Chapter 7 Industry Chaser Amoi

Corresponding to this impetuous era, too much speculative enthusiasm has filled the minds of too many people, and many companies are relentlessly chasing "emerging industries", but each success is not the basis for the next success.Amoi Electronics (600057) is a microcosm of this type of enterprise. Amoi Electronics has been listed for seven years, and its performance has experienced two rounds of first profit and then loss.Amoi’s decision-makers once said that any company should be a speculator in the industry, because every industry has its ups and downs, and only by grasping the opportunities in the industry can companies create wealth and value. Therefore, whether they can seize opportunities is the key to the success of a company The essential.But the question is, where is the ultimate way out for the continuous industrial pursuit of such Chinese enterprises?

Whether it is the craze of video recorders and DVD players in the 1990s, or the craze of mobile phones, cars, 3C, 3G, and LCD TVs in recent years, Amoi has not let go of any craze.Among these pursuits, how much is due to the necessity of industry replacement, how much is due to the original impulse of speculators, and how much is due to other plans outside the industry.Reviewing the history of Amoi's frequent industrial pursuits has become the basis and necessary premise for interpreting Amoi's corporate operation ideas. And sorting out Amoi's repeated industrial pursuits, some of them turned into large-scale substantive industrial investment, and some of them appeared as only a small amount of investment or foundation, which really attracted attention and spread the concept.This has become a basic clue for analyzing Amoi's numerous industrial pursuits.

The video recorder industry that Amoi initially entered was destined to carry out industrial replacement, but unfortunately, the inevitability of this made Amoi's corporate character generate a speculative inertia of constantly chasing the industry. Founded in 1981, Amoi's initial business was to assemble some electronic products, mainly black and white TV sets.As one of the earliest TV companies in China, Amoi has not been able to make its brand loud enough, its main business has not been clearly defined, and its scale has always been relatively small.Until 1993, taking advantage of the popularity of video recorders, Amoi began to enter the video recorder industry and became one of the few national designated video recorder manufacturers.

Amoi started to look for opportunities to further expand the enterprise as the video recorder market began to stabilize.Going public has become Amoi's time choice. In April 1997, six shareholders including Xiamen New Electronics Co., Ltd., China Electronics Leasing Co., Ltd., China Electronics International Trade Corporation, Xiamen Electronic Equipment Company, Xiamen Electronic Instrument Factory, and Chengdu Broadcasting and Television Equipment (Group) Company were the founders. Approved by China Securities Regulatory Commission (1997) No. 176, Xiamen Xiamen New Electronics Co., Ltd. was established by offering shares to the public, with a registered capital of 187 million.

The short industry cycle of video recorders in the Chinese market predestined Amoi to seek new industry opportunities, so Amoi began the process of chasing industry opportunities. Soon after it went on the market in 1997, Amoi realized that the rapidly rising VCD would be the terminator of video recorders, and became one of the many gold diggers for VCD products.A year later, Amoi's transition to the production of DVD players won its first pot of gold after listing. In 1998, Amoi's net profit per share was as high as 1.02 yuan.The success of this transformation may be a direct inspiration for the basic concept of enterprise development strategy summarized by Amoi President Li Xiaozhong later: any enterprise should be a speculator in the industry, because every industry has its ups and downs, and enterprises can only grasp it. Industrial opportunities will create wealth and value.Therefore, whether it can seize the opportunity of speculation is the key to the success or failure of the enterprise.Li Xiaozhong joined Amoi after graduating from the Department of Electronic Engineering of Shanghai Jiao Tong University in 1985, and then worked in the quality control department, manager, planning department, export office and other departments, and began to serve as the vice president of Amoi Electronics Co., Ltd. in 1997. Since then he has been promoted to president.

Choosing a DVD player made Amoi a success from the very beginning.As a result, Amoi began to extend along the related industries of DVD players, and in 1999, it launched a relatively advanced digital power amplifier, which was combined into Amoi Home Theater. At the same time, it also entered the newly emerging cordless phone. In 1999, Amoi spent most of the 200 million allotment funds on cordless phones and home theaters. However, in the late 1990s, there were many entrants in the DVD player, home theater, and cordless phone markets, and the competition was fierce. The profit margin of the products continued to decline, and Amoi failed to continue the situation of substantial profits in the previous two years. In 1999, Amoi's earnings per share dropped rapidly to 0.11 yuan, and in the following 2000 and 2001, it suffered consecutive losses and was labeled as "ST".

