---
title: "2017⇆2019, China's Business Has Changed"
description: "The sudden viral trend of '2017⇆2019' evokes nostalgia for time passed, reminding us that many things, including business, have truly changed. From the final frenzy of 2017 to the return to common sense in 2019, the article reflects on shifts from speculation to long-termism, from focusing on first-tier markets to sinking markets, and from single-point breakthroughs to total war, among other transformations."
author: "沈帅波"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2019-12-17"
categories: "Brand Marketing"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/DNnmTXkn7pokTEknqUvsoQ"
translation: "https://xinjignxiao.com/zh/articles/2017-2019-%E4%B8%AD%E5%9B%BD%E7%9A%84%E7%94%9F%E6%84%8F%E5%8F%98%E4%BA%86-5c1a3c15.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/20172019-china-s-business-has-changed-5c1a3c15/"
citation: "沈帅波. “2017⇆2019, China's Business Has Changed.” New Distribution, 2019-12-17. https://xinjignxiao.com/en/articles/20172019-china-s-business-has-changed-5c1a3c15/"
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---

# 2017⇆2019, China's Business Has Changed

> The sudden viral trend of '2017⇆2019' evokes nostalgia for time passed, reminding us that many things, including business, have truly changed. From the final frenzy of 2017 to the return to common sense in 2019, the article reflects on shifts from speculation to long-termism, from focusing on first-tier markets to sinking markets, and from single-point breakthroughs to total war, among other transformations.

