed the company's profit margins. In 2007, the Ministry of Finance and the State Administration of Taxation issued the Circular on Reducing the Tax Rebate Rates for Certain Commodities, reducing or eliminating the export tax rebate rates for many commodities, and labor-intensive textiles, clothing, footwear, plastics, and toys. The export tax rebate rate for commodities is generally reduced by 3%-8%. The continuous appreciation of *** against the U.S. dollar since 2005 is tantamount to worsening for increasingly difficult export companies.
Second, raw material prices rose, new labor laws came into effect, and corporate costs continued to rise. In 2010, the purchase price of raw materials, fuel, and power in China rose by 9.6%, and most of the production materials required by the manufacturing industry rose in varying degrees. With the implementation of the new "Labor Law" in 2008, the cost of labor continues to rise. According to statistics from the National Bureau of Statistics, the total wages in China in 2009 rose by 14.16% year-on-year. The increase in production costs and labor costs has made manufacturing companies overwhelmed. In fact, the weakening of labor cost advantages in China has prompted some multinational corporations to begin shifting labor-intensive product processing bases to low-cost regions such as India, Vietnam, and Thailand.
Once again, companies are difficult and costly, and they lack the most important funding base for survival and development. Under the current macro-control situation, the limited size of the economy cannot meet the normal needs of the majority of manufacturing enterprises. Taking Guangdong Province as an example, according to incomplete statistics, there are millions of private and foreign-funded manufacturing enterprises in Guangdong, and the potential capital demand has reached more than 2 trillion yuan, while banks can only meet 40% of the fund demand and 95% of the manufacturing industry. The company lacks funds. In addition, the continuous increase in interest rates has also increased the company's cost.
Finally, the inherent risks of OEM production methods are outstanding, with low added value and vulnerability to shocks. The outsourcer controls the brand and distribution channels. OEM companies are basically in the technological, market and production environments. This profit model that only seeks economies of scale is insecure. Once the international environment becomes turbulent, OEM companies will be the first to suffer. Impact. In addition, due to the lowest value-added manufacturing link in the production chain, OEMs have low profitability and are unable to withstand the impact of rapid changes in raw material prices and markets, and increase operating risks.
In view of the above problems, traditional manufacturing enterprises with low value-added and lack of independent brands and technology content are faced with such problems as tight resources and rising costs, and urgently need to find new development paths.
The space for transformation and upgrading Although China's manufacturing industry faces many difficulties, it still can find room for upgrading from some aspects.
In terms of geographical differences, there is a clear gap between mainland companies and Taiwan stay-at-home companies. Taiwan’s traditional manufacturing enterprises gradually moved outward after the mainland’s economy opened up. In the mid to late 1990s, Taiwan’s shoe-making industry, fans, hardware parts, bicycles, textiles, and other labor-intensive, low-value-added manufacturing industries were almost universal. shift. After more than 10 years of development, the overall performance gap between the two sides of the bicycle and textile industry has reached six times.
From the point of view of product value, there is a great value gap between product assembly and key components. At present, key components of many industries are controlled by foreign capital, and Chinese manufacturing companies only earn value from assembly in the manufacturing industry chain. Take the iPad for $499 as an example, the average cost is only 260 US dollars, China only got the assembly fee of 11.2 US dollars. The core components such as air-conditioning compressors and tablet PC screens can reach 30%-40% of the total cost of finished products. As Chinese companies do not have the core technology to quickly update their products to reduce costs, until 2008, no domestic company can produce inverter compressors. After Midea's cooperation with Toshiba, Gree and Daikin in 2008-2009, inverter air conditioners entered the popularity phase in China. Until 2011, part of the inverter compressors of America's largest air conditioning manufacturer Midea (12.80, -0.03, -0.23%) still purchased from Toshiba.
From the perspective of corporate functions, there is a significant gap in the value of processing and manufacturing and production services. In addition to the R&D, manufacturing, and marketing of key research areas in the industry chain, production services are an important link that can provide sufficient value space for the transformation and upgrading of manufacturing companies. In the industrial fields such as elevators and automobiles, production services account for more than 50% of the profits of the industry. Japan’s elevator giants still rely on orders of 5,000 units a year to survive. The profit margin of production services in the automotive industry is 2-3 times that of sales or parts manufacturing.
This shows that China's manufacturing industry has great room for appreciation in the geographical distribution, manufacturing industry chain and the entire value chain.
