---
title: "Speaking Up for 'Outdated' Traditional Industries!"
description: "Ma Yun and new marketing tell traditional industries that if they don't follow new rules, being 'traditional' means extinction. But is that really true? When new ideas and concepts emerge endlessly, it's either a boom in theory or a confusion in understanding. This was the case around 1997, and it's the same now. Facing major changes in China and the world, influential entrepreneurs propose new ideas and concepts, predicting trends; while theorists sensitive to new phenomena either induce, deduce, or endorse, elevating them to theory or methodology."
author: "金焕民"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2018-11-02"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/9t7zfzM4Sc_5cxQifv8mhg"
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---

# Speaking Up for 'Outdated' Traditional Industries!

> Ma Yun and new marketing tell traditional industries that if they don't follow new rules, being 'traditional' means extinction. But is that really true? When new ideas and concepts emerge endlessly, it's either a boom in theory or a confusion in understanding. This was the case around 1997, and it's the same now. Facing major changes in China and the world, influential entrepreneurs propose new ideas and concepts, predicting trends; while theorists sensitive to new phenomena either induce, deduce, or endorse, elevating them to theory or methodology.

Ma Yun and new marketing tell traditional industries that if they don't follow new rules, being 'traditional' means extinction. But is that really true?
When new ideas and concepts emerge endlessly, it's either a boom in theory or a confusion in understanding. This was the case around 1997, and it's the same now.
Facing major changes in China and the world, influential entrepreneurs propose new ideas and concepts, predicting trends; while theorists sensitive to new phenomena either induce, deduce, or endorse, elevating them to theory or methodology, proposing new logic and systems.
**Undeniably**, these efforts have had a huge positive impact on practice, providing direction for thinking and innovation in chaos. **But the problem is** that various popular new ideas, concepts, logic, and systems, though using the same rhetoric, have inconsistent connotations and extensions; each speaks its own language, easily confusing people, leaving enterprises either at a loss or focusing on the trivial; overgeneralizing, exaggerating the difficulties faced by traditional industries, and overstating the energy of emerging industries.
The Strong Rise of E-commerce
How hot is the convenience e-commerce provides to consumers? The answer lies in people's willingness to forgive its fatal flaws while embracing it with enthusiasm. As a new thing, whether from a macro or micro perspective, we don't need to nitpick e-commerce. Because it represents direction and trend to a certain extent, is indeed a new growth point for China's economy, the most vivid case of 'Internet+', and a feasible and necessary path for traditional industries to rejuvenate.
But we should also see that all this has unfortunately made discussing the influence of the internet a 'politically correct' stance. So much so that in practice, discussing traditional industries and their innovative practices has become seen as out of touch and pulling history backward.
Wang Jianlin, who bet against Ma Yun, has fallen into strategic passivity, and people are unwilling to delve into why Wang Jianlin and his business empire suddenly entered a 'sell, sell, sell' state; in the bet between Lei Jun and Dong Mingzhu, people even deliberately ignore that Xiaomi experienced risks during the process, while Gree was more composed and steady.
E-commerce rose strongly because it brought convenience and new consumption experiences, and brought hope for economic growth and breaking the deadlock of traditional economy. As for the twists and turns it will experience in its growth, its continuous transformation and improvement, that is less important, and even discussing these issues can get you labeled.
E-commerce is eagerly embracing traditional industries. People are even unwilling to seriously ask whether this means it's a necessary path for e-commerce's survival and development, or a future trend of winner-takes-all.
Despite being vital to national welfare and people's livelihood, traditional industries supporting the national economy have suddenly become representatives of backwardness and symbols of bleak prospects, even as meat on the chopping block for the new economy or emerging industries.
Saying traditional industries are in dire straits is an exaggeration, but it's a fact that they generally show pessimism and disappointment.
The Past and Present of Traditional Industries
Before diving into the topic, we need to discuss traditional industries and traditional economy.
Traditional industries correspond to emerging industries. Undoubtedly, if a country doesn't pay attention to emerging industries, it's as bad as a company not caring about new product R&D. But this doesn't mean emerging industries' current or future status and role in the national economy and people's livelihood are necessarily higher than traditional industries, nor does it mean traditional industries will inevitably give way to emerging industries in the long run.
If distinguishing traditional and emerging industries is relatively easy, distinguishing traditional and new economy is more difficult. I rack my brains but can't understand why the same product, Xiaomi is classified as new economy while Gree is traditional economy; nor why Xiaomi phones, despite performing better in the market and seeming to have more potential, have become the label of new economy over Huawei phones, and why vivo and OPPO are not new economy?
If all non-internet-based economies are classified as traditional economy, and all non-internet-based industries are labeled traditional industries, then discussions based on such classification are doomed to fail to solve theoretical and methodological problems in understanding and practice.
The US, based on trade deficits, launching a trade strategy against China is clearly misdiagnosing the cause and prescribing the wrong medicine. Products China exports to the US are almost all products the US no longer produces. In the 1970s and 1980s, the US transferred most manufacturing globally, building global supply chains. According to the above classification, what was transferred were traditional industries, forming traditional economies.
China, as the world's factory, also accepted traditional industries and formed traditional economies, so much so that Lang Xianping called Chinese manufacturing and Chinese enterprises 'international migrant workers'.
The greatest achievement of Chinese-style marketing is that through learning and imitation, it not only recaptured the Chinese market for traditional industries but also went global with them. An unexpected result is that in the global supply chain, it pushed developed countries, especially the US, to the ceiling.
