Chapter 14 Chapter 13 The "Fourth Carriage" Driving China's Economy: Efficient Integration of the Industrial Chain
Highlights of this chapter: The future of China's traditional manufacturing industry is to transform from pure manufacturing to a traditional labor-intensive industry with efficient integration of the industrial chain.Let me take Spain's Zara (ZARA) and Sweden's H&M as examples to illustrate how to efficiently integrate the industrial chain. The reasons for the success of ZARA and H&M are different from what we have said in the previous chapters. They do not emphasize the industry essence of Prada and Anna Sui's brand positioning triangle, but through the efficient integration of the industrial chain, the price is greatly reduced and the appearance fashion is improved. Value for money1.
Against the background of the global financial crisis, some enterprises are still able to develop against the market and expand their scale. Their net profit rose 13%, and sales were not affected by the economic crisis.Why? How does a fast fashion brand rise so rapidly in such a short period of time? What they do is to highly compress and integrate the entire "6+1" industrial chain into 12 days. Efficient integration of the industrial chain, how to achieve "efficient"? What did they do?They dug 200 kilometers of underground tunnels and transported them with high-pressure air. We talked about cost-effectiveness 1 and cost-effectiveness 2 in the previous chapters. Many consumer products must advertise the essence of the industry to improve cost-effectiveness 2 in order to stand out during the recession.But I noticed that in recent years, a clothing brand ZARA, which never advertises, has sprung up suddenly. Not only has it defeated GAP in the United States, Uniqlo in Japan and Esprit in Hong Kong, Even better and better.How did it succeed?Without advertising, it is impossible to show the essence of the clothing industry, but it strengthens the cost performance 1 through the efficient integration of the industrial chain and completely ignores the cost performance 2. The success of ZARA deserves the attention of our traditional labor-intensive industries. If Bank of America abandoned its acquisition of Lehman Brothers in September 2008 as a symbol to calculate the outbreak of the global financial crisis, it has been more than nine months.The global economy is heading for recession due to the financial crisis in the United States.However, in the context of the economic crisis, we found that some industries are relatively resistant to pressure.Such as e-commerce industry, network industry, pawn industry, training industry, entertainment industry, etc.Even in the same industry, some companies can still find business opportunities and find the warmth of the market in the crisis.So, in the context of economic depression, why are some companies still able to develop against the market?What kind of new thinking is there in this?
I remember that in the past few months, I went to Jinjiang, Fujian to give a speech. The leaders of Jinjiang City told me that more than 60% of Jinjiang’s export manufacturing industry has been hit hard, but some famous enterprises in Jinjiang are currently operating well and are relatively resistant to pressure. .He said that there are 230,000 retail outlets of branded enterprises in Jinjiang, and the operating conditions of these enterprises are not bad.At that time I said, your observation is correct, but your explanation is wrong. In fact, the reason why these companies are resistant to pressure is not because they are brand-name companies, but because they have 230,000 outlets.You know what else is before 230,000 outlets?There is still a series of work to be done.Has there been wholesale before the outlet?Is there any storage before wholesale?Is there any transportation before storage?Is the order processed before shipping?Also, the products sent to the warehouse must be manufactured first, right?Before manufacturing, there must be product design, right?It seems like because you have 230,000 retail outlets, it is relatively resilient.In fact, these brand-name products are resistant to pressure because they have a series of things before 230,000 outlets, which I will discuss in detail in the next section. Under the impact of the global financial crisis, the newly renovated Qianmen Street in Beijing seemed deserted.On April 23, 2009, the opening of H&M, a well-known fashion brand from Sweden, added vitality to this most prestigious and time-honored commercial street in Beijing.Many photos taken on the opening day recorded the hot sales at that time.The young people came out of the store excitedly, almost everyone had several H&M paper bags. The "hotness" of H&M and the "coldness" of Qianmen Street form a moderate contrast.At the same time, ZARA, another fashion brand from Spain, recently announced that in the coming year, the company will expand its investment in Asia, especially in the Chinese market.So, in today's sluggish global economy, what are the reasons for these two fashion industry giants to increase their investment in China against the market?What kind of strategic thinking and development model are behind this?