The road to transformation According to the 2006-2011 survey of Taiwan's Tainan Science Park, the Institute of Industrial Technology, more than a dozen representative manufacturing companies, and dozens of companies in the Pearl River Delta, the author summarizes the top ten transformation and upgrading of manufacturing companies. path.
Path 1: Recognize the new features and new demands of the traditional manufacturing industry, reposition the market, and achieve overall transformation and upgrading. With the changes in the environment and the increase in income, some traditional industries have emerged with new features and new demands. For example, in Taiwan, bicycles have been upgraded from traditional transportation to high-end fitness, leisure products and home toys. At the same time, the combination of traditional industries and new technologies has become a high-tech industry. For example, Taiwan's textiles such as clothes and fabrics have been upgraded from basic daily necessities to items featuring deodorant and antibacterial functions and high-tech content. Through the repositioning of R&D, manufacturing, marketing and other links to enhance brand value and added value, the company has achieved an upgrade.
Path 2: From replacing imported products to replacing products produced by multinational companies in China, and then replacing products from multinational companies in foreign markets to achieve transformation and upgrading. Haier, Galanz, Changhong, and ZTE (17.59, 0.13, 0.74%) have all achieved technological innovation and independent research and development along this path, thus realizing product transformation and upgrading. Take the air-conditioning industry as an example, the overall transformation and upgrading of China's air-conditioning industry is mainly divided into two steps, the first step, from the replacement of imported products to replace the products of multinational companies in China. In 2009, LG's market share was only 2.18 percent. Foreign air-conditioning brands such as Toshiba, Sanyo, and Hitachi were also defeated. In the field of inverter air conditioners where foreign capital has monopolized technology, domestic air-conditioner occupancy rate exceeded 75%; To replace foreign products in foreign markets. At present, China's air-conditioning production accounts for 70% of global production and has been exported to more than 200 countries and regions. By implementing a proactive follow-up strategy, imitating imported products and products produced by multinational companies in China, we will carry out innovative research and development while absorbing advanced technologies, and realize enterprise transformation and upgrading through three alternative paths.
Path 3: With the help of the industry's blurring of borders and industrial integration, new products and new demands will be created to achieve cross-industry transformation and upgrading. Since the 1990s, communication technology and computer technology have developed rapidly. The industry boundary has been ambiguous and industrial integration has become a development trend. In the information industry, Microsoft, Intel, and IBM are invariably moving toward the path of industrial convergence. With the penetration of the toy industry and sports, education, media, IT, animation and many other industries, many traditional toy manufacturers have launched new products and established new channels and new models. For example, Longchang International integrates traditional toys with electronic products, and radio-controlled toys account for 57% of the company's turnover. Aofei Animation (28.23, -0.16, -0.56%) combines animation design with toy production and is widely welcomed by the market. Ha-generation toy companies mainly use the channel integration of supermarket chains, while providing FAW-Volkswagen and other major brand companies to provide plush toy products.
Path 4: Break through the barriers and limitations of key components through technology accumulation and capacity evolution to achieve the overall transformation and upgrading of the industry. The key components of many industries are controlled by foreign companies. Breaking through the barriers and restrictions of key components has become an important path for the transformation and upgrading of enterprises. For example, Lu Guanqiu proposed in the 1990s that Wanxiang must pay attention to the input of key components and key processes, and some primary processing steps are transferred out. Taiwan bicycle manufacturers have also actively researched and developed their own design and production of key components. Their materials have evolved from steel pipes to titanium alloys, magnesium alloys, and even carbon fiber. The weight has dropped from the original 30 kg to the current 7 kg. The leading industries of Taiwan's Hsinchu Science Park and Tainan Science and Technology Park have gradually moved from the early system development to the manufacturing of key parts and components, and have produced clustering effects.
Path 5: Increase investment and extension of production services, increase added value, and achieve transformation and upgrading. The profits of used cars, after-sales services, and new car sales in developed countries in Europe and America are 3:2:1. The Japanese elevator giants rely on 5,000 orders each year to survive. The main reason is that the elevator industry needs a lot of renewal and renovation. Visible, for some industries, especially the market is relatively saturated, follow-up maintenance requirements of the large durable consumer goods industry, after-sales service has great room for development. Therefore, these industries can extend from traditional marketing to production services and increase their added value.
