The essence of a depressed economy is not as simple as the depression of all industries, the devastation, and unemployment everywhere that readers think.Instead, a depression is a time of opportunity.However, these opportunities are not everywhere, but are gathered into some special highlights, waiting for those who are interested in discovering them. What is your state of mind now?Are you confused?It seems that the economic development is not good, the stock market has fallen, the real estate market has also fallen, and it is difficult to find a job. Why is this?Others tell you that it is because of the international financial crisis. Do you think it may be or should be.However, half a year later, the crisis in the United States was not over, but you found that in the first half of 2009, housing prices in China slowly rose.The stock market has been rising for several months since the end of 2008, but do you feel panicked as it goes up?Why panic?Because in August 2009, the stock market, housing market and auto market seemed to be weak again.You find that the economy does not seem to be really improving, and the crisis seems to have passed, but the prosperity of the past is also far away from you.What happened to this depressed economy?

To answer these questions, we must first understand what is happening to the Chinese economy. Therefore, in the first chapter of this book, we first talk about the real crisis of the Chinese economy-the crisis of manufacturing.This crisis comes from two difficulties, the first is the deterioration of the investment and business environment, and the second is overcapacity.The first dilemma has basically nothing to do with the financial tsunami, but the financial tsunami hit the second dilemma - overcapacity.We used to digest this part of excess capacity through exports to the United States, but the financial tsunami impacted our exports, leading to the emergence of a crisis of excess capacity.

Chapter 2 points out that our exports to the United States are to satisfy American consumption of foam.What is bubble consumption?As long as consumption is borrowed money, it is called bubble consumption.An important basis of our past prosperity was exports, primarily to the United States.But now that there is a financial crisis in the United States, the bubble consumption of Americans has exploded.The formation of bubble consumption is very complicated and is closely related to the manipulation of Wall Street.The second chapter discusses how the consumption bubble is formed under the manipulation of Wall Street.Chapters 1 and 2 constitute the first part of this book.

Our entrepreneurs are facing two dilemmas. The first is the deterioration of the investment and business environment, and the second is overcapacity.The focus of this book is to find bright spots in these two dilemmas. First of all, I would like to talk about the virtual economy.Although the economy cannot be reversed quickly, there are still opportunities in virtual markets such as the stock market and the real estate market under the two difficulties mentioned in the first chapter.Moreover, under the strong intervention of the US government, the trend of gold and the euro has undergone drastic changes. Therefore, how to grasp the only remaining opportunities in the virtual market during the crisis period is the highlight of the second chapter.

The second part mainly discusses property market, stock market, auto market, gold and foreign currency.Due to limited publication time, we only discuss the market situation before September 2009.However, the conclusions drawn by analyzing these markets will help readers discover new highlights in the future, because the real purpose of this part is to discover the factors that affect these markets. In the first half of 2009, our stock market went up, the real estate market also went up, and the auto show was crowded with people, and it was extremely popular.After being worried for more than a year, our majority of shareholders can no longer sit still and decide to return to the stock market.Then, the rising market encourages more people to enter the market.Just like in 2007, theories are starting to emerge to justify the way the market is doing, and it's tempting to jump in even for the most timid.

Someone said, Professor Lang, the property market, stock market and auto market seem to have rebounded!Do you think you can see it through?Please think about it, why did the property market pick up?The main reason is that the two dilemmas faced by entrepreneurs have not been resolved, and manufacturing funds have entered the stock market, property market and auto market. In addition, in the first half of 2009, banks released more than 7 trillion credit funds. Since the two dilemmas of entrepreneurs were not resolved, part of the credit funds did not enter the real economy, but entered the stock market.The rapid expansion of bank credit has caused everyone's inflation expectations, so safe-haven funds dare not invest in the real economy, but entered the stock market and property market.

Therefore, there are three funds entering the stock market: (1) manufacturing funds, (2) credit funds, and (3) safe-haven funds.There are two funds entering the property market: (1) manufacturing funds, and (2) safe-haven funds.In addition, enterprises mainly state-owned enterprises have not resolved the two major difficulties, so they started buying land frantically with a large amount of bank credit funds, causing land kings in various places to hit new highs repeatedly. The main point of the third chapter is not to make a judgment on China’s economic recovery simply from the superficial recovery of the stock market and property market. The bright spots in the stock market, property market and auto market actually rely on the two dilemmas of entrepreneurs.

Opportunities do not only exist in the mainland property market and stock market.Comparing mainland China, Hong Kong, Taiwan, and the U.S. stock market is more helpful for grasping virtual economic opportunities.The stock market trends in mainland China and Taiwan are the same, but the reasons are different. It cannot be simply interpreted as the Taiwan stock index being influenced by the mainland.The rise in Taiwan's stock index is due to the inflow of a large amount of international hot money. So what about the Hong Kong stock market and the US stock market?It is a surprising coincidence that the inflection points of the two stock markets from decline to rise are on the same day.If I can't find a reason for the US stock index to rise, then I can't find a reason for the Hong Kong stock index to rise.However, in May and June 2009, large international investment banks made positive comments on the stocks among the 33 constituent stocks of the Hang Seng Index, and even encouraged buying. Why did they do this?

