Chapter 18 17. Skyworth: Is it self-salvation or self-transcendence?

On December 19, 2007, Skyworth announced its interim financial report in Hong Kong, showing that the net profit in the first half of the year reached 98 million Hong Kong dollars, a full increase of 250%. Such good news really made Skyworth breathe a sigh of relief.Because in the last year, for a whole year, Skyworth's net profit was only HK$128 million, but even so, it was still a leader in the industry.Even more worrying are Changhong and TCL Multimedia. Regardless of the stock market, both of them are losing money in their color TV business.No one is in the mood to laugh at fifty steps and laugh at one hundred steps.Multinational corporations have suddenly invaded chain store channels, and resorted to price cuts to keep the former rivals under the same roof.

What happened to Skyworth in just half a year?The test of profitability spread from a single enterprise to the entire industry, and then formed a theory of crisis or even fatalism.It's a critical moment again, whether it's for TCL or Skyworth.Half a year ago, no one would turn a blind eye to the rapidly changing industry trends. It seemed that overnight, Chinese home appliance giants had inadvertently reached a critical point of life and death, and thinking about change had to be put on the table.Urgency, urgency, restlessness, haste, everything indicates the coming of a storm. In order to preserve the multimedia business, Li Dongsheng sold many industries including computers one after another in order to preserve the multimedia business. How will Skyworth, which has been moving forward steadily, deal with the dizzying industrial turmoil?In order not to lose money, TCL can sell its properties, but Skyworth is different. Its wealth and life are almost entirely tied to color TVs.Skyworth has not been involved in too many industries, nor has it made great strides on the road of diversification. Naturally, it cannot liquidate its business through bankruptcy and sell profitable assets to make the report look better like TCL.Since there is no way to get redemption, we can only find a way from within the body.Pressure comes from the market, and all methods also come from the market.To treat both the symptoms and the root causes, Skyworth has to think and make changes at more levels. Although it may hurt the muscles and bones, the timing cannot be slackened and ignored by Skyworth.For Skyworth, perhaps history has given it the only chance this time.

This year, not only Li Dongsheng was restless, but also his college classmate Huang Hongsheng. In prison, Huang Hongsheng had to write a letter to Skyworth's board of directors every month. The content of the letter was probably his perception of managing the company and some suggestions.Over the past few years, Huang Hongsheng has maintained this good habit, and the outside world has often learned the contents of letters, but none of them caused such an uproar like the one in October 2007. "After a group of beautiful antelopes are eaten by fierce lions, the remaining companions become panic all day long. The result is that the antelopes that run faster and faster survive, and the antelopes that run slower or half-hearted are eaten by lions. Yes. The best running antelope will also get sick. Judging from the symptoms, Skyworth has a serious surplus of personnel and costs are out of control; and spiritually, it seems to have lost the fighting spirit that must win in the past. Incentives and discipline are the survival rules of enterprises. First of all, we need to reduce a large number of redundant staff and cut down the sharply increasing cost drag, which we call discipline renewal; secondly, we must rekindle the passion in the hearts of everyone in Skyworth, so that the power of the engine can be transformed into the "acceleration" of operating benefits, Skyworth people who are in the cost center become the 'sharp hands' who cut costs."

This anxious text makes people feel Boss Huang's deep worries and worries.This has never happened before, even in those difficult days, Huang Hongsheng still calmly dealt with all the changes, but now, he is very anxious.Two years ago, when Li Dongsheng was sleepless due to internationalization, Huang Wangsheng, serving his sentence in Hong Kong, was flattered to deal with the greatest pressure of his life.This time, Huang Hongsheng could no longer be as detached as before.In his view, Skyworth is sick, and not seriously ill. In the past two years, Skyworth has been pursuing a steady style of work, step by step, and it has been very steady. Some people attribute it to Boss Huang's character.When TCL invested heavily in the field of white goods, the ace manager Lu Qianghua tried his best to persuade Boss Huang to enter this field, but Huang was still unmoved.It is precisely because of its pragmatism that Skyworth has lived a healthier and more stable life than most of its peers in recent years.In fact, Huang Hongsheng has always valued professional managers with financial backgrounds. Zhang Xuebin, CEO of Skyworth Group, and Yang Dongwen, President of Color TV Division, both graduated from Zhongnan University of Finance and Economics. .When analyzing the styles of TCL and Skyworth, a former employee who worked in TCL and Skyworth said: "TCL can produce Yang Weiqiang, but Skyworth can produce Yang Dongwen." After Lu Qianghua left, Huang Hongsheng became more and more cautious about professional managers. , also has reservations about the airborne troops.Zhang Xuebin's taking office and Yang Dongwen's re-emergence are obvious signs, which means that Skyworth has entered a new stage.