Path 6: Reduce investment and consumption, improve environmental protection standards and added value, and achieve transformation and upgrading. Low-carbon business is not only investment, no benefit. Guangzhou UTI Textile (Dyeing & Printing Co., Ltd.) achieved a nearly 5% reduction in production costs through the use of more energy-efficient and environmentally-friendly dyeing machines, non-phosphorus procurement, and the formulation of industry environmental protection standards. The direct economic benefits of energy-saving projects reached 35 million yuan per year. Taiwan Hongyuan (Hongyuan Industrial Co., Ltd.) has achieved transformation and upgrading through energy conservation, emission reduction and eco-friendly product innovation. Its gross profit margin has been increased to 20% in 2009, and its fuel cost has decreased by 39% compared with 2008.
Path VII: Using the strategic alliances and the leading role of large companies to achieve the overall transformation and upgrading of manufacturing companies in industrial clusters. Industrial clusters provide a good platform for independent innovation and improving the industrial chain. The use of strategic alliances and the leading role of large companies will accelerate the technological innovation of manufacturing companies. In 2003, the A-Team of the Taiwan Bicycle Industry Association was established. The "giant" and "Merida" of the three major bicycle manufacturers in Taiwan form a central satellite system with component manufacturers. A-Team vendor performance is significantly better than non-A-Team vendors. On the one hand, A-Team's unit price is $140 higher than its peers (A-Team is priced at $350: $210 per peer). On the other hand, 95.2% of A-Team members sell on their own brand, and only in the whole industry. 55.46% of companies do this.
Path 8: Coordinate domestic and overseas markets, and implement enterprise transformation and upgrade in the coexistence of OEM (Original Equipment Manufacturer), ODM (Original Design Manufacturer) and OBM (Original Brand Manufacturer). . OEM companies need to reverse the dilemma of shrinking profit space. They can gradually extend their business areas from the lowest-value-added manufacturing link to both ends of the “smile curve†and upgrade from OEM to ODM and even OBM. For example, the practice of Dongling Ketchen and Christie's Technology (13.450, -0.05, -0.37%) in the domestic market are all "born OBM." However, in overseas markets, Dongling Ketchin has been involved in ODM since 2000 and has not yet launched OBM business. The path is “OEM → ODMâ€. Christie Technology launched the "brand transition" in 2007 and replaced its own brand "JASIC". The proportion of OBM business climbed to 70%, and the path was "OEM → ODM → OBM". For domestic and foreign markets, three different approaches can be taken to achieve the transformation and upgrade. They are the upgrade from OEM to ODM, the upgrade from OEM to OBM, and the coexistence of OEM, ODM, and OBM.
Path Nine: Through the split and reorganization, OEM, ODM, and OBM coexist to achieve enterprise transformation and upgrading. For large corporations or enterprise groups, the use of spin-offs and reorganizations separates the parent company into a number of discrete companies, thereby separating different businesses and establishing specialized agencies to manage them. The coexistence of OEM, ODM, and OBM not only continued the advantages of the enterprise in OEM manufacturing, but also successfully achieved the upgrade to ODM or OBM. For example, Acer began with OEM and created its own brand. In 2002, it formed two separate OBMs (Acer Macro Computer, Benq BenQ Dentsu) and OEM Enterprise (Wistron Wistron Capital) through splitting and reorganization.
Path 10: Acquire OBM's corporate brand, acquire strategic assets, and achieve enterprise cross-over upgrades. China's enterprises started relatively late and lacked strategic resources such as technology, brand, management, and service. Adopting a follow-up strategy will be in a passive situation. This can be achieved by implementing M&A in certain industries or technology fields to acquire strategic assets and achieve leapfrogging of enterprises. upgrade. Taiwan Merida acquired Specialized's 48% equity in the first American bicycle brand in 2002, and through the cooperation with the German brand Centurion, it has obtained back-end R&D. Currently, its own brand sales revenue is up to 90%. In 2000, Wanxiang acquired channels and brands through the acquisition of LT, BT and Michael. Taisheng achieved OEM upgrades to ODMs and OBMs by acquiring British and American high-end brands.
It can be seen that although China’s traditional manufacturing industry is currently facing unprecedented challenges, the road to transformation and upgrading is spacious. As long as the company chooses the right upgrade path based on its own characteristics, it will be able to obtain new opportunities and create new glories.