If we analyze it from the perspective of hindsight, Amoi is good at seizing the market growth opportunity of an industry, and has achieved initial success in the opportunity of rapid industrial growth, but Amoi lacks the ability of in-depth industry.This is reflected in the Amoi DVD player and its home theater series, and also in the mobile phone industry, which later achieved short-term glory. Amoi, seeking industrial opportunities again, found another direction: mobile phones.This industry has the potential for high-speed growth and high profit margins, and the competition is not too fierce due to license restrictions.

In March 2001, Amoi obtained a GSM mobile phone license.Although Amoi is the same as many Chinese mobile phone manufacturers who started with nothing at the beginning, the production of mobile phones has also become an open platform, and the core components of mobile phones can be directly purchased in the global market.Moreover, the rise of the South Korean mobile phone industry has also given Chinese mobile phone manufacturers an opportunity to leverage their strength to develop. Korean mobile phone companies have not been able to directly enter the Chinese market due to license restrictions, and they rely on a large number of mobile phone designs, core components and related solutions. cooperation with Chinese companies.However, Chinese companies rely on manufacturing capabilities and channel capabilities to quickly assemble Korean semi-finished products into the market.The luck of Amoi is that, as the first Harmony mobile phone to land in the Chinese market, a Korean company has traveled half of China with an immature A8 semi-finished product, because there are still flaws in the circuit design, and no manufacturer is willing to take the risk except Amoi .Amoi's adventure has made Amoi A8 myth, and Amoi's most brilliant two years so far. In 2002 and 2003, Amoi earned a total net profit of 1.1 billion yuan.

At this time, Amoi's pursuit of the industry has been richly rewarded, and it seems that it has found the direction of enterprise development.Amoi's 2002 annual report shows that its mobile phones sold 2 million units, accounting for 82% of its main business income.Moreover, at this time, Li Xiaozhong said: "As an entrepreneur, the most important thing is to determine the development strategy of the enterprise. Once determined, one must be good at turning such a strategy into reality."Focusing on the success of the mobile phone industry, Amoi puts forward the strategy competition theory of "sub-core technology" based on the weak and strong, and "application pioneer, refinement-oriented", focusing on the high-end mobile phone market, and trying to make Amoi establish a competitive The mobile phone production industry value chain.

However, Amoi was not immune to the large-scale landslide of domestic mobile phones in 2004, and became one of the companies leading the momentum of this decline. In 2004, Amoi began to enter the downward channel again.Amoi's 2004 third quarterly report showed that there was a loss of 41.6378 million yuan in the third quarter, with a loss of 0.10 yuan per share. From January to September 2004, the gross profit rate dropped from 37.76% in the same period last year to 10.06%, the main business profit dropped 56.8% year-on-year, and the net profit dropped 91.73% year-on-year.Although Amoi still maintained its title of "profit" with a net profit of 15.8543 million yuan in 2004, its mobile phone inventory was as high as 1.8 billion, its cash flow dropped sharply by 1.1 billion, and its net profit plummeted by 97%.