The fourth chapter will link the changes in mainland China and Taiwan, as well as Hong Kong and the US stock index, to find out the bright spots for investors to operate. I believe that many readers must not be able to answer such a basic question before reading Chapter 5 of this book: What are the long-term factors that determine the fluctuation of gold prices?However, the fact is that many people invest in paper gold without even understanding this most basic question. Generally speaking, the trend of the U.S. dollar and gold is just opposite. When the U.S. dollar rises, gold falls, and when the U.S. dollar falls, gold rises.The reason is that the U.S. government manipulates the price of gold to boost the dollar.Only by understanding how the U.S. government manipulates the price of gold can you find the bright spot of investing in gold, although gold is not a good investment product.

After talking about the highlights of the virtual economy, let's talk about the highlights of the real economy.Note that these bright spots can alleviate two dilemmas faced by entrepreneurs.As long as entrepreneurs grasp these bright spots, they will be able to effectively resist these two difficulties and break out. Consumer goods can basically be divided into three categories: people's livelihood necessities, general consumer goods and luxury goods.What impact will the recession have on consumer goods?If your usual meal size is two bowls of rice, even if the economic depression causes your income to drop, you still have to eat two bowls of rice; conversely, even if your income rises, you still eat two bowls of rice, it is impossible to eat five bowls.Therefore, for the necessities of people's livelihood, the impact of the depression economy is very small.So we only discuss general consumer goods and luxury goods.

According to economic theory, if the economic depression causes your income to drop by n%, then your consumption of general consumer goods that are not necessities of people's livelihood, such as hats, socks, home appliances, etc., will fall within n%.But the reality is much more complicated, and the demand for each product will be different in a recession.Consumers will be more targeted in purchasing products.To put it simply, due to the impact of the economic depression, people will spend more time at home, and will use more products used at home, such as quick-frozen dumplings, instant noodles, Internet cards, game software, online games, condoms , baby products, etc., this is what will be discussed in Chapter 6.Although consumers’ income has declined during the recession, they will not simply choose cheap products, but prefer to use cost-effective products, so these products will grow against the market instead. This phenomenon is called the “lipstick effect.” .Chapters 7 to 9 will analyze the "lipstick effect" from different angles. The entertainment industry discussed in Chapter 6 is a "blessing in disguise" industry.During the Great Depression, material conditions deteriorated in an all-round way, so they had to seek spiritual comfort.So, what can satisfy the needs of your soul?That is entertainment. In 2009, Xiaoshenyang suddenly became popular, and we suddenly discovered that our society accepted the so-called folk culture and art during the depression period, which was unimaginable before.Moreover, in the United States, great stars, directors, studios and movies only appeared during the Great Depression.Because the public needs spiritual sustenance, there is a demand.Because capitalists' funds were particularly tight during the recession, only good films could find investors, so directors and producers were forced to work hard to make good films, so there was a supply.Under the coordination of supply and demand, a new economics of entertainment has emerged.Industries related to eating, drinking, and entertainment should be a bright spot in a recession.But is the entertainment industry bound to do well?uncertain. The "lipstick effect" will dominate the depression period, and only by understanding the "lipstick effect" can we create success in the depression period. During a depression, the demand for general consumer goods changes dramatically. The seventh chapter confirms the occurrence of "lipstick effect" through the analysis of liquor industry.From the fourth quarter of 2008 to the first quarter of 2009, the sales of high-end liquor fell by 10%, while the sales of middle and low-end liquor increased by 5% to 15%.This is the lipstick phenomenon.Not only liquor, daily chemical products, food and other consumer goods have been impacted by the "lipstick effect". The "lipstick effect" is not simply buying cheap products, but consumers tend to buy products with high cost performance.Our past understanding of cost performance (cost performance 1) is. Cost performance 1 = (appearance + performance) / price Chapter 7 puts forward a new thinking: "the nature of the industry" is an important element that constitutes cost performance (cost performance 2).By grasping the "essence of the industry", we can improve the cost performance and stand out in the recession. Cost performance 2 = (appearance + performance + industry essence) / price What is the purpose of the advertisement?Play brand awareness?Or to fight corporate reputation?Actually neither.The real purpose of advertising is to play the essence of the industry spirit of the product.In times of economic depression, the spirit of the essence of the industry can be greatly improved through advertising2. The eighth chapter takes sports products and liquor as examples to discuss how to convey the industry essence and spirit of the products to consumers through advertisements.If an enterprise can do this, it will be able to greatly improve the price-to-performance ratio2, which will help the enterprise break through during the recession. The performance of restaurants during the recession also highlights the "lipstick effect."Under the impact, many high-end restaurants try to attract customers by diversifying tastes, improving service quality and improving dining environment.So, what is the reason for consumers to choose a restaurant, is it taste, service or environment?Actually neither. Chapter 9 puts forward a new thinking: the value-for-money ratio of a restaurant is not just the taste, environment and service divided by the price (value-for-money 3), but also includes the nature of the restaurant industry (value-for-money 4)—intangible experience. Cost performance 3 = (taste + environment + service) / price Cost performance 4 = (taste + environment + service + industry essence) / price According to economic theory, if the economic depression causes your income to drop by n%, then your consumption of luxury goods will be greatly reduced by more than n%.However, the economic depression China is facing this time has a characteristic. Since the two major dilemmas faced by entrepreneurs have not been resolved, a large amount of manufacturing funds will flow into the luxury goods market. China's luxury goods market has experienced an unusual recovery. In order to improve the cost performance 2 to cope with the economic depression, we need to grasp the nature of the industry.That being the case, can we directly acquire those brands with high cost performance?The price of Italian famous brands made in China is dozens of times that of domestic brands, so we believe that we should implement a brand strategy. Only by mastering the brand can we increase profits. This thinking almost dominates the strategic thinking of governments and enterprises at all levels in our country.In fact, this thinking itself is wrong.The reason why these well-known brands can be sold at such a high price, and consumers are still flocking to them, is that the price-performance ratio of these brands has been greatly improved after advertising the essence of the industry. Chapter 10 takes the two brands of Prada and Anna Sui as examples to see how world-renowned brands highlight the essence of the industry through advertising, thereby greatly improving cost performance 2.If you don't understand the essence of the industry behind these brands, even the acquisition of brands will be difficult to succeed. Compared with brands such as Prada and Anna Sui, the ultimate luxury goods, such as the world's top jewelry, are not as simple as advertising the essence of the industry to improve cost performance2, but relying on the accumulated memory of history to let the essence of the industry settle in the hearts of consumers .They cannot be produced as OEMs in China like some Italian clothing brands, because even the craftsmanship of the production is the memory of historical accumulation.The eleventh chapter takes Cartier as an example to analyze this characteristic of extreme luxury.Every piece of Cartier's work tells a legendary story.Suppose there are three rings like this in front of you: the first one is a Cartier leopard-shaped diamond ring, the second one is a big diamond, and the third one is a big ring made of pure gold.If you were to choose one of these rings for your wife, which one would you choose?Logically speaking, the price/performance ratio of large diamonds is definitely higher than that of Cartier, and the price/performance ratio of large pure gold rings may be even higher.However, after 10 years, your wife will definitely only remember the price-performance ratio, the lowest Cartier.Because it is not only a peerless jewel, but also engraved with a legendary story, and the story of this celebrity can relive your own memory.The economic depression has dimmed its highlights, but it has not damaged its inherent historical heritage, and the memory of this historical heritage has attracted a large amount of manufacturing funds from our country to enter this market. During the recession, your income drops, you can buy one less LV (Louis Vuitton) bag, but you still have to buy socks.Therefore, luxury goods like LV should not be sold, right?Indeed, worldwide, luxury sales have plummeted.Taking LV as an example, sales of jewelry fell by 41%, wine and spirits fell by 22%, and perfume and cosmetics fell by 11%.But what about in China?Take Guangzhou Friendship Store as an example. In the first quarter of 2009, the growth rate of international first-line jewelry and watch brands exceeded 15%, and the growth rate of famous brand watches worth more than 100,000 yuan or even hundreds of thousands of yuan exceeded 90%.Curiously, sales of low- and mid-priced luxury goods plummeted by 30%.What is this indicating? Chapter 12 tells us that during the depression period, luxury goods were greatly discounted, making their cost-effectiveness 2 more than that of second- and third-tier brands, which resulted in the phenomenon that first-tier brands sold well while second-tier brands plummeted. ZARA has taken a different path. It does not advertise the nature of the industry to improve cost performance 2, it does not even advertise at all, but returns to the most traditional cost performance 1, and reduces costs and improves products through efficient integration of the industrial chain. The appearance is fashionable, and the traditional cost-effectiveness has been improved, so that it has suddenly emerged in the depression period. The thirteenth chapter will show us how ZARA does this. Finally, we also need to know that the most important issue now is not when the economy will bottom out, but how to recover after bottoming out.The "three carriages" that we used to drive the economy - consumption, export and government spending seem to be ineffective now, and the economy may fall into a crisis of stagnant development, coupled with the 7.37 trillion bank credits and international inflation in the first half of this year The inflation expectations brought about will likely lead to stagflation in my country's economy.If this happens, the efficient integration of the industrial chain will become the "fourth carriage" and lead us out of stagflation.