Most CEOs with a financial background like to speak in terms of reports and systems.Before joining Skyworth, Zhang Xuebin worked as the general manager of Hainan Coconut Tree Group for many years. His greatest contribution was the reform of the shareholding system and the construction of the management system of Coconut Tree Group, which allowed the company's performance to grow steadily for a long time.Unlike professional managers such as Lu Qianghua, Zhang Xuebin will never let the company sit on a roller coaster, let alone put the company in a dangerous situation in pursuit of short-term performance.

In the past, Huang Hongsheng, who was always hands-on, regarded Skyworth as his own son. Once he found any management problems, he would personally intervene and even give instructions on the spot.Being trapped in Hong Kong now, he can calm down and think about things that he can't usually see or take care of.Those who are obsessed with the authorities sometimes need to act as a bystander to see the dark spots and hidden dangers hidden in the depths.The team led by Zhang Xuebin and Yang Dongwen is loyal and responsible. They understand what Huang Hongsheng wants and what the market wants.From the performance of the past three years, we can know that Huang Hongsheng is quite satisfied with this pair of partners.It's just that the industry is volatile, prompting him to examine the established strategy from a longer-term perspective.The current situation does not allow Skyworth to jog, it must hurry up and travel lightly, which is the ardent expectation of Huang Hongsheng in prison.

Skyworth's situation can be seen as a microcosm of China's manufacturing industry facing global competition.When the previous price advantage became a sharp weapon in the hands of foreign brands, the fortress carefully built by local companies lost its foundation.On many levels, local companies do not have much say, such as technology and brand.In the sprint competition, you can win the victory through price wars and other local methods; but once the runway is lengthened, these advantages will become a drag, and you will drag yourself into the abyss step by step.The real headache for Huang Hongsheng is not the high cost of marketing, but the lack of growth.For an enterprise that wins by marketing, the pressure of the market will always be the greatest pressure.

Maybe Huang Hongsheng is regretting not being able to invest in LCD modules, but this is more of a helplessness.No matter who has a huge industrial chain and an equally huge investment, he will think twice.What makes the situation so severe is not the lack of investment in LCD modules, nor the lack of mastery of upstream technology, but those non-technical factors.In the past, the competition between foreign brands and domestic brands was not at the same level. One focused on the high-end market and attacked the top road, while the other focused on the mid-to-low-end market and focused on the bottom road. Each makes his own money.However, with the advent of the era of flat-panel TVs, the boundaries between well water and river water have blurred. Overnight, the Tuyang brand stood on the same stage.Due to their strong brand power and design power, Sony and Samsung's strong and strong bodies withstood Skyworth and TCL's quick attack, accurate and powerful fists and started a counterattack.

In fact, Skyworth is not seriously ill, it is the Chinese home appliance industry that is ill.It is not difficult to reduce marketing costs, and the reduction of redundant staff does not necessarily hurt the muscles and bones. These can indeed contribute to Skyworth.Reducing staff and increasing efficiency is the first choice for most multinational companies to deal with major crises. General Electric, Samsung, and Sony have all used it many times.Huang Hongsheng's proposal to reduce staff and increase efficiency is obviously based on deep concerns about Skyworth's situation.Under such circumstances, no one can enjoy themselves, neither Li Dongsheng nor Huang Hongsheng.But whether it is for TCL or Skyworth, overcoming the crisis is only the first step, and the more difficult task is yet to come, that is "brand" and "consumer satisfaction".

In the past few years, Skyworth has not missed the bus of flat-panel TVs, but its stored energy is not enough to surpass Sony and Samsung.Perhaps the huge brand investment will make the report look not so good-looking, but it can have a huge impact on the long-term development of an enterprise, especially for consumer goods companies.Obviously, this is not a question of treating the foot and treating the head, but it is related to Skyworth's competitiveness in the next 10 years. Huang Hongsheng's letter put tremendous pressure on Zhang Xuebin and Yang Dongwen.After this letter was exposed, Zhang Xuebin and Yang Dongwen had to explain to the media to stabilize the morale of the army.Huang Hongsheng's wish is very simple. He hopes that Skyworth will continue to obtain high profits. This is the idea of ​​the boss.But for Zhang Xuebin and Yang Dongwen, professional managers, it is necessary to find the best balance between the boss's intention and the established strategy.In the face of a complex competitive situation, popular support is more important than short-term gains and losses.In the letter, Huang Hongsheng also mentioned incentives. He hoped to use half of the saved 400 million yuan to reward meritorious senior managers and employees.Such a high reward is the first time in the history of Skyworth. It is Huang Hongsheng's painstaking efforts and his determination.Skyworth's illness is just a minor ailment, and carrots and sticks are a good prescription.But how to break through the market dilemma is not a problem that can be solved in a short while.Huang Hongsheng is in Hong Kong and cannot personally experience the smoky market. He can only rely on the team with Zhang Xuebin as the core to break out of the encirclement.

