Lessons from Cao Dewang and Dong Mingzhu: The New Economy Is About Integration and a Return to Industry

These days, the topic of Cao Dewang 'fleeing' has gone viral online, flooding social media feeds. People are exclaiming: Li Ka-shing left, and now Cao Dewang, hailed as China's greatest philanthropist, is he also going to 'flee'?

Why are they 'fleeing'?

Everyone probably understands Li Ka-shing's 'flight'—businessmen are inherently self-interested, and it's understandable to protect and grow one's assets. If Mr. Cao Dewang truly left, many people would find it hard to comprehend, especially since China's top philanthropist has always been critical of Li Ka-shing's exit.

Three years ago, he commented on Li Ka-shing's withdrawal: "He set a bad example in this matter. As a Chinese, even if China's economy faces a crisis, one should not withdraw. You are Chinese, and setting such a bad example, many Chinese real estate entrepreneurs will follow him and leave... China is your motherland, you should share its fate. If the country is destroyed, where will your home be?"

Mr. Cao Dewang's remarks in a media interview about comprehensive costs and high taxes caused an uproar in society.

That's the case of Mr. Cao Dewang; below is another example of Ms. Dong Mingzhu.

After the chairman of the CSRC, Liu Shiyu, spoke out, the 'barbarians at the gate' quieted down. This was almost the intention of the top leadership, largely preventing a repeat of the Nanbo and Vanke incidents. Some say that Ms. Dong of Gree is formidable, coming out to deal with these 'barbarians at the gate' immediately. Even Mr. Wang Shi must admire Dong Mingzhu's power.

Dong Mingzhu entered the new energy vehicle sector by taking a stake in Zhuhai Yinlong, and even pulled in Wang Jianlin to invest a small 500 million yuan. Whether the new energy vehicle venture will succeed is uncertain, as Zhuhai Yinlong makes buses with limited market capacity (though it is said to have core battery technology). But for her indomitable spirit alone, she deserves great praise.

Indeed, we all need to learn from Ms. Dong in respecting, promoting, and focusing on industry.

For some time, the internet and industry have become 'mortal enemies,' irreconcilable, which is truly lamentable and astonishing.

Over the past three years, the internet has been thriving, sweeping everything in its path. O2O, mass entrepreneurship and innovation, the new internet economy—all very lively. But after the frenzy, how many O2O projects have you seen succeed? We need to transform, but where to and how? Traditional enterprises turning to the internet, internet companies extending to traditional offline channels? What we see are mostly failures.

Because if you abandon your core advantages to do something you're not good at, failure is inevitable.

What has mass entrepreneurship and innovation achieved?

I still say: entrepreneurship and innovation cannot be accomplished by a few college students and the general public. Entrepreneurship requires an entrepreneurial spirit—can college students achieve that? Innovation requires sustained, organized effort—how can the masses do that?

What lessons do the above two examples offer us?

I can't speak on the big picture—reforms, policies, I don't understand. I think companies need to think carefully and return to the level of industry, not spend all day on capital operations and flashy things. Returning to the real economy and industry is the fundamental way out.

The so-called transformation is the integration of the internet and industry.

No company has transformed from traditional business to purely internet business. Transformation must be a change in mindset, using newer methods and tools for business development and customer relationship maintenance. The essence remains creating value and meeting customer needs. That is, the essence of marketing and business hasn't changed; only the tools and methods have.

In the 1 billion yuan bet between Lei Jun and Dong Mingzhu, Ms. Dong won comprehensively.

Xiaomi's 5-year target of 100 billion yuan is basically unattainable (this year, Huawei is expected to achieve over 580 billion yuan in sales, with mobile business conservatively estimated at 200 billion). In fact, it's often hard to distinguish between internet and traditional now. Traditional enterprises need internet technology and tools, and internet companies need to penetrate and extend into traditional fields and channels. The overall trend is integration.

Once, on a business trip to a southwestern city, I heard a local grassroots official's remarks that struck me. He said: Although e-commerce and the internet pose a great threat to the traditional economy and real economy, on the other hand, they are also driving the transformation and upgrading of the real economy, forcing traditional economies to change. The internet has impacted many entities but also created more market opportunities and employment. He believed the future must be the virtualization, digitalization, and internetization of the real economy, with mutual integration and promotion.

I was greatly surprised that such opinions came from local officials.

1. Returning to industry means doing things down-to-earth

Play less with concepts and flashy things, and have more focus and persistence. Gree has focused on air conditioning for over 20 years, mastering core technology, with annual sales of a single category exceeding 100 billion yuan, making it the world's number one. That's remarkable. The slogan 'Let the world fall in love with Chinese manufacturing' is full of confidence and dominance.

With the same materials, our products are inferior; at the same price, ours are still inferior. A friend in trade told me: With the same thing, you can tell at a glance whether it's imported or domestic. He said leisurely: Chinese people are too clever.

Why can't we make good products? We should think about it carefully.

It's nothing but cutting corners and adulteration. If you're always thinking about making quick money, how can you have the mind to study technology and products? Opportunism is always looking for the next target.

2. Returning to industry doesn't mean staying in place

I believe returning must mean starting anew at a higher level, not just discussing problems and solutions in the same place. As for macro-level policies, taxes, environmental protection, etc., I'm not an economist or a manager in a national functional department, so I have nothing to say.

I can only offer some views on micro issues.

Return to the essence of marketing. Marketing, simply put, is meeting customer needs while achieving corporate goals. At the same time, marketing is the process by which a company satisfies its own needs through exchange. The value of a company lies in its products meeting others' needs, and both parties are willing to exchange. So demand is the foundation of marketing, and exchange is the means to satisfy demand. Both are indispensable. The process of marketing management is essentially 'demand management.'

We must start from the consumer's or customer's perspective to solve problems and create value.

Return to the origin of the product. The product is the foundation and root. At the physical level, the product is function, performance, and cost-effectiveness—the most external things. At the value level, the product is the pain point, the solution to a problem. For example, a bottle of water solves the problem of thirst. Finally, at the spiritual level, the product is what else it brings to consumers: a moment of relaxation, enjoyment, peace, glory... This is the spiritual connotation of the product.

As the quality of life improves, when people consume a product, besides buying function, they also need to buy value, and sometimes some spiritual enjoyment. I think this should be the need of the times, a trend, and even the future.

Return to the brilliance of human nature. Chu Orange is personified; it's the inspirational spirit of Chu Shijian's decades of ups and downs. Smartisan Technology is also personified; Luo Yonghao's persistence, craftsmanship spirit, and never-give-up fighting spirit. I recognize the Smartisan phone as a representative of sentiment because in today's society and consumer group, such things are too scarce. I'm not actually supporting Old Luo, but supporting the thinking and ideas of such groups.

The distance between ideals and reality is the space for product and brand innovation. Consumers or users don't need a perfect product, but they need a perfect, personified, real feeling. This feeling is the belief and worship of brand personification, which can also be called the ultimate 'care' of the brand.

The 'ultimate' goal of marketing is to grasp human nature and make marketing shine with the brilliance of human nature.

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