In the Post-Pandemic Era, How Can Small and Micro Enterprises Build Core Competitiveness?

Meituan's Wang Xing once said on a social platform: "2019 may be the worst year of the past decade, but it will be the best year of the next decade." This statement seems applicable to the just-passed 2020. The pandemic outbreak, halted offline businesses, soaring operating costs, and uncertainty in the macro environment—when combined—have become an unbearable burden for the vast number of small and micro enterprises! Even as we enter 2021, the production and operation of small and micro enterprises have not fully recovered. This also prompts reflection: Will the survival situation of small and micro enterprises improve in 2021?

-01- The Development Difficulties of Small and Micro Enterprises in the Post-Pandemic Era Putting aside the impact of the pandemic, as more small and micro enterprises resume normalized production, through extensive contact with them, we have found that while some enterprises show strong growth momentum, more seem to have hit a bottleneck, with sluggish growth and declining profits year by year. At the same time, consumption in the macro environment is tightening, market growth is slowing or even stagnating, but fixed costs such as warehouses, vehicles, and labor wages continue to rise, further squeezing the survival space of enterprises. In such an industry context, a large number of commercial circulation enterprises have to operate at low or even negative gross margins. Take a commercial circulation enterprise in Shantou as an example. Adhering to the business philosophy of "harmony brings wealth," Chaoshan merchants, in the face of rising raw material prices and a sluggish market, had to maintain original prices to preserve relationships with long-term partners. Not raising prices during critical periods also subjected them to enormous financial pressure. Secondly, the FMCG commercial circulation field is essentially a capital-intensive industry. Advance payments and year-end payments are huge pressures for distributors. Sufficient cash flow is the only way to ensure the healthy and sustainable development of an enterprise. Facing increasing pressure from manufacturers, distributors know that the moment of life and death has arrived: once a marketing node is missed, it may mean missing the entire year's sales in the market, with no room for error. More importantly, the market is changing rapidly. New channels such as video live-streaming e-commerce, community group buying, and social e-commerce are emerging one after another. Each new channel represents a risk and an investment for small and micro enterprises. Refusing to cooperate with new channels means safety and comfort, but it also represents conservatism and stagnation. Only by continuously going deep into the market, observing changes, and adapting to changes can businesses have the opportunity to grow stronger. However, while actively embracing change, capital investment has also become an unavoidable topic for small and medium-sized commercial enterprises...

-02- Who Will Solve the Development Funding Problem for Small and Micro Enterprises? Cash flow is the blood of an enterprise; once the capital chain breaks, it means the enterprise loses its ability to generate blood. But in the face of uncertainty in the macro environment, rising upstream prices, increasingly severe pressure of payment and delivery, and the current situation of long payment cycles and difficult collection from downstream terminals, what should small and micro enterprises do? Who will guard the capital moat of small and micro enterprises? Self-rescue? Damaging customer relationships, forcibly collecting accounts receivable from downstream customers, selling vehicles and warehouses, or even laying off employees and cutting salaries—these are only temporary measures that solve immediate problems but put the enterprise in a more difficult situation, leading to a vicious cycle. Borrowing from relatives and friends? Borrowing once or twice is fine, but long-term, frequent borrowing for turnover is not a long-term solution. Free things are often the most expensive. Capital turnover between relatives and friends often carries emotional weight in addition to the capital itself. Once business problems arise, both parties suffer not only financially but also emotionally. Incidents of relatives and friends turning against each other over money are not uncommon. Private lending? Although it provides fast disbursement and simple procedures, the interest rates are high, risks are high, and it is easy to fall into predatory loan traps. Lenders have complex backgrounds and varying qualifications, which can bring greater danger to distributors. Traditional mortgage loans? Although interest rates are low and they are safe and reliable, small and micro enterprises often lack assets to mortgage, making it difficult to successfully obtain loans. What small and micro enterprises need are safe, efficient, flexible, and simple capital solutions. Currently, none of the above borrowing methods can meet the funding needs of small and micro enterprises. Why does this situation occur? Essentially, it is because the scale of small and micro enterprises varies. Although some enterprises have reached a certain size, their business processes are not highly standardized, and they have little or no data accumulation, which brings great risk to corporate borrowing. Currently, China has more than 30 million small and micro enterprises, and the FMCG industry has more than 200,000 commercial companies. These small and micro enterprises constitute the foundation of social stability and long-term development, and they are also an important force driving social progress. As the capillaries supporting economic development, is there really no good capital solution for the development problems of small and micro enterprises?

-03- In the Internet Era, How to Solve the Development Difficulties of Small and Micro Enterprises? To solve the funding problems of small and micro enterprises and meet their needs for safety, efficiency, flexibility, and simple procedures, the financial product—WeBank's Weiyedai—came into being. As the flagship corporate finance product of WeBank, Weiyedai has successfully served numerous small and medium-sized enterprises across various industries nationwide with its fast, efficient, flexible, and safe services. Among them, Huang Desheng, general manager of Guangzhou Huangpu District Dehaiyuan Store Trading Company, is a typical representative. With the growth of the company's business, the funding needs of Guangzhou Huangpu District Dehaiyuan Store Trading Company have increased. To quickly supplement working capital for peak season stocking, the person in charge, Huang Desheng, applied for Weiyedai distributor loans and successfully borrowed funds for turnover. The application process for Weiyedai distributor loans is entirely online, requires no collateral, and can be approved in as fast as 1 minute. The high flexibility of borrowing and repaying at any time and low interest rates are also important reasons why Huang Desheng favors Weiyedai. Weiyedai provided a "buffer" for Dehaiyuan's self-adjustment and capital chain repair during difficult times. It is precisely because of this convenient loan model that Huang Desheng's company has overcome many difficulties. Not only Huang Desheng, but also Zhang Quan, secretary-general of Xinxiang Steel Chamber of Commerce, has enjoyed the dividends of technological development and big data. Zhang Quan said that previously, funding difficulties were basically solved through private lending: "Relatives, friends, peers... borrow for a few days to turn over. But the problem is that many times you can't guarantee they can lend it, and every time you have to owe a favor." Moreover, previously, every time Zhang Quan received an order, he had to consider whether he had enough cash on hand; if not, he had to give up. Now with the credit line provided by Weiyedai, he has more confidence, and advance payments and intention deposits can be paid at any time. There are many small and micro enterprises like Huang Desheng and Zhang Quan. The internet, big data, and technology have brought convenience to our lives and also improved efficiency in our work and business. The outbreak of the pandemic is both a "crisis" and an "opportunity" for small and micro enterprises. Through the pandemic, the fragility of small and micro enterprises has been fully exposed, but it has also made them aware of the shortcomings of their business models, and they can then continuously improve their business models, production, and operational efficiency through the empowerment of new technologies, new tools, and new industries, thereby enhancing market competitiveness. No matter how the industry background changes, small and micro enterprises always adhere to their business secrets and strive to make their businesses bigger and stronger. Just like the short video "Entrepreneurs' Business Secrets" recently released by Weiyedai, the character stories in the video come from small and micro business owners in various industries, each with their own business secrets. Entrepreneurs' Business Secrets Perseverance, harmony, willingness to try, and courage to fight constitute the foundation of the business philosophy of small and micro business owners nationwide. Although they are distributed across different industries and regions, they provide diverse services for the development of our society, and they form the basic foundation of China's rapid economic development. No matter how the external environment changes, their hard work and efforts should not be let down. The pandemic will eventually pass, and the market and users will eventually return to the previous normal. But I hope that through this pandemic, small and micro enterprises can build their own core competitiveness and ability to cope with uncertain risks. Tips will be paid 400-2000 yuan once adopted.