Yang Dongwen has a strong sense of crisis on many occasions.He once said, "If the market share of foreign-funded flat-panel TVs exceeds 60%, national brands will lose the right to speak in market positioning, define market standards, and lead consumer trends." However, his view is not a fear. At the peak season mobilization meeting in December 2019, after comparing the advantages and disadvantages of Skyworth and joint venture brands in detail, he said confidently to branch managers across the country, "The arrival of the tablet era puts us on the same starting line as foreign brands. It’s not scary, they have set the price lower than ours, which means that the myth of foreign brands has gone bankrupt, and whoever wants to tell me how fierce the joint venture brand’s price war is in front of me in the future, and doesn’t come up with a solution, I will punish him.” The pragmatic Yang Dongwen has a clear understanding of the current situation and also understands where the opportunities for Skyworth lie.In addition to the big cities, Yang Dongwen also intends to cling to the "base areas".The base areas in Yang Dongwen's eyes are the second- and third-tier cities and the broader rural market.In a fully competitive industry, the countryside has always been the soil where local enterprises can survive and thrive.For Yang Dongwen, there is a piece of paradise that belongs to Skyworth, and his point of view coincides with Zhang Xuebin's statement that "deep cultivation of channels is the magic weapon for Skyworth to win". In Skyworth, everyone understands from top to bottom that the main battlefield in the future will be in the countryside. "Ten billion is a hurdle. No matter which enterprise reaches this hurdle, it will face a problem of re-growth." Yang Dongwen believes that Skyworth in the mature stage will face such a problem sooner or later.In Skyworth, Yang Dongwen, who was the chief financial officer, has always been a firefighter.After Lu Qianghua left that year, Yang Dongwen succeeded Lu Qianghua as the general manager of marketing.At that time, the channels of the home appliance industry were in a period of drastic changes, and retail stores represented by Suning and Gome were rising rapidly. Yang Dongwen withstood the tremendous pressure and performed major surgery on Skyworth’s color TV marketing model.During that time, Yang Dongwen was both a firefighter and the chief surgeon.For two full years, he continued to spin like a spinning top, never daring to slack off for a moment, and finally his black hair turned into a full head of gray hair. The people around him use one word to describe Yang Dongwen: "Follow the trend and change." Over the past few years, Yang Dongwen has always been one step ahead of his opponents to understand market changes and respond in a timely manner.At that time, Suning and Gome were rising strongly. He timely adjusted the agency system strongly promoted by Lu Qianghua and shifted his main energy to the home appliance chain stores.Now, when multinational corporations have also settled in Suning and Gome and lowered their prices aggressively, Skyworth jumped away again at the right time and set its sights on the rural market that the multinational corporations cannot see. In first- and second-tier cities, the success of large chain stores such as Suning and Gome is equivalent to the success of more than half of the market.In the third and fourth tier markets, the channels and terminals are all owned by the company, and everything is under control.More importantly, CRT color TV is still the first choice of rural consumers, and it has always been the dominant item of local brands.Multinational companies such as Sony and Samsung will not lower the value of their brands and succumb to the rural market with relatively weak purchasing power. In other words, they cannot sacrifice their brands in exchange for the market.Therefore, in a sense, the rural market has naturally become a natural protective barrier for local brands. There are indications that sticking to the primary market will not make the future clearer, and it would be a good choice to sink into the rural market that cannot be covered by multinational companies.Even Sun Weimin, president of Suning, said frankly: "We won't be able to enter the rural market within 5 years. If the manufacturers don't build it themselves, who will help them build it?" Zhang Xuebin has repeatedly emphasized on many occasions: "Foreign brands are not suitable for large-scale operations. It is also impossible to use only one channel to spread across the country. It will take time for foreign brands to establish advantages in the domestic third- and fourth-tier markets. If domestic brands are intensively cultivated in channels, domestic brands can completely compete with foreign investors in products. Brands go above and beyond." With regard to the homework of the rural market, Skyworth did not miss a single lesson.If you drive deep into a certain village in the countryside, you must be familiar with the dazzling rainbow sign painted on the wall of the farmhouse; if you are lucky enough to see a certain Hollywood blockbuster in the countryside, maybe it was screened by Skyworth for