Learning and imitation have limits. Around 2008, Chinese enterprises' learning and imitation reached its peak, and around 2013, it hit its limit. People saw the difficulties traditional industries faced in this decade but ignored that in the same decade, Chinese enterprises focusing on independent intellectual property showed creativity. They also ignored that the technological foundation for China's emerging industries was nurtured by traditional industries.
Facing China's economy, if we deliberately ignore the strong foundational role of the so-called traditional economy and industries, the harm to the national economy will be far greater than the US's large-scale transfer of traditional industries.
The US is pretending to be confused. It surely knows the cause of the US-China trade deficit. What it wants to encircle is not China's traditional industries themselves, but the creativity that is accumulating and will eventually explode. In the past five years, China's effective invention patents have increased by 2 times, and annual technology transaction volume has doubled. Not long ago, WIPO and other organizations released the 2018 Global Innovation Index ranking, where China ranked **17th**, up 18 places from 2013.
Without the strong foundation of traditional industries, the sustained rise of emerging industries will lose support. Without strategic connection, it will also create a gap in technological innovation. Returning to the consumption level, people's lifestyles will inevitably undergo revolutionary changes with the formation of emerging industries (services rising rapidly and leading manufacturing), but the evolution of traditional industries forming the material basis of lifestyles is a relatively slow process from quantitative to qualitative change, not a drastic change. Therefore, making conclusions by simply comparing rapidly developing emerging industries with traditional industries in painful transformation is unreliable.
The evolution of people's material life is a relatively stable upgrading process. By comparing product differences between China and developed countries, it's easy to draw such conclusions. It's also relatively easy to find the real gaps and directions for improvement in various industries in China.
Ma Yun and new marketing tell traditional industries that if they don't follow new rules, being 'traditional' means extinction. This partly explains the development trend, but it's also 'the backside determines the mouth' propaganda.
Ma Yun's 'Five New' concepts, when analyzed, mainly intimidate the 'commerce' (new retail) and 'production' (new manufacturing) in traditional industries. His arguments and ideas are tailored to the ideal development needs of e-commerce.
The problem is that it may not be the only development direction for traditional industries, nor even the ideal one.
The Fate of Traditional Brand Enterprises
Manufacturer-dealer unity was at least in the past a good wish, a marketing term used by the stronger party to fool the other. Since channels have always been changing, manufacturer-dealer games have always been a fact.
Once, the emerging supermarket industry presented manufacturers with the scenario 'enter supermarkets and die, don't enter and wait to die'. But today, brand enterprises have entered the mainstream, establishing industry positions with the help of supermarkets, and coincidentally, leading Chinese enterprises have escaped the curse of 'popularity leads to death' through supermarkets. Those 'MUJI' also eventually became a paradise for Taobao shoppers in supermarkets.
Currently, a topic of discussion is 'brand enterprises are becoming targets of new retail robbery' or 'new retail will turn brand enterprises into ordinary suppliers'.
The Chinese supermarket industry that prepared to slaughter brand enterprises didn't succeed, nor did giants like Walmart, nor did they succeed with multinational brands or Chinese brands. If new retail has the ability to turn Chinese brand enterprises into ordinary suppliers or eventually hunt them down, it would need at least two basic conditions:
> 1. It has the ability to create first-class products surpassing brand enterprises;
>
> 2. Chinese brand enterprises are made of mud, or they are willing to be slaughtered.
In this regard, I would rather make this judgment: if new retail cannot find a win-win model with brand enterprises, then new retail dominating the future market is a false proposition.
'**Discourse power is shifting from manufacturers to retailers**' was a popular topic in the 1980s. But whether this shift is irreversible (manufacturing becoming suppliers without discourse power) or just a re-division of interests between manufacturers and dealers with environmental changes, no conclusion was given. Instead, with Walmart rising to the top of the Fortune 500 and the strong rise of e-commerce, people have reinforced the previous conclusion.
Any business form that adopts a life-and-death stance against brand enterprises has no way to survive. The reverse is also true. Unless brand enterprises' brands lose the support of strong product power, digging their own graves.
Discussing the way out for brand enterprises first requires understanding how brands are formed and the survival mechanism of brands, which is the underlying logic determining brand prospects. A brand is just a name with no value. What makes it invaluable is valuable products and independent intellectual property supporting the value.
The real reason Chinese brand enterprises seem passive is that despite high visibility, their brands lack support from independent intellectual property and strong product power. This is also the fundamental reason why they are at a loss in the face of the 'three-phase superposition' and the rise of the internet. It even has nothing to do with the internet. On the contrary, the internet provides opportunities to solve their long-standing problems, not just threats, let alone a crisis of being swallowed.
Invincible product power is the brand; that's our basic understanding of brands. It's generation after generation of super-first-class products that make competitors fear and consumers love, which create, support, and polish the brand. From iPhone 1 to iPhone 9, product and brand are integrated; Q7, Q5, Q3, and X5, X6 also confirm this trend.
These logics will never change—for retailers, they can choose the best suppliers, but they don't have the ability to eliminate the best manufacturers. For brand enterprises, if they don't cooperate with the best retailers, 'no matter how good the car, there's no road to travel', making sales redundant is never about making retailers redundant.
If they don't rationally and fairly embrace brand owners, are Ma Yun's choices for fans the best or the most economical? This is a question worth serious consideration.
Source: Sales and Market (ID: cnmarket)
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