According to the annual report of Amoi Electronics, its operating difficulties last year were mainly due to two reasons: one is that the competition in the entire mobile phone industry has intensified, and the gross profit margin has dropped sharply; investment thus creating an operating burden.According to Xia Xinnian Bao, its R&D investment is based on financial statistics in the name of "special payables". According to calculations, the investment in 2004 was about 161 million yuan.Wang Zhiquan, spokesperson of Amoi Electronics, said that the funds were mainly used in 3G mobile phones and some 2.5G application technologies. However, only in 2003, Amoi had a net profit of 590 million yuan, which is undoubtedly quite rich as a research and development fund reserve.So what exactly got Amoi in trouble? Also in the 2004 financial report, the cash flow generated by Amoi's operating activities last year was -660 million yuan, while the figure in 2003 was 500 million yuan, a year-on-year decrease of 231.81%. A huge amount of cash was lost in operating activities.After entering the mobile phone industry and making huge profits within three years, he did not devote more energy to the in-depth development of the industry, but saw new industry opportunities and invested in new industry speculation. In 2003, when Amoi performed well, Amoi started a series of attempts to enter new industries. In June 2003, Amoi announced that it would enter the notebook computer market, and launched its first notebook product V6 at the same time. In August 2002, Amoi LCD TV project began. In August 2003, the 17-inch LCD TV entered mass production and went on sale. In 2004, Amoi announced that Amoi would invest 600 million yuan to build a 200,000-square-meter LCD TV base in Xiamen. Amoi does not have any basic industries for computers and LCD TVs, but because of its expanding market opportunities and high product profit margins, it is in line with the goals pursued by Amoi's industry.As for the mobile phone industry, which obviously still has strong potential, Amoi has obviously begun to be distracted again.As competition becomes more intense, and the next stage of competition is more determined by mobile phone companies’ technology follow-up and product innovation capabilities, Amoi’s “distraction” makes it clear that mobile phones will become the same as DVD players: Amoi will continue to Making mobile phones, but with further industrial development, Amoi is already looking for a new love.Chen Qiang, general manager of Amoi's home system business department, said that after the decline in the profits of DVD players and mobile phones, Amoi has taken the emerging LCD TV as the key development direction in the future, making it the company's first after mobile phones and computers within two years. Three pillars of industry. Amoi's short-lived success in mobile phones was followed by a rapid industry "distraction", and with the support of two years of huge profits in mobile phones, Amoi's pursuit of goals has become more and more.As a listed company, it needs constant concept hype. Amoi is not only keen on industry speculation, but also keen on chasing concepts. In July 2003, Amoi changed its logo and officially changed the name of "Xiaxin" to "Amoi", and the English logo was changed from Amoisonic to Amoi.Li Xiaozhong, president of Amoi, explained the reason for changing the label: Amoi has embarked on the road of diversified development of 3C products, and needs a broader brand to support its future development. 3C fusion is a concept that Amoi is willing to promote. In 2004, Amoi introduced himself as follows: Amoi Electronics is a joint-stock listed company (600057), currently mainly engaged in mobile phones, PHS, LCD TVs, home theaters, fax machines, MP3, notebook computers, automotive electronics and other consumer products 3C integrated products such as communication, digital audio-visual and IT. In June 2004, Amoi held a "Digital Art, Dynamic Amoi——Amoi 3C New Product Conference" in Beijing.Amoi announced that it will further promote 3C integration because it has many products involving TV, AV, IT, mobile phones, and consumer electronics. However, an obvious problem is that the progress of 3C integration is based on the technological driving force of the enterprise, and Amoi, which has made few achievements in core technology, only supports 3C integration with the length of the product line. Is it the manufacturing concept or the development of the enterprise? The source power market can obviously make a judgment. According to the 2004 financial report of Amoi Electronics, its main business income last year was 5.055 billion yuan.With such an enterprise scale, can Amoi afford to invest in multiple industries such as mobile phones, LCD TVs, and notebook computers that require huge investment? In 2000, Amoi announced that it would enter the GPRS market, and signed a technical cooperation agreement on GPRS with Lucent Microelectronics (Bell Laboratories) of the United States, and signed a "Memorandum on Jointly Expanding the International Market" with Lucent Network Systems UK.But the performance in the market proves that nothing will happen. During the car boom in 2004, Amoi's announcement caused a lot of surprise in the stock market. On March 29, 2004, Amoi Electronics announced that the company plans to invest 175 million yuan with its own funds to form a joint venture with Nanjing Automobile Group Co., Ltd. to jointly