Author:
Mao Yunshi: Professor of School of Management at Sun Yat-sen University and Director of the Center for Enterprise and Market Research at Sun Yat-sen University, Zheng Qizhi: Ph.D. candidate at School of Management, Sun Yat-sen University
The plight of manufacturing companies First of all, the export tax rebate rate was lowered, and the government continued to appreciate, which squeezed the company's profit margins. In 2007, the Ministry of Finance and the State Administration of Taxation issued the Circular on Reducing the Tax Rebate Rates for Certain Commodities, reducing or eliminating the export tax rebate rates for many commodities, and labor-intensive textiles, clothing, footwear, plastics, and toys. The export tax rebate rate for commodities is generally reduced by 3%-8%. The continuous appreciation of *** against the U.S. dollar since 2005 is tantamount to worsening for increasingly difficult export companies.
Second, raw material prices rose, new labor laws came into effect, and corporate costs continued to rise. In 2010, the purchase price of raw materials, fuel, and power in China rose by 9.6%, and most of the production materials required by the manufacturing industry rose in varying degrees. With the implementation of the new "Labor Law" in 2008, the cost of labor continues to rise. According to statistics from the National Bureau of Statistics, the total wages in China in 2009 rose by 14.16% year-on-year. The increase in production costs and labor costs has made manufacturing companies overwhelmed. In fact, the weakening of labor cost advantages in China has prompted some multinational corporations to begin shifting labor-intensive product processing bases to low-cost regions such as India, Vietnam, and Thailand.
Once again, companies are difficult and costly, and they lack the most important funding base for survival and development. Under the current macro-control situation, the limited size of the economy cannot meet the normal needs of the majority of manufacturing enterprises. Taking Guangdong Province as an example, according to incomplete statistics, there are millions of private and foreign-funded manufacturing enterprises in Guangdong, and the potential capital demand has reached more than 2 trillion yuan, while banks can only meet 40% of the fund demand and 95% of the manufacturing industry. The company lacks funds. In addition, the continuous increase in interest rates has also increased the company's cost.
Finally, the inherent risks of OEM production methods are outstanding, with low added value and vulnerability to shocks. The outsourcer controls the brand and distribution channels. OEM companies are basically in the technological, market and production environments. This profit model that only seeks economies of scale is insecure. Once the international environment becomes turbulent, OEM companies will be the first to suffer. Impact. In addition, due to the lowest value-added manufacturing link in the production chain, OEMs have low profitability and are unable to withstand the impact of rapid changes in raw material prices and markets, and increase operating risks.
In view of the above problems, traditional manufacturing enterprises with low value-added and lack of independent brands and technology content are faced with such problems as tight resources and rising costs, and urgently need to find new development paths.
The space for transformation and upgrading Although China's manufacturing industry faces many difficulties, it still can find room for upgrading from some aspects.
In terms of geographical differences, there is a clear gap between mainland companies and Taiwan stay-at-home companies. Taiwan’s traditional manufacturing enterprises gradually moved outward after the mainland’s economy opened up. In the mid to late 1990s, Taiwan’s shoe-making industry, fans, hardware parts, bicycles, textiles, and other labor-intensive, low-value-added manufacturing industries were almost universal. shift. After more than 10 years of development, the overall performance gap between the two sides of the bicycle and textile industry has reached six times.
From the point of view of product value, there is a great value gap between product assembly and key components. At present, key components of many industries are controlled by foreign capital, and Chinese manufacturing companies only earn value from assembly in the manufacturing industry chain. Take the iPad for $499 as an example, the average cost is only 260 US dollars, China only got the assembly fee of 11.2 US dollars. The core components such as air-conditioning compressors and tablet PC screens can reach 30%-40% of the total cost of finished products. As Chinese companies do not have the core technology to quickly update their products to reduce costs, until 2008, no domestic company can produce inverter compressors. After Midea's cooperation with Toshiba, Gree and Daikin in 2008-2009, inverter air conditioners entered the popularity phase in China. Until 2011, part of the inverter compressors of America's largest air conditioning manufacturer Midea (12.80, -0.03, -0.23%) still purchased from Toshiba.
From the perspective of corporate functions, there is a significant gap in the value of processing and manufacturing and production services. In addition to the R&D, manufacturing, and marketing of key research areas in the industry chain, production services are an important link that can provide sufficient value space for the transformation and upgrading of manufacturing companies. In the industrial fields such as elevators and automobiles, production services account for more than 50% of the profits of the industry. Japan’s elevator giants still rely on orders of 5,000 units a year to survive. The profit margin of production services in the automotive industry is 2-3 times that of sales or parts manufacturing.
This shows that China's manufacturing industry has great room for appreciation in the geographical distribution, manufacturing industry chain and the entire value chain.
