Click the image for details Guest Speaker: Yang Yonghua MBA from Tsinghua University, renowned expert in enterprise growth path planning, and practical marketing expert. Currently serves as Chairman of Guanfeng Consulting Group and Director of the Central China Industrial Development Research Center. Author of books including "Unity of Knowledge and Action" and "Practical Marketing Strategies for FMCG in Times of Change."

" What exactly has changed in the environment? Many companies are now complaining about insufficient consumer purchasing power. In reality, over 100 million Chinese travel abroad each year, with nearly a trillion yuan in overseas purchases. Some imported foods have also seized the opportunity to enter the domestic market at high prices. Why are these consumption trends surging? Is our consumption power really a problem? The issue is that we are unable to accurately grasp the timing. With environmental changes, and irregular ones at that, the real problem facing enterprises is uncertainty. For example, the supply-demand environment has changed. Our current supply-demand situation is characterized by overall surplus and structural deficiency. Overall surplus is the problem we face, while structural deficiency is the opportunity. Due to overall surplus, homogeneous competition has led to insufficient innovation and unclear differentiation, causing industries to shrink in scale. In reality, only by adjusting structure and innovating products to enter customers' lives can enterprises find great opportunities. For instance, changes in the consumption environment have ushered in an era of enjoyment-oriented consumption. From not having enough to eat in the past to eating healthier now, the shift in consumption and social development has transformed the consumption environment into one of enjoyment. For food enterprises, the strategic opportunity lies in the concept of "medicine and food homology." We should shift the function of food from filling hunger, eating well, and eating nutritiously to eating healthily. Incorporate the concepts of medicine and food homology, health preservation, and wellness into our products. For example, the advent of the mobile internet era has made information more transparent and consumers smarter. They know which products are good and which are not, and they also know whether your product claims are genuine. For enterprises, the most important change is in the marketing environment and marketing mission. In the past, the marketing task was distribution rate and terminal activation; doing these two well sufficed. In the future, marketing will be 1% about product placement and 99% about customer experience and winning over customers' taste. Currently, the most common consulting issue we've received in the past two years is the problem of products not moving. Many report that they distribute well, display well, have no issues with distribution rate and terminal activation, and have high profit margins—so why aren't products selling? The root cause of all products not moving is insufficient differentiation and severe homogenization, with reliance on low prices to compete. But the era of low-price competition is over; the era of value competition has arrived. Let me give an example. Twenty years ago, during the planned economy, consumers were like pigs: goods were scarce, no choice, you bought whatever was sold. In the market economy era, goods became abundant, consumers had choices, and consumers transformed from pigs to dogs—they had options but still weren't respected. Now consumers are cats: abundant goods, overall surplus, and we've reached an era where sugar isn't sweet and meat isn't fragrant. What is the image of a cat? Smart, greedy, lazy, and picky. To win over customers in the "cat era," you must create products that make customers scream. Customers vote with their money. If your product lacks value, if it doesn't fully deliver value, if you fool consumers, they will respond with stagnant sales.

" Where can restructuring occur? Below, I'll share some actionable methods from the paths of restructuring to rebirth.

1 Strategic Restructuring: Business Chain Restructuring Strategic restructuring requires enterprise decision-makers to consider what kind of enterprise they want to build: for scale, for brand, or for operational value. When there is overall surplus and supply exceeds demand, strategic restructuring is necessary. We have served an ice cream company called Mulunhe in recent years. Over the past five years, profound changes have occurred. This year, Mulunhe ice cream shipped over 900 million yuan in just four months from December 2016 to March 2017. This was due to strategic restructuring: first, restructuring the business chain to achieve integration of manufacturer and distributor, and integration of factory and market. Upstream suppliers formed equity relationships with the company, and downstream distributors also aligned interests with the company. After analyzing industry leaders and SMEs, we found that Mulunhe had unconventional growth in 2017, from less than 1.5 billion yuan in revenue to now being in short supply. We proposed that restructuring capability determines the future of an enterprise; only through restructuring and transformation can rebirth occur. Like the famous story of the eagle's rebirth: after living 35 years, its claws, feathers, and beak become hard. It must go to a cliff cave, strike its beak against rocks, wait for a new beak to grow, endure pain to pluck out old feathers and remove calluses from its legs and claws, and become a new eagle.

2 Operational Restructuring: Choice Over Effort Previously, domestic enterprises debated whether to diversify or focus on the main business. At that time, many enterprises tended to expand their main business. On the issue of main business vs. diversification, Chinese enterprises have fallen into a misunderstanding. For example, our research found that none of the Fortune 500 companies have a single main business; they all have an industrial chain or are conglomerates. I summarized a rule: Chinese enterprises like to cultivate a single towering tree, while foreign enterprises adopt a big forest strategy with towering trees, shrubs, and grass. When strong winds blow, foreign enterprises have wind resistance. We only have one main business, lacking wind resistance. In 2002, I often puzzled over the question: expanding the main business aligns with the principles of focus and specialization. But after more than a decade, we find that the big forest strategy is far more reliable than the big tree strategy. For example, in the instant noodle industry, Baixiang is a single-product instant noodle company, while Hualong has instant noodles, beverages, biscuits, and flour. Compared to Kangshifu, Hualong has both investments and fast-food projects. Today, we see that Baixiang only focuses on its main business without mutual support. It has only one big tree, no shrubs, no lawn; when strong winds come, its trunk breaks or falls. Hualong, on the other hand, is relatively calm: if one side fails, another succeeds, with mutual support.