produce automobile bodies and other products. The new projects announced at the same time include Wireless broadband, the company intends to invest 30 million yuan with its own funds to set up a joint venture company, and the company will hold 65% of the shares of the joint venture company.But there is no text on this matter. Amoi, who has just entered the field of flat-panel TVs, can't wait to see flat-panel TVs as an opportunity to re-plan the market structure of the color TV field in terms of publicity. The CRT "old four" represented by CRT said that they will lead the industry changes in the era of flat-panel TVs. Where is the future? A manager of Amoi Electronics once told the media that Amoi's strategy is to look for development opportunities in the industry and drill where there is profit.The success of Amoi's two transitions to DVD players and mobile phones makes it seem like it has a reason to say this.However, in the continuous pursuit of the industry, what is the competitiveness of Amoi Electronics?Which industry can we rely on in the future? Next, what exactly does "Amoi Electronics" want to do?No one can answer this question accurately, perhaps even "Amoi Electronics" can't explain it clearly. In fact, Amoi's industrial development concept has set up a big 3C basket. If there is another market opportunity, Amoi New may not let go. However, how many chances does Amoi have for success in Amoi's current main business or an industry that has decided to take a chance? The DVD player has been declining, and Amoi has long stopped taking it as its main business, and it seems that Amoi’s current sales of mobile phones with more than 80% of its electronic sales revenue can be relied on. However, in 2004, Amoi’s mobile phones fell sharply and the losses in the first three quarters , the mobile phone industry seems to be about to lose its foundation in Amoi's corporate strategy model, and even in the field of mobile phones, Amoi Electronics is well known to dominate the world with Korean models, and its advantages in the field of mobile phones are still limited to marketing and marketing. field of design.Of course, Amoi will not give up the mobile phone industry. Amoi emphasizes the need to expand deeply in the mobile phone field. The future opportunities of the mobile phone industry lie in the addition of mobile phone functions and the not-too-distant 3G. However, no one is sure about Amoi's competitiveness. Amoi, which gained huge profits from the mobile phone industry in 2002 and 2003, began to plan ahead for more layout in the future. This also led to the fierce competition in the mobile phone market and the decline in profits. Amoi began to invest in LCD TVs. , laptops and many other areas of preparation.Amoi Electronics attributed this diversification strategy of extending its tentacles in all directions to a rather forward-looking corporate development strategy - "related diversification" with 3C integration as the core.This kind of corporate strategy results in Amoi Electronics having a relatively large and complex industrial organization system despite its small scale.Amoi's current organizational structure is a mixture of "subsidiary system" and "business department system": Mobile Communications Co., Ltd., home system business department, portable system business department, and IT business department respectively face communications, consumer electronics and IT three markets. Even the notebook computer that Amoi placed high hopes on began as an OEM. "Now it is at most a job of processing and transformation," commented an industry insider.As for the LCD TVs that Amoi is currently increasing its efforts to promote, Amoi emphasizes its own system integration capabilities, because the LCD TVs produced by Amoi mainly use South Korea’s Samsung Electronics for the LCD display, and Pixelworks in the United States for the system control chip. The company and the TV signal demodulation unit choose Micronas from the United States.Obviously, when entering LCD TV, Amoi does not have the basic advantages of CRT to rely on, and does not have the technology accumulation of previous LCD TVs. The control of LCD panels is in the hands of companies in Japan, South Korea and Taiwan, and Amoi does not have strong procurement capabilities. Under such circumstances, how far can Amoi go with its so-called sub-core technology (appearance design) to open up the market, and this easy-to-replicate competitiveness can support it? In short, once the industry’s industry fluctuates due to the industry pursuit strategy, the company itself will experience a greater decline. Amoi’s performance in the field of disc players and current mobile phones proves this point.Constantly looking for high-profit industries for speculation makes it impossible for companies to establish strong core competitiveness in any industry.From the perspective of corporate development strategy, just like the classic line in "Shaolin Soccer", if a person has no dreams, what is the difference from a salted fish?However, if too many dreams are chased, it may lead to neurasthenia due to lack of energy. Any enterprise has its own character formed in the process of growth, and the way of being accustomed to surviving opportunities seems to be a deep imprint of Amoi's development. In a business environment where consumers are immature and gradually growing, whether to use a concept or It is common to see examples of successful companies being brilliant