the villagers. Wallwashing is a remnant of the 1990s marketing feature, corny and vulgar, but effective.The countryside is a pure land that has not been excessively polluted by advertising.In the case of unequal information, grabbing the attention of the villagers also grabs the minds of the villagers.At that time, Sanzhu and Heart K opened up the rural market by relying on two things, one was the wall painting movement, and the other was the leaflet movement. A lot of money".Everyone is curious about novelty things, once the black box is opened, marketing becomes easy.As long as the price is low, the effect is good and it is useful, villagers who pay attention to benefits are willing to pay for it.It’s just that this kind of local method is costly. In order to hit the rural market, the three plants used 100,000 troops and cost hundreds of millions of yuan; It has brought great challenges, and has also had a great impact on operational efficiency and risk early warning mechanisms.Back then, the three plants fell down because of a chain reaction caused by a product quality turmoil.Durable consumer goods like color TVs, of course, do not need to be so forceful and extreme, but there is one criterion that must be followed, and that is "effectiveness". Skyworth's "Send Movies to the Countryside" campaign is clearly in line with this principle.Watching movies is a luxury for rural people. Although it is rare to watch movies all year round, every time it is a big event for them.The insatiable curiosity made the people gathered together feel like they were infected with a virus, and they were easily captured by Skyworth's pervasive promotion and publicity. "Every time sending movies to the countryside has been a persistent topic among the local villagers for quite some time," said Shi Song, Sales Director of Huanzhong Media Shenzhen Branch.Huanzhong Media is the organizer of Skyworth's "Send Movies to the Countryside". Skyworth has cooperated with it in 100,000 national public welfare movie clips covering 9 provinces across the country and 1,000 special movies in conjunction with promotional activities of distributors in 9 provinces. show. At that time, Chuangwei had two intentions: one was to promote low-end flat-panel TVs to the rural market, and the other was to expand the share of CRT products in the rural market.The former is based on promotion and publicity, and the atmosphere can be set off very well through movie product placement, Duitou, Rainbow Gate, banners, DM, and on-site experience.The latter is obviously a more arduous and long-term task, which has gone beyond the scope of guerrilla warfare and fortified warfare.If Skyworth wants to occupy the high ground of the "base area" for a long time, organizational and system changes are more urgent and necessary. Huang Hongsheng has hired three seniors over 70 years old: one is Wang Dianfu, chairman of the board of directors of Yuanyuan, who was appointed to take up this position when he was in danger; The general manager, she regards Skyworth as the last career in her life; one is Li Hongan, the former chief scientist of the group, who designed 70% of Skyworth's color TV appearance three years ago. Reusing these old people will give people a conservative impression, but it is positive for the shaping of corporate culture.This may sound contradictory, but it is precisely because of this that Skyworth is so different.For example, Skyworth's professional managers are a group of stable and conservative people, but often at the most critical moment, they will carry out drastic reforms without hesitation.For another example, Skyworth has always had reservations about diversification, but once it decides to enter the rural market, it will not hesitate to carry out a traumatic transformation.It used to be Huang Hongsheng's style to observe calmly, look for the direction without hesitation, and now this spirit has been perfectly interpreted by the core team headed by Zhang Xuebin and Yang Dongwen. The winter of 2007 was not too cold, and Yang Dongwen was gratified by the results of the half-year campaign: first, from January to September, the sales of Skyworth color TVs ranked first for nine consecutive months; second, from April to September, Skyworth LCD The sales of TVs increased by 95.8% year-on-year; third, the sales of Skyworth color TVs during the National Day Golden Week increased by 25% year-on-year, and the sales of the new product "Coocaa TV" exceeded 50,000 units.It is the product differentiation that enables Skyworth to avoid the trap of "price war" carefully constructed by the joint venture brand, achieve excellent mid-term performance of doubling profits, and submit an answer sheet that is far better than the industry level. However, Yang Dongwen's brows still cannot be completely relaxed. This is just a victory in the nature of a battle. In terms of strategy, the opponent Skyworth faces is no longer the domestic counterparts, but the challenge of all the world's color TV giants entering China.In the future there will be only the strong and the weak, nothing else.Therefore, the development strategy determined by Skyworth is to "strengthen the core industry." The symbol of "strength" is the