The road to transformation According to the 2006-2011 survey of Taiwan's Tainan Science Park, the Institute of Industrial Technology, more than a dozen representative manufacturing companies, and dozens of companies in the Pearl River Delta, the author summarizes the top ten transformation and upgrading of manufacturing companies. path.
Path 1: Recognize the new features and new demands of the traditional manufacturing industry, reposition the market, and achieve overall transformation and upgrading. With the changes in the environment and the increase in income, some traditional industries have emerged with new features and new demands. For example, in Taiwan, bicycles have been upgraded from traditional transportation to high-end fitness, leisure products and home toys. At the same time, the combination of traditional industries and new technologies has become a high-tech industry. For example, Taiwan's textiles such as clothes and fabrics have been upgraded from basic daily necessities to items featuring deodorant and antibacterial functions and high-tech content. Through the repositioning of R&D, manufacturing, marketing and other links to enhance brand value and added value, the company has achieved an upgrade.
Path 2: From replacing imported products to replacing products produced by multinational companies in China, and then replacing products from multinational companies in foreign markets to achieve transformation and upgrading. Haier, Galanz, Changhong, and ZTE (17.59, 0.13, 0.74%) have all achieved technological innovation and independent research and development along this path, thus realizing product transformation and upgrading. Take the air-conditioning industry as an example, the overall transformation and upgrading of China's air-conditioning industry is mainly divided into two steps, the first step, from the replacement of imported products to replace the products of multinational companies in China. In 2009, LG's market share was only 2.18 percent. Foreign air-conditioning brands such as Toshiba, Sanyo, and Hitachi were also defeated. In the field of inverter air conditioners where foreign capital has monopolized technology, domestic air-conditioner occupancy rate exceeded 75%; To replace foreign products in foreign markets. At present, China's air-conditioning production accounts for 70% of global production and has been exported to more than 200 countries and regions. By implementing a proactive follow-up strategy, imitating imported products and products produced by multinational companies in China, we will carry out innovative research and development while absorbing advanced technologies, and realize enterprise transformation and upgrading through three alternative paths.
Path 3: With the help of the industry's blurring of borders and industrial integration, new products and new demands will be created to achieve cross-industry transformation and upgrading. Since the 1990s, communication technology and computer technology have developed rapidly. The industry boundary has been ambiguous and industrial integration has become a development trend. In the information industry, Microsoft, Intel, and IBM are invariably moving toward the path of industrial convergence. With the penetration of the toy industry and sports, education, media, IT, animation and many other industries, many traditional toy manufacturers have launched new products and established new channels and new models. For example, Longchang International integrates traditional toys with electronic products, and radio-controlled toys account for 57% of the company's turnover. Aofei Animation (28.23, -0.16, -0.56%) combines animation design with toy production and is widely welcomed by the market. Ha-generation toy companies mainly use the channel integration of supermarket chains, while providing FAW-Volkswagen and other major brand companies to provide plush toy products.
Path 4: Break through the barriers and limitations of key components through technology accumulation and capacity evolution to achieve the overall transformation and upgrading of the industry. The key components of many industries are controlled by foreign companies. Breaking through the barriers and restrictions of key components has become an important path for the transformation and upgrading of enterprises. For example, Lu Guanqiu proposed in the 1990s that Wanxiang must pay attention to the input of key components and key processes, and some primary processing steps are transferred out. Taiwan bicycle manufacturers have also actively researched and developed their own design and production of key components. Their materials have evolved from steel pipes to titanium alloys, magnesium alloys, and even carbon fiber. The weight has dropped from the original 30 kg to the current 7 kg. The leading industries of Taiwan's Hsinchu Science Park and Tainan Science and Technology Park have gradually moved from the early system development to the manufacturing of key parts and components, and have produced clustering effects.
Path 5: Increase investment and extension of production services, increase added value, and achieve transformation and upgrading. The profits of used cars, after-sales services, and new car sales in developed countries in Europe and America are 3:2:1. The Japanese elevator giants rely on 5,000 orders each year to survive. The main reason is that the elevator industry needs a lot of renewal and renovation. Visible, for some industries, especially the market is relatively saturated, follow-up maintenance requirements of the large durable consumer goods industry, after-sales service has great room for development. Therefore, these industries can extend from traditional marketing to production services and increase their added value.