through advertising. The "Gold Rush of Opportunism" has made countless companies overflowing in the economic tide, and has also caused countless companies to experience ups and downs. In such an environment, what we think about is not whether "opportunism" is rational, but to seize market opportunities. After that, whether the enterprise can have enough courage and far-reaching vision to do something and not do something.Pursuing the pedantic word of "relevant diversification", when the current business has become a fashionable rhetoric for "speculation" of enterprises, we must clearly judge the indispensable elements of the enterprise's capital strength, core advantages, management capabilities, brand marketing, etc., whether to provide corresponding support.In Amoi, the reliance on the mobile phone business resulted in increased operating risks, as well as the other two businesses in its rapid expansion based on the concept of "3C": IT business and consumer electronics business. In 2004, Amoi The performance of the main income of the mobile phone profit further strengthened everyone's suspicion.From multiple pressures such as the difficulty of management after diversification and the decline in profits, it is not difficult for us to see Amoi's panic.Perhaps from the very beginning, the "3C" strategy was a corporate dream. Simply building terminal products to form 3C integration, in an immature environment, can only be a grand mission to urge the company to move forward, which needs to test enough patience of the company. "Haste makes waste" At this point, Xia Xin seems to be in a hurry.In the case that the "three legs" cannot be developed simultaneously, relying on Amoi's long-standing concept of mid-to-high-end mobile phone line and brand marketing capabilities, as well as its technical accumulation in 3G and the prospect of future 3G mobile phones, "two legs" or "one leg" Whether the way forward (mobile phone business) will reshape a brand-new Amoi industry kingdom may be another proposition that the public pays attention to again. Amoi's "opportunism" has given people too much room for association. In the face of "opportunism" in the 1970s and early 1980s, many large international companies achieved diversified operations. They not only enjoyed the happiness of opportunism, but also assumed the heavy burden brought by it in the later period, and finally returned in "labor pains". .In the case of Amoi, among domestic enterprises lacking core technology, it is not a phenomenon of individuality that exists alone, but a common appearance of domestic enterprises. Under this situation, does the experience of foreign enterprises also give some inspiration to similar domestic enterprises?China's economic achievements have created the soil where industrial opportunism prevails today. Amoi is not the first, nor will it be the last.In such a "gold rush era", companies that simply exist for speculation will obviously not be able to maintain long-term stability in an era where opportunities are fleeting and the strong are respected. In-depth development can grow into a towering tree, and the enterprise can be built evergreen. After reading the article "Industry Chaser Xia Xin" by Mr. Zhou Tao, I feel that this case is not new at all, on the contrary, it is very familiar.Because this is almost a microcosm of the strategic management of Chinese home appliance companies and even Chinese companies in the past ten years.It is no exaggeration to say that in today's China, such cases abound. As a former strategic management participant and current strategic marketing consultant, I have no doubts about the rationality, experience and sense of responsibility of China's first and second generation entrepreneurs represented by Amoi President Li Xiaozhong when making strategic decisions , and partly agree with the value of adopting the "opportunistic strategy" in the initial stage of the market economy to the primitive accumulation of enterprises; even, I would rather believe that the "opportunistic strategy" they adopted is a planned and intelligent way to complete primitive accumulation, Means to Real Business Strategy, not Ends (i.e. Real Strategy). Regrettably, this is not the case. The "opportunistic strategy" is their real strategy.Not only Amoi, but also many companies with larger scale, higher reputation and longer history than Amoi - such as Chunlan, Haier, TCL...even Lenovo, which gives people the most stable impression. We have already seen some phased results: Few people in Xiaxin know what he does now, Chunlan does everything but seems to be doing nothing now, and TCL’s stock price still falls sharply even though it has already made a public strategic review. It was horrible, but the prudent Lenovo stated after paying the tuition several times that he must first learn "dualization" now, and then learn "diversification" in the future. With the baptism of the market economy for twenty-five years, a small number of enterprises have begun to wake up, and most enterprises are still addicted to it. Why is this so?I think there are two reasons: one is driven by the environment, and the other is that they do not understand strategy. Undoubtedly, the choice of "Xiaxin-style opportunistic strategy" by enterprises and entrepreneurs is actually a product of the environment in the primary stage of the socialist market economy.Let us examine whether this is the case: (1) the temptation of "gold everywhere" (as