improvement of the brand and the enhancement of profitability, and it needs to obtain the maximum sales with the least cost. Generally speaking, store inventory, floating inventory, labor costs, channel costs, and promotion costs are the major elements that constitute marketing costs.Among these elements, inventory and labor costs are two major variables.In the home appliance industry, there is an account that elementary school students can calculate: if Skyworth wants to install 5,000 store terminals, the annual inventory cost will be as high as 1.5 billion yuan based on the average inventory cost of each store of 300,000 yuan.This figure is not an exaggeration. Among the major home appliance giants, Hisense’s inventory is 1.47 billion yuan, Konka’s is as high as 2.11 billion yuan, and Changhong’s inventory is as high as 4 billion yuan.Although Skyworth's inventory cannot be seen from the financial report, it is an astonishing number without guessing. Otherwise, why did Skyworth's chief financial officer "strengthen the efficiency of logistics distribution and integrate scattered logistics" in the 2006-2007 financial report? Center" as the focus of work for the next year? "The Moore effect of IT technology has overturned the rules of the game in all industries." In his letter, Huang Hongsheng hoped that the development of Skyworth would be measured by "acceleration".The bloated logistics system in the past obviously cannot make Skyworth adapt to the "Moore effect". If Skyworth wants to deal with the rapidly changing market as easily as the IT company Dell, I am afraid that not only the logistics and warehousing system must be changed, but also the organizational structure, incentive system and even marketing model. At the beginning of the new fiscal year, Skyworth embarked on the biggest reform in the tablet era, aiming to increase "marketing acceleration".Yang Dongwen, the chief surgeon, not only reduced the original 200 warehouses to 100, but also reduced the original 170 branches and offices to 40 branches, and carried out a large-scale personnel rotation system in the marketing headquarters, and implemented KPI for employees assessment.At the same time, Skyworth released the "Terminal 251" project and the "Thousands of Counties and Thousands of Stores" plan in a high-profile manner.The former plans to develop 200 terminal stores with sales of more than 10 million yuan, 500 sales of more than 5 million yuan, and 1,000 terminal stores with sales of more than 2 million yuan in the secondary and tertiary markets. The image transformation of each terminal store is aimed at increasing the sales of these stores by 20% to 30%. But this is still not enough for Skyworth, it has to make fundamental changes in the system.Zhang Xuebin did not let Huang Hongsheng's ardent hope fail, and his next approach was more in line with Skyworth's current situation: In September, Skyworth launched a massive "cost reduction and efficiency increase" full-staff management activity, which greatly enhanced system efficiency and significantly reduced costs. Improvement; December 8th was the day when Skyworth held a sales mobilization meeting. Accompanied by Zhang Xuebin, Yang Dongwen and others, there were also CEOs from 40 branches and nearly 500 sales managers.In addition to arranging plans for the peak sales season of the Spring Festival and issuing sales targets for each branch in 2008, this meeting also decided to take Guangdong, Guangxi, Fujian and Tianjin as pilot projects to implement the legalization of branches and try out the joint-stock system , Skyworth headquarters transferred 49% of the "virtual equity" of the branch to local backbone employees, and the headquarters held 51%.The specific method is: if the performance of the branch company is good, the backbone can get a 49% reward when the year-end dividend is distributed;At the same time, these four branches can sell products of non-competing brands to increase revenue while completing the performance indicators issued by Skyworth headquarters.In other words, these four branches will gradually transform into distributors. In Yang Dongwen's view, it seems wasteful for Skyworth's 10,000-strong domestic marketing team to only sell one product, color TVs. These NPCs can be fully utilized to circulate blood by taking over non-competitive businesses of other brands.In fact, before this shareholding reform, Yang Dongwen was trying "non-competitive affiliate marketing". In 2007, Skyworth and Vatti cooperated in sending movies to the countryside, and then things got better. Skyworth not only added exhibition points in some Vantage franchise stores, but also joined hands with Vantage to carry out group-buying promotions.Prior to this, Skyworth had won the agency rights of Electrolux refrigerators in Anhui, Shandong, Henan, Shanxi, and Shaanxi provinces.Yang Dongwen said frankly that the brand positioning and market positioning among the alliance brands will make the operation very complicated, and mutual borrowing channels can be leveraged. Sub-channel innovation is clearly iconic.If the transformation is successful, the huge marketing system will become a huge high-quality commercial channel asset for Skyworth.