2017⇆2019 suddenly went viral without warning.
It evokes our regret for the passage of time. Suddenly, we realize that many things have truly passed.
Besides life and emotions, business is also like this.
Looking back, the person is there in the dim light.
**-01-**
**The Last Frenzy VS Return to Common Sense**
In 2017, more than 50% of funds raised money for the last time. By this moment in 2019, early-stage investment has almost disappeared. Yes, you read that right: for more than half of the funds, the first fund they raised was also their last.
The dividend from the industrial revolution brought by mobile internet basically disappeared in 2017, but many still harbored illusions. One word to describe it: the last frenzy.
Returning to common sense is the main theme of 2019. Today in 2019, fund of funds have started doing direct investments because they find it better to do it themselves than to find an unprofessional intermediary. Funds are also unwilling to look at early-stage projects because they are basically cold. At the same time, **the trend theory and track theory born from the previous boom, as well as the past USD fund playbook, are becoming ineffective**.
**-02-**
**Speculation VS Long-termism**
In 2017, real estate, after a crazy rise in 15-16, was suppressed by a series of policies. In market expectations, a large number of people were still eager to act. In 2017, the stock market also heard "news" because many people understood common sense as: if housing doesn't rise, stocks must rise.
In the past few rounds of monetary easing, some people did get rich, and they thought this was the right path. But in fact, **money earned by luck must be lost by ability**.
The emergence of long-termism thinking is not because people suddenly became noble, but because, first, the arbitrage space for short-term thinking is rapidly disappearing, forcing you to think long-term; second, long-term thinking is not the opposite of short-term inaction, but a business model based on compound interest thinking.
Many people frown at the mention of long-termism, thinking, "I need to survive now; how can I not make money?" But true long-termism does not mean not making money now; it means not chasing the last copper coin of the present, leaving ample energy for the broader sky of the future.
So when it comes to long-termism, I don't think it's about high moral integrity or desirelessness. On the contrary, it's about those who plan great things not chasing small profits.
**From now on, in business, you need to focus on [organizational building], [product R&D], [brand depth], [supply chain construction], and all things related to the business itself, because you can no longer fool people into giving you money.**
**-03-**
**Focus on First-tier VS Sinking Market**
In 2017, mainstream Chinese media still only cared about the first-tier market. Over the past two years, I have emphasized that the first-tier does not represent China, and the sinking market deserves respect. At first, few believed it, but gradually it became a consensus (though many were not influenced by me).
By late 2018, the concept of the sinking market was quickly ignited. Standing at the end of 2019, I think discussing the sinking market is no longer of much significance.
Because in fact, a group of hidden champions have basically occupied the core advantages. Another group of giants, using capital and resource advantages, especially the technological advantages of internet companies, have grabbed a large number of users faster.
It can be said that the fundamentals of the sinking market have completely changed. After the sinking dividend is exhausted, Chinese business is entering a more brutal fight.
**-04-**
**Single-point Breakthrough VS Total War**
If in 2017, single-point breakthroughs could still work, standing at the end of 2019, total war might be the only way to describe the current situation.
The scenario where single-point breakthroughs work is when big players have weak links. But in the past four or five years, big players have been more hardworking and faster in evolution than most small entrepreneurs. So in many industries, the head players no longer have obvious shortcomings, making single-point breakthroughs difficult to work in practice.
Total War is a globally popular strategy war game from the desktop era. It requires players to be superior in tactics, development, technology, strategy, and all aspects to win the war.
We see fewer and fewer startups surviving, essentially because they cannot withstand [total war]. In the face of absolute artillery advantage, your dodging and hiding are useless.
But can we still start businesses in the future? I think yes, it belongs to mature professional teams, like the Luckin Coffee team.
For example, in vertical niche segments where there is no particularly strong opponent, or in areas giants are too lazy to bother with, or waiting for the next round of technological iteration and revolution.
At the same time, the wave of [recruitment] i.e., [M&A] is appearing again. Part of the logic of M&A is that [fighting is not cost-effective] for both sides.
The business world is entering a small cycle from "long-term division must unite" to "long-term unity must divide."
On November 26, LVMH Group reached a final agreement with Tiffany. LVMH will acquire Tiffany in cash at $135 per share, totaling $16.2 billion.
In fact, LVMH Group can become the leader of the global middle-class income recovery plan.
If you don't believe it, look at the picture below: brands including Rimowa and others have been acquired by it in recent years.
Below, our team also compiled a list of Unilever's acquisitions in recent years. In earlier years, Unilever and Procter & Gamble sold off a batch of brands. This is business, cycling endlessly.
**-05-**
**Explosive Growth VS Deep Cultivation of Existing Stock**
One of the hottest words in 2017 was explosive growth, as if without it, it wasn't worth doing at all.
Standing at the end of 2019, explosive growth is unlikely to appear in large categories in the short term, but maybe in small categories and new categories. This year, companies treating infertility have listed overseas; that's an emerging small category.
But on the big picture, I haven't seen such opportunities yet.
**China's new normal is a relatively lower growth rate**, but because of the world's largest existing stock, turning to deep cultivation of existing stock is urgent. This is the core reason for digging into existing stock this year.
The essence of deep cultivation of existing stock is to forget those sneaky methods; once addicted, it's hard to extricate yourself.
Return to customer value, because customers are not fools now; everyone has seen the world.
Sincerity becomes more valuable, and sincerity is reflected in [products], [services], and [prices].
2019-2020 is the most critical node to win over your existing users. After this point, your consumers may be completely taken away by another competitor in the same category. This is not alarmist. Learn from the hotel and aviation industries for user cultivation, and learn from Japanese service industry for service details.
**-06-**
**Valuation VS Cash Flow**
A large number of star companies that have not yet listed will definitely break their IPO price if they list, because around 2017, they received unreasonable valuations in the primary market, exceeding the reasonable takeover price in the secondary market.
So some investors can be said to be "slapping their faces to look fat," claiming to be investors in XX star companies, but they are actually at the tail end, and even after listing, they won't make money.
Cash flow is the most important thing now. Theoretically, as long as cash flow remains positive, you can survive until the next huge wave appears.
There was a time when Li Hejun of Hanergy became China's richest man, but recently Hanergy was exposed to owe 1 billion in wages. It was a misjudgment of cash flow during the transition period: many accounts receivable couldn't be collected, reportedly up to 60 billion, and at the same time, hiring a large number of people caused rapid blood loss.
Many times, good companies are on the verge of collapse. Everyone must watch their cash flow carefully.
Watching cash flow doesn't mean not spending money; many people don't understand this.
Forget about valuations. Unicorns have almost lost their horns; only beasts remain.
**-07-**
**Demographic Dividend VS Demographic Anxiety**
Before 2017, Chinese companies always talked about the demographic dividend. But most discussed the traditional demographic dividend. After two years of fermentation, the demographic dividend has turned into demographic anxiety.
China's current median age is 40, while in 1980 it was only 22.
However, Germany's current median age is 48, with Western Europe and East Asia particularly aging.
I personally think the problem should be viewed from two sides: on one hand, it indeed needs urgent improvement; on the other hand, because China's size is huge, although the number of newborns has dropped to about 11 million this year, it is still roughly equal to the population of two Denmarks (Denmark has 5.8 million).
The total number of young people in China still exceeds the entire population of the United States.
The entire post-90s generation is 190 million (another version says 188 million), and the post-00s are about 140 million. Together, that's 330 million, while the US total population is 320 million.
From the chart above, we can see that the US is similar, also aging.
So from this absolute number perspective, China still has a lot of room to maneuver. Also, any dimension of the population that Chinese companies capture is tens of millions, or even hundreds of millions, in size.
I have to use my often-quoted saying: pessimists are often right, but optimists often succeed.
**-08-**
**Expansion VS Layoffs**
In 2017, everyone was expanding aggressively; in 2019, they entered layoffs and contraction. Now many big companies are only letting people go, not hiring.
The core problem now is that **there are not many irreplaceable mental workers at the basic level**, so companies cannot find people for core and backbone positions.
But millions of college graduates each year do not have the ability for core positions, so the concept that you can stop learning after graduation must change.
The fate of mental workers is that if you want to get a premium, you must be better than 90% of mental workers, not hovering around the average.
On the other hand, what China lacks most now is technical personnel. The era where blue-collar workers can live with dignity is coming.
From 2017 to 2019,
Looking back, my heart remains the same.
Looking back, it's like a dream.
From 2017 to 2019, China's business has changed.
But we have witnessed more people returning to rationality. And I have witnessed more respectable enterprises stepping into the spotlight. This is the foundation of Chinese business.
Source: Jinjibo Finance (ID: jinbubo)
Tips will be paid 400-2000 yuan once adopted.


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## Citation metadata

- Publisher: New Distribution
- Author: 沈帅波
- Published: 2019-12-17
- Canonical: https://xinjignxiao.com/en/articles/20172019-china-s-business-has-changed-5c1a3c15/
- Original source: https://mp.weixin.qq.com/s/DNnmTXkn7pokTEknqUvsoQ

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