Chinese companies can evolve in tough times

Source:Global Times Published: 2019/1/9 17:43:40

Illustration: Luo Xuan/GT

The year 2018 was a tough year, but we have made it through. The good news is that the hardship was common for many people, while the bad news is that a difficult time may just lie ahead. I have always believed that when the society offers opportunities, we should create value for it. But when there is no opportunity from the society, we should create value for ourselves.

When it comes to the talk of reflecting upon 2018, many entrepreneurs often mention systemic reform and China-US trade, which in fact have little direct impact on their businesses. Many of us attribute the bad business performance to such problems as the macro economy, unfair competition, changing markets, macro control and deleveraging. We all know what has happened to the general environment, but it is still necessary for entrepreneurs to perform a further deep dive into their business.

What have you learned over the past months? What changes have you made? Has your team evolved? Why did you pledge stocks to make so much investment that has nothing to do with your business?

China has accumulated a large amount of wealth after 40 years of reform and opening-up. Forty years ago, simple infrastructure investment and low-end manufacturing contributed to the rise of the Chinese economy. However, today, when the nation has become the world's second largest economy, simplistic management is no longer suitable for such a large economy.

Managing a company of 200 staff is different from managing one of 2,000 or 20,000 staff. That's why we have to keep learning. It is normal to see some problems and conflicts in China-US trade relations, but it is wise to know how such conflicts will change your business.

In 2019, every company needs to pay attention to its own customers, its own products, asking themselves whether the technology needs to be upgraded, whether the organization needs to be improved or whether the investment direction needs to be adjusted. Without considering these basic management decisions, we will still face many difficulties.

Many people are complaining about the macroeconomic slowdown, but most companies that suffered have little to do with the macro economy. Therefore, one needs to go back to the original motivation and think about why they started the business, why the business got better, and why it is now suffering.

The Chinese economy still has lots of opportunities, and I believe so because of the following three factors.

First, China has a population of 1.4 billion people, which includes 300 million middle-income earners. And Chinese people are living in one place, covered by the same economic policy.

Second, China is one of the few countries in the world that dares to propose plans for future. Many countries cannot even make strategic plans for five years ahead, because their ruling political parties will always change.

Third, China's infrastructure investment over past 20 years exceeds the total of European countries and the US during the same period. So there are still opportunities under this big picture.

With regards to the China-US trade war, if the trade negotiations go well, we can do some foreign business. But if the talks fail to reach some positive results, we can still do the business with 1.4 billion Chinese customers at home. It's not a big deal. The Chinese market is big enough for us to do our business. But if you are not able to adjust your own business well and adjust for a changing market place, it is meaningless to blame others and the US. 

You need to change yourself, making adjustments to your own skills, organizational structure, key performance indicators, and financing options. All the problems we are complaining about today are rooted in individual companies. So the key is to make reforms and change yourself and your business.

Sometimes it is not a bad thing for companies to grow slowly from time to time. We can do things a little bit slower, but a little bit better and more comfortably. That's the way to make the business more sustainable and improve long term potential. You may have seized an opportunity and may develop quickly for the first three or five years, but still you need to evolve you business, your staff and organization and rethink the capital management and investment principles.

Lastly, no matter whether 2019 is good or bad for an individual business or person, it is essential to focus on your own things. Only in this way may our companies pull through the hard time, because you are able to ride out a storm only when you are strong.

The article was compiled based on a speech made by Jack Ma Yun, founder and executive chairman of Alibaba Group Holding, at the 2018 Shanghai Forum Themed Zhejiang Entrepreneurs in the World.


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