3 Organizational Restructuring: Interests Are Not the Only Bond The highest level of organizational restructuring is values, goals, and interests. I often study religious organizations: they don't pay salaries, they live a hard life, yet the organization remains very stable. In fact, a great organization must have three core elements: first, values—why we do it; second, goals—to what extent; third, interests—what's in it for me if I do well. When building team organizations, enterprises must understand that interests are not the only bond. Sometimes, paying more money can lead to faster dissolution due to lack of motivation. For example, Mr. Ren Zhengfei said at Huawei's 30th anniversary that Huawei's deadline has arrived, its lifespan is over, because in the past, sending cadres abroad with an annual salary of 1.5 million yuan attracted eager applicants. Now, sending a senior executive abroad with 2 or 3 million yuan attracts no one, because people feel it's too hard, too far from home, and lacking a sense of fulfillment and happiness. Many enterprises are currently in difficulty. From an organizational and team perspective, there are two aspects: first, lack of organizational vitality—people have lost entrepreneurial passion and innovation capability, feeling they are living off past achievements. Second, lack of competitiveness—there's no phenomenon of putting wolves into a flock of sheep. Another issue is organizational non-growth.

4 Brand Restructuring: Connect with Customers Brand is the biggest challenge enterprises will face in the future. In the past, branding was like a peddler's self-promotion, talking about oneself. Future brand restructuring is about connecting with customers. Enterprises can consider the following four points:

  1. Use a "warm man" culture to cater to consumer values, moving from empty slogans to more down-to-earth humanistic care;
  2. Apply the past to the present, integrating historical culture with modern social values, such as using wine culture to interpret modern new life;
  3. Shift from "peddler-style" "selling point promotion" to "entering customers' lifestyles" , implementing customer-experience-based "buying point resonance" ;
  4. Brand appeal is replaced by customer experience. In the era of face consumption, brand was a magic weapon to impress consumers. Now "losers" increasingly value "substance." Personalized consumption concepts make it hard to unify products with a single brand awareness. Recently, there was a new peddler online who said, "My melons are sweeter than first love," and they were sold out. Including a small liquor we helped Wuliangye plan since 2014 called "Wai," which also achieved success through personalized consumption. Currently, Jiangxiaobai and Wai are two innovative fashion products. Methods for Brand Restructuring:
  5. From "advertising is brand" to "experience is brand"; In the internet era, brand experience replaces brand awareness; experience is existence. Brand interactivity is brand power. For example, Apple experience stores complete sales through customer experience.
  6. Building a brand is building consumer relationships; The purpose of branding is to tell you I care about you, I pay attention to you. In the past, branding was advertising: I am who I am, you care about me.
  7. Use scenario-based consumption to create brand topics; Here's an example of JDB. When Wanglaoji and JDB were in a brand dispute, JDB released a series of "Sorry" ads, such as: "Sorry, we don't know how to fight lawsuits, we only know how to make herbal tea." Another: "Sorry, we are grassroots, a completely private enterprise." "Sorry, we are too stupid; it took us 17 years to make Chinese herbal tea a brand bigger than Coca-Cola."

5 Product Restructuring: Give Consumers a Reason to Buy The era of homogeneous products is over; the era of differentiated, categorized products has arrived. Enterprises need to restructure products by entering customers' lifestyles, finding and forming reasons for customers to buy. Let me give a few examples. Traditional iced tea brands like Kangshifu, Uni-President, and Wahaha are all declining. In recent years, emerging beverage brands like Chali and Hai Zhi Yan have broken through billions in a short time. Traditional old products decline, while new products rise rapidly.

6 Market Restructuring: Break Through Traditional Thinking The idea of surrounding cities from rural areas, especially SMEs not daring to enter mainstream cities or mainstream consumption, is a huge mistake. Additionally, blindly expanding territory is also a huge mistake. Of course, if your product is sufficiently differentiated and has enough value, you can also expand territory. We must firmly believe that as long as the product is good enough, we can enter first-tier cities at high prices.

7 Marketing Restructuring: Shift from Selling to Buying I've already discussed the development and changes in marketing missions. In the past, the marketing mission was convenience, distribution rate, and terminal display. In the future, it's terminal experience and winning over customers. I'll give you a mindset for marketing restructuring: worship. In the past, marketing was about how to sell; now, your starting point must be why people buy. Consider the "how to buy" issue before the "how to sell" issue.

8 Systemic Restructuring: All Enterprises Are Worth Rebuilding As long as you are customer-oriented, I believe all enterprises are worth rebuilding. Why call it systemic restructuring? The first seven restructurings can be applied to address specific problems and shortcomings. But if you find you have shortcomings in all seven, then I think you need systemic restructuring—that is, being customer-oriented, producing products from the customer's perspective, and developing yourself accordingly.

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