Recently, I've heard many people talking about 'hunkering down'—'waiting out a few years,' 'enduring the winter,' 'holding on.' Because the economy is down and business is tough, they plan to contract and wait for better times.

But I say: This time, hunkering down won't work. The outcome of hunkering down is death. 'Hunkering down' is a historical experience

Hunkering down has been a historical experience. Since the reform and opening up, many enterprises have survived multiple economic downturns by hunkering down.

However, there was one exception: the 1997 Asian financial crisis.

In that crisis, enterprises that tried to hunker down all died; only those that were reborn survived. I had the fortune to experience that crisis, and it remains a personal historical memory.

The implicit assumptions of 'hunkering down'

Why can some economic crises be survived by hunkering down, while others cannot?

When we talk about 'hunkering down,' it actually implies several assumptions:

Assumption 1: Economic crises or downturns are limited in time; after winter comes spring.

Assumption 2: After the crisis or downturn, the future is an extension of the present. That is, the situation after hunkering down is not much different from the current situation, and traditional business can continue.

Assumption 3: When scale is reduced, costs can be compressed. After cost compression, survival is not a problem.

The multiple economic downturns after China's reform and opening up indeed conformed to the above assumptions. Therefore, most enterprises survived by hunkering down.

Such historical memory can sometimes be terrifying. I often say that all theories have preconditions or assumptions, and most preconditions are implicit.

I propose the above assumptions to illustrate that the preconditions for surviving by hunkering down no longer exist. 'The era of rupture'

Let me first talk about the 1997 economic crisis.

Although it was called the 'Asian financial crisis,' it had a huge impact on China. It brought China from an era of shortage economy, almost without passing through an era of supply-demand equilibrium, directly into an era of surplus economy. In other words, this was an 'era of rupture.' It did not conform to 'Assumption 2' I proposed above, that the future is not a continuation of the present. Even if you hunkered down, traditional business could not continue.

After the Asian financial crisis began, enterprises' instinctive reaction was to cut prices. After cutting prices, profits declined or even turned to losses, so they reduced quality, forming a vicious cycle.

At that time, some enterprises also adopted the method of hunkering down, but successful enterprises adopted the method of 'restructuring.'

Generally speaking, restructuring was carried out in two aspects: First, product restructuring. Low-end products continued to cut prices, while high-end products were cultivated as a priority. For example, at that time, Shuanghui's stated goal was 'sales growth of 30% per year, and product structure adjustment of 5% per year.' Second, channel restructuring. Before 1997, provincial distributors were the mainstay; after 1998, the 'market center of gravity sank,' and city-level distributors, county-level distributors, terminal sales, and deep distribution were all proposed after that.

The 'restructuring' after 1997 formed a new mainstream product system, which has continued to the present; it also formed a new channel system. Of course, to complete the above two aspects of restructuring, internal personnel reorganization was inevitable, and a large number of people were eliminated. Why does this crisis form an 'era of rupture'?

The Asian financial crisis after 1997 created an 'era of rupture.' The 2008 financial crisis should also have formed an era of rupture, but the '4 trillion' stimulus in 2009 delayed this process.

Why do I say this crisis forms an era of rupture?

First, China's consumption upgrade, the awakening and rise of the middle class, has already required a change in the mainstream product system. This is what I have been advocating: the 'mainstream gear shift.'

Second, following the popularization of C-end e-commerce, B-end e-commerce is now rising, which will completely change the channel system of Chinese enterprises.

Third, the impact of the internet on marketing communication is comprehensive and thorough.

The impact of the above three aspects means that after this crisis passes, we will face a completely different enterprise system and market system. The assumptions of 'hunkering down' no longer hold

Let's look again at the three assumptions based on 'hunkering down.'

Regarding Assumption 1: Past economic downturns were V-shaped, but this one is likely to be L-shaped, lasting a relatively long time. Especially as China's economic transformation encounters a world economic crisis, the future is hard to predict. After winter, there may not be spring, but a deeper winter.

Regarding Assumption 2: After the economic downturn, the future is not a continuation of the present, but an 'era of rupture.'

Regarding Assumption 3: Hunkering down means reducing costs through contraction. As I said in 'The Enterprise's Winter, the Employee's Spring,' although the economy is down, labor employment is quite full, and overall wage costs are still rising rapidly.

If the three basic assumptions of 'hunkering down' do not hold, then the strategy of 'hunkering down' is also invalid. The 'rebirth' strategy

Since hunkering down is not the correct strategy, what is the correct strategy?

I believe it should be an active 'restructuring' or 'rebirth' strategy.

In an 'era of rupture,' traditional business is affected, and when new things appear, they always encounter 'collective indifference.'

In the face of crisis and opportunity, most people's instinct is to focus on the crisis.

In the face of stock and increment, most people's instinct is to focus on the stock, or be 'kidnapped' by the stock.

The so-called 'collective indifference' to opportunity means that when opportunity appears, most people are busy dealing with the crisis and rescuing the stock.

In the face of crisis, most people will choose 'loss minimization,' and hunkering down is a manifestation of this choice. This is a passive, instinctive choice. In an era of rupture, loss minimization is very difficult to achieve.

Here, I can make a bold prediction. After this crisis, a large number of enterprises will cease to exist; hunkering down will not work. At the same time, after the crisis, a large number of new enterprises will stand out and become the masters of the industry for some time to come. -END- Speed 8 Taurine Vitamin Functional Drink National Recruitment Reasons for recommendation: 1. Superb taste and quality. 2. International superstar Donnie Yen as image spokesperson, precise and powerful. 3. Patented packaging design. 4. Strong corporate strength. 5. High profits, professional operation team and after-sales service. Recruitment area: Recruiting for blank markets nationwide. WeChat: lp780611. For more information, follow the WeChat official account: Tuba Ge Food. The best FMCG distributor learning platform in China Dedicated to providing professional, practical, and actionable tutorials for enterprises and distributors Committed to helping Chinese FMCG distributors grow rapidly The most professional and practical knowledge base in the FMCG industry Reply with the red number below to get the corresponding content Reply with number 1 to view the complete knowledge base | 001 Excellent article selection | 002 Distributor market operation | 003 Terminal visit management | 004 Sales supervisor skills | 005 Sales improvement techniques | 006 Channel expansion | 007 Managing distributors | 008 Distributor development | 009 Distributor internal operations management | 010 Team management | 011 Efficient distribution techniques | 012 Sales manager's eighteen skills | 013 KA operation methods and strategies | 014 First lesson for new salespeople | 015 Internet, brands | [Long press QR code to follow] To join QQ/WeChat group, please click: Read original text