Chapter 82 New observation - same strategy, different results

In 2007, Sanjiu, who was in a desperate situation, was incorporated by China Resources.In the past many years, China Resources and Sanjiu have many similarities. They are both large state-owned enterprises directly under the State-owned Assets Supervision and Administration Commission, and they are also models of mergers and acquisitions. However, their final fates are quite different. China Resources used to be a state-owned trading company registered in Hong Kong. Through a series of reorganizations, it completed the transformation from a pure foreign trade enterprise to a diversified holding group, with total assets of up to 170 billion Hong Kong dollars.The same state-owned enterprise, the same development background, and the same acquisition trajectory, what kind of mysterious reason did it destroy Sanjiu but make China Resources a success?

In 2001, just when Zhao Xinxian launched the third expansion by relying entirely on bank loans, China Resources led by Ning Gaoning also proposed a development strategy of "rebuilding China Resources": it planned to invest 15 billion to 20 billion yuan in the Mainland in the next five years, Form a "new China Resources" similar to Hong Kong China Resources. During the implementation of this plan, China Resources Group further reduced the dozens of business areas that had begun to shrink in the early stage to a few industries such as real estate, retail, microelectronics, and electric power, and corresponded to "manufacturing and distribution of daily consumer goods" respectively. , "real estate and related industries" and "infrastructure and public domain" three strategic investment categories.While shrinking the "front" of investment, China Resources focuses on the improvement of management capabilities and value creation in each investment field, and strives to form professional competitiveness in each investment field while "limited related diversification".According to Ning Gaoning, during the entire development process of China Resources Group, bank liabilities should not exceed half of shareholders' funds, which also means that "rebuilding China Resources" is a capital expansion based on its own funds.

Different "capital values" and corporate development concepts led the two companies to embark on their own different paths: when facing reorganization in 2005, Sanjiu had hundreds of "children" companies, internal management chaos, and complicated The internal guarantee and loan of the company once caused the creditor's rights investigation to fall into a "maze".In 2005, China Resources Group completed the goal of "rebuilding China Resources" set four years ago ahead of schedule: turnover, total assets and pre-tax profits doubled compared with 2001; Total assets and pre-tax profits were 64.8 billion yuan, 169.7 billion yuan and 12.3 billion yuan respectively.Compared with scale expansion, what is more noteworthy is that the return on equity of China Resources Group has continued to rise, from 6.6% in 2001 to 16.9% in 2005 (slightly decreased to 16% in 2006).This means that the growth of China Resources is not only the expansion of scale, but also the creation of real value for shareholders - the continuous improvement of corporate profitability.

Behind the seemingly similar expansion strategies, there are completely different operating concepts and results.This is just like "Sun Tzu's Art of War" says: "Everyone knows the shape of my victory, but no one knows the shape of my victory." The following short article is written by Ning Gaoning (he was transferred to the chairman of COFCO in December 2004), entitled "Same Strategy, Different Results". There are two companies in Hong Kong. There is not much difference more than ten years ago. The scale and profit of the companies are similar.There is not much difference in what the two companies have done for more than ten years. If you do real estate, I will do real estate, if you do infrastructure, I will do infrastructure, and if you do telecommunications, I will do telecommunications.But after more than ten years, the two companies are very different: one has become a world-class enterprise, and the other is not only much smaller, but also forced to do debt restructuring.However, the two companies operating under almost the same strategic direction have very different results, which makes us think.

Strategic direction is of course very important, especially in terms of industry, geography, scale, and timing. Decision-making is often short-lived, but its impact is far-reaching.If the company invested heavily in the Internet in previous years, or invested in global satellite phones that turned out to be an unnecessary dream, or added a large amount of land bank during the Hong Kong real estate peak in 1997, then the company will face trouble It is very strategic, and it is difficult to solve at the level of tactical execution. The wrong strategy can lead to the failure of the company, but the correct strategy cannot guarantee the success of the company. A successful company must be in place in terms of strategic direction and tactical execution.What's more, there are not many companies that have completely failed in strategy, and more companies have distanced themselves from the competition under almost the same strategic direction.Tactical execution plays a more permanent role in the development of the company. It can not only execute the strategy, but also consolidate and optimize the direction of the strategy in the process.Like TOM.COM, it was originally a pure Internet company, but its strategy was optimized during execution, and it has today's vitality.On the contrary, because strategies and tactics overlap at different levels, it is difficult to separate their interactions absolutely, especially when companies are transforming their strategies, they often ignore the execution of tactics.Dissatisfaction with the results of the implementation arouses doubts about the strategy, and even changes the strategy easily. At this time, the company not only has no tactics, but also no strategy, no confidence, and problems arise.

The company's business decision-making is a process of dealing with contradictions and making choices. Strategy and tactics, long-term and short-term, development and stability, centralization and decentralization, these contradictions will always exist, and the choice will always be difficult.But in these contradictions, the main aspects of the contradictions change with the different stages of the company's development.When the company's strategic direction gradually becomes clear, tactical execution becomes more important. I went to Hainan Province a few days ago and saw one of our assets there - Shimei Bay.There are the world's best sea water, beaches, hot springs, and tropical rainforests.Shimei Bay is still a virgin land, and I also believe that Hainan will definitely be the best holiday destination for Chinese people in the future, but how to make Shimei Bay well?From the perspective of long-term strategy, there is nothing wrong here; from the perspective of tactical execution, we have to face many tests. It not only tests our enthusiasm and dedication, but also tests our wisdom and creativity.Shimei Bay is just one example, and all our work will be subjected to the same test for a long time.