everyone knows, it is actually a trap for some companies); (2) the government's design of the entry threshold for some markets and industries has further raised some The temptation for companies to enter this market or industry; (3) China's low-cost, low-risk financing environment makes it very easy for companies to "get money" (regardless of stock market, bank or other policy financing); (4) Easy and fast in the early stage (5) The assessment system with "output value" as the core index encourages the "promotion" of entrepreneurs and major shareholders (government officials) with the same goals. (6) The endless pursuit of "diversification of personal interests" by individual entrepreneurs and small groups has accelerated the unremitting pursuit of "diversification of the company's industry"; The excessive pursuit of entrepreneurial spirit such as decisive decision-making and perseverance will also become the mental drug of "over-diversification" of enterprises; (8) Chinese traditional face culture, fame culture, collusion culture between officials and businessmen, and human instincts in the primitive accumulation stage are all It is the material and spiritual opium for entrepreneurs to pursue "scale", "renown" and "industrial diversification". Although the entrepreneurs in power at this stage have experienced strategic experience for a period of time, many of them have obtained MBA or even DBA degrees, and have seen many strategic stories of the world's top 500 companies. A consulting firm has done strategic management consulting projects.But I still say bluntly that most Chinese entrepreneurs at this stage have at most just begun to have a little strategic awareness, and I am afraid that they have not yet systematically read the basic knowledge of strategic management. No, the key is because the time we have experienced the market economy is still too short. If you don't believe me, you can do two things to check it out: One is to finish reading the "Strategic Management" book or a complete chapter, and then compare your company to see how your company is doing? The second is to take some time to understand and study your peers or a few well-known Chinese companies to see how they are doing. Xia Xin's opportunistic choice is obviously irrational.In fact, it is impossible for Amoi to enter new industries through brand extension in many cases, because the positioning of Amoi in the minds of customers will prevent Amoi from developing in new industries.Because customers think that DVD players and VCRs are also image output devices, there is a correlation between the two, and the competition is not too fierce, so Amoi was able to succeed in DVD players.The success of Amoi's mobile phone is entirely dependent on product differentiation, and seized a market gap first.However, in other fiercely competitive industries, such as computers and LCD TVs, Amoi has hardly achieved anything, because customers' minds have been firmly occupied by other strong brands, and Amoi has no chance. Industrial decline is inevitable, and at this time enterprises should completely transform to new industries.To succeed in transformation, companies must concentrate all resources on repositioning in the minds of customers, which is a difficult challenge.Amoi wanted to seize all industrial opportunities, but in the end, he couldn't seize any of them.It is relatively easy to enter an industry, but it is not easy to take root in an industry and build a competitive advantage.Especially for a medium-sized enterprise like Amoi, it is often necessary to devote all the resources of the enterprise to truly grasp an industrial opportunity.Amoi has achieved unexpected success in mobile phones. It may have been a way out to take this opportunity to realize strategic transformation and fully enter the mobile phone industry.Regrettably, under the name of 3C integration, Amoi has entered many industries such as mobile phones, TVs, and computers, but has not been in a strong position in one industry.With the intensification of competition, the survival of the fittest has begun in various industries, and Amoi, which has no competitive advantage, will face the fate of being eliminated. The prevalence of industrial opportunism reflects the lack of strategy of Chinese enterprises, resulting in the general lack of competitiveness of Chinese enterprises.Chinese companies are swarming after hot industries, regardless of whether they can formulate the right strategy to occupy a unique position in the minds of customers.Without positioning, setbacks and failures are inevitable.The failure of Bird to build cars and Oaks to make cars is a strong signal that this road is dead.In the global competitive environment, Chinese companies are no longer allowed to attack multiple industries. The way out for Chinese companies is not only to focus on a single industry, but also to occupy a position in the minds of customers, and to do business on as narrow a front as possible. Do it thoroughly, so as to resist the impact of powerful international competitors.Enterprise resources are integrated around positioning, so that there is performance.For example, BMW and Regal in the automotive industry have achieved great success today precisely because they firmly occupy the positioning of "driving" and "safety" in the minds of customers and allocate corporate resources around the positioning. What Chinese companies need is not more opportunities, but focus and positioning.