Path 6: Reduce investment and consumption, improve environmental protection standards and added value, and achieve transformation and upgrading. Low-carbon business is not only investment, no benefit. Guangzhou UTI Textile (Dyeing & Printing Co., Ltd.) achieved a nearly 5% reduction in production costs through the use of more energy-efficient and environmentally-friendly dyeing machines, non-phosphorus procurement, and the formulation of industry environmental protection standards. The direct economic benefits of energy-saving projects reached 35 million yuan per year. Taiwan Hongyuan (Hongyuan Industrial Co., Ltd.) has achieved transformation and upgrading through energy conservation, emission reduction and eco-friendly product innovation. Its gross profit margin has been increased to 20% in 2009, and its fuel cost has decreased by 39% compared with 2008.
Path VII: Using the strategic alliances and the leading role of large companies to achieve the overall transformation and upgrading of manufacturing companies in industrial clusters. Industrial clusters provide a good platform for independent innovation and improving the industrial chain. The use of strategic alliances and the leading role of large companies will accelerate the technological innovation of manufacturing companies. In 2003, the A-Team of the Taiwan Bicycle Industry Association was established. The "giant" and "Merida" of the three major bicycle manufacturers in Taiwan form a central satellite system with component manufacturers. A-Team vendor performance is significantly better than non-A-Team vendors. On the one hand, A-Team's unit price is $140 higher than its peers (A-Team is priced at $350: $210 per peer). On the other hand, 95.2% of A-Team members sell on their own brand, and only in the whole industry. 55.46% of companies do this.
Path 8: Coordinate domestic and overseas markets, and implement enterprise transformation and upgrade in the coexistence of OEM (Original Equipment Manufacturer), ODM (Original Design Manufacturer) and OBM (Original Brand Manufacturer). . OEM companies need to reverse the dilemma of shrinking profit space. They can gradually extend their business areas from the lowest-value-added manufacturing link to both ends of the “smile curve†and upgrade from OEM to ODM and even OBM. For example, the practice of Dongling Ketchen and Christie's Technology (13.450, -0.05, -0.37%) in the domestic market are all "born OBM." However, in overseas markets, Dongling Ketchin has been involved in ODM since 2000 and has not yet launched OBM business. The path is “OEM → ODMâ€. Christie Technology launched the "brand transition" in 2007 and replaced its own brand "JASIC". The proportion of OBM business climbed to 70%, and the path was "OEM → ODM → OBM". For domestic and foreign markets, three different approaches can be taken to achieve the transformation and upgrade. They are the upgrade from OEM to ODM, the upgrade from OEM to OBM, and the coexistence of OEM, ODM, and OBM.
Path Nine: Through the split and reorganization, OEM, ODM, and OBM coexist to achieve enterprise transformation and upgrading. For large corporations or enterprise groups, the use of spin-offs and reorganizations separates the parent company into a number of discrete companies, thereby separating different businesses and establishing specialized agencies to manage them. The coexistence of OEM, ODM, and OBM not only continued the advantages of the enterprise in OEM manufacturing, but also successfully achieved the upgrade to ODM or OBM. For example, Acer began with OEM and created its own brand. In 2002, it formed two separate OBMs (Acer Macro Computer, Benq BenQ Dentsu) and OEM Enterprise (Wistron Wistron Capital) through splitting and reorganization.
Path 10: Acquire OBM's corporate brand, acquire strategic assets, and achieve enterprise cross-over upgrades. China's enterprises started relatively late and lacked strategic resources such as technology, brand, management, and service. Adopting a follow-up strategy will be in a passive situation. This can be achieved by implementing M&A in certain industries or technology fields to acquire strategic assets and achieve leapfrogging of enterprises. upgrade. Taiwan Merida acquired Specialized's 48% equity in the first American bicycle brand in 2002, and through the cooperation with the German brand Centurion, it has obtained back-end R&D. Currently, its own brand sales revenue is up to 90%. In 2000, Wanxiang acquired channels and brands through the acquisition of LT, BT and Michael. Taisheng achieved OEM upgrades to ODMs and OBMs by acquiring British and American high-end brands.
It can be seen that although China’s traditional manufacturing industry is currently facing unprecedented challenges, the road to transformation and upgrading is spacious. As long as the company chooses the right upgrade path based on its own characteristics, it will be able to obtain new opportunities and create new glories.
Author:
Mao Yunshi: Professor of School of Management at Sun Yat-sen University and Director of the Center for Enterprise and Market Research at Sun Yat-sen University, Zheng Qizhi: Ph.D. candidate at School of Management, Sun Yat-sen University
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