Let me take the garment industry as an example to give you a hint as to what kind of enterprises can withstand the impact of the financial tsunami.We have recently collected a lot of data on the clothing industry. I will use two foreign-funded companies that have just entered China as examples. One is Zara, a Spanish company with an English name of ZARA, which has opened stores in Guangzhou, Shanghai, and Beijing.There is also a Swedish company, H&M, which also makes clothing, and has opened stores in Shanghai and Beijing.What are the characteristics of these two companies?That is, the price is low, the style is fashionable, but the product quality is average.However, the two advantages of low price and fashionable product appearance have greatly improved the cost performance. Our data shows that although ZARA is a general consumer product, its current operating conditions are good. On March 26, 2009, ZARA President Isla said that they were not affected by the financial crisis. The net sales in the first quarter of 2009 were 2.338 billion euros, a year-on-year increase of 5%. Develop new markets. The first Beijing store of ZARA's biggest competitor, H&M, opened in Qianmen on April 23, 2009. H&M's net profit in 2008 increased by 13%, but its global sales in 2009 were not good. It fell 12.6%, the first decline in net profit in five years. For these two general consumer goods companies, compared to the plight of Nike and Adidas, it is not easy for ZARA and H&M to achieve such achievements during the recession. H&M and ZARA have the same concept as the 230,000 retail outlets in Jinjiang I mentioned earlier.This can be illustrated by the characteristics of their products.After I arrived in Beijing a few days ago, I went shopping in Lufthansa. I wanted to buy a women's camisole.I didn't buy it for myself or anyone else, I was just asking for a price.I saw that the camisole was four to five hundred yuan a piece, and such a thin camisole was actually sold for four to five hundred yuan. I was reluctant to buy it, it was too expensive.I went to ZARA to buy it for 100 yuan.Lufthansa's counters are mostly domestic brands, and they sell for four to five hundred yuan a piece. What chance does it have to survive? ZARA is an imported brand that only costs 100 yuan, and 80% of ZARA's products are produced in Europe, and only 20% of its products are produced in Asia, including China.We usually think that such labor-intensive garment industry should of course be produced in China in order to reduce costs.But people ignore China and don't come at all.Because their success is different from what we used to think, they simply look down on China's cheap labor. The camisole shirts produced by our Chinese brand using cheap Chinese labor cost four to five hundred yuan a piece, while ZARA’s camisole tops, which 80% of their products are produced in Europe, only sell for 100 yuan a piece without cheap Chinese labor. What's the point?Moreover, the clothes of these Chinese brands are weird and have no sense of fashion.It's not that I'm making fun of them, the level of our Chinese design is a weird level, the clothes are very complicated and have no aesthetic feeling.Because our designers lack the experience of the economic depression, so they always make some superficial articles, this flower and that flower, this is not fashion.Take a look at H&M and ZARA. Their clothes are very simple, but even a simple camisole has a very fashionable and artistic sense.Why?We used to think that cheap products must be due to the use of cheap labor and low cost, and fashionable products must use the best designers.Let me tell you, ZARA is almost the largest clothing brand in the world, but it does not have big-name designers, and all of its designer team of hundreds of people are young people in their 20s. A fashion company without big-name designers, why are its products so fashionable?It's completely different from what we thought.What is their company philosophy?Only by giving up innovation, the product will be fashionable.A nation like ours that calls for independent innovation every day is usually a nation without much creativity.How much creativity does it take to think of giving up creativity?A company that neither relies on cheap Chinese labor nor on product innovation can not only withstand the financial tsunami, but also perform well. Their products are cheap and fashionable.What is the reason? GAP in the United States, ZARA in Spain, H&M in Sweden, and C&A in Germany are currently the four most successful clothing retail brands in the world.Except for GAP in the United States, these four companies have settled in China. The ZARA brand has gradually expanded since its birth in 1975. At present, there are more than 2,000 ZARA chain stores in 56 countries around the world, and there are already more than a dozen of its chain stores in China.Sweden's H&M was founded in 1947. If calculated by sales volume, it can be said to be the largest clothing retailer in Europe. At present, H&M has about 1,700 fashion stores in major cities around the world, including Shanghai and Hong Kong. Nearly 55,000 employees. At the end of 2008, H&M's annual financial statement showed that despite the impact of the global financial crisis, its net profit was SEK 15.3 billion, an increase of nearly 13% over the previous fiscal year.So, why do ZARA and H&M still maintain a strong sales momentum even though the economic environment is not very good and the purchasing power is reduced?What is the mystery of this?
You must be surprised to see this, because their success is completely different from what we think, do you know why it is different?Because our China is a nation that lacks creativity extremely, so we cannot see the essence of the problem clearly, and all we see are superficial phenomena.So what's wrong with our apparel industry? The reason for ZARA's success is the same as that of companies like Jinjiang, which is to control the entire industrial chain.The Jinjiang enterprises I mentioned earlier have wholesale, warehousing, transportation, order processing, manufacturing, product design and other links before the 230,000 retail outlets.Only by controlling the entire industrial chain can we control the pricing power and the products will be cheap.Only by controlling the entire industrial chain can the products be fashionable. The four apparel retail companies ZARA, H&.M, GAP, and C&A are called the world's four "fashion killers" by the industry, and some people vividly call them fast fashion brands.For example, ZARA's well-known market positioning is "affordable fast fashion".The data shows that the storage time of China's clothing industry is generally 6 to 9 months, and that of international famous brands is generally 120 days, while ZARA's fastest time is only 7 days, generally 12 days.Obviously, ZARA's warehousing and other costs are very low, and reducing warehousing costs means lower costs and faster new fashion products.Often the latest season of Dior's new clothing has just appeared on the Paris T-stage. Two weeks later, fashionable men and women in Beijing and Shanghai will be pleasantly surprised to find the shadow of Dior's latest style in Zara's store, and the price may even be 1/10 of Dior's. None.So, how do these fast fashion brands meet the seemingly contradictory market requirements of fast and fashion in design?
I want to offer our readers a new mindset.First of all, I would like to talk about what is called the whole industrial chain.The entire industrial chain can be divided into seven major links. Our Chinese enterprises are mainly manufacturing, which is one of the seven major links in the industrial chain.In addition to manufacturing, there are six major circulation links, including product design, raw material procurement, warehousing and transportation, order processing, wholesale operation, and terminal retail. 6 major logistics plus 1 manufacturing, I give it an interesting name called "6+1".This "6+1" is the entire industrial chain. Only by controlling the entire "6+1" industrial chain can you achieve the level of Jinjiang enterprises.Only after the industrial chain is extremely compressed can you achieve the level of ZARA.What does it mean?Let me compare ZARA with our enterprises in Guangdong.Our garment enterprises in Guangdong have to go through the entire "6+1" industrial chain, from product design to sale, do you know how long it will take?180 days on average. How many days is ZARA?It compresses the entire industrial chain from product design to retail into 12 days.Our Chinese companies need 180 days, ZARA is 12 days, and H&M is 21 days.Why are their products so cheap?Please think about it, if it takes me 180 days to sell the clothes I made, a piece of clothing will have to be stored in the warehouse for 180 days, assuming that the storage cost of a piece of clothing is one yuan per day, I will It costs 180 bucks to store the dress.What if it only takes 12 days?Then the storage cost of a piece of clothing has dropped from 180 yuan to 12 yuan, so you have reduced the storage cost by 168 yuan. Do you still need to consider labor costs?Labor costs don't matter at all.That's why they don't care about China's cheap labor at all, because it doesn't matter at all. ZARA has greatly reduced costs through the efficient integration of the industrial chain, which is its first advantage. What ZARA has done is to highly compress and integrate the entire "6+1" industrial chain into 12 days, thereby greatly reducing costs.Because of this, its camisole can sell for 100 yuan, but we need 180 days, and our camisole must be sold for four to five hundred yuan to recover the cost.Why are its products cheap?There is only one reason - the high degree of integration of the "6+1" industrial chain.So it does not need to rely on cheap labor, so 80% of the production is in Europe, and there is no need to come to Asia for production. Why are its products particularly fashionable? ZARA has hundreds of designers, all young people, and there are no famous designers at all.And as far as I know, ZARA told its designers not to innovate.why?Because only by giving up innovation, the product will be fashionable.This is a concept, whether it is true or not, a nation that can think of giving up innovation is the most creative nation. So how exactly does it do it?Give up innovation and be a quick responder to the market.What is a quick responder?For example, let’s say it made 100 pieces of clothing, sold 12 pieces the day before yesterday, sold 6 pieces yesterday, and sold 7 pieces today.Then ZARA told its designers, brothers, don't innovate.You design clothes based on two principles. The first principle is to design clothes based on the commonality of 12 to 6 to 7 pieces.For example, the clothes sold in the past three days are all dark series, so the new clothes you design are dark series.The second principle is to slightly modify it according to the trend change.For example, when selling 12 pieces, there are 4 buttons, when selling 6 pieces, there are 3 buttons, and when selling 7 pieces, there are 2 buttons, so the new model is 1 button.Then put it on the market right away, get on the market and sell it within 12 days. After 12 days, the market demand will change from 4 buttons to 3 buttons to 2 buttons, and then to 1 button in the dark series, and you just launched a new style, which just fits, so your product is very fashionable. Through the efficient integration of the industrial chain, ZARA makes the products particularly fashionable, which is its second advantage. Through these two advantages, ZARA has greatly improved the cost performance 1, without considering the cost performance 2 at all. This concept of ZARA deserves our attention.When we discussed Prada and Anna Sui, we said that fashion brands all over the world have occupied the entire fashion brand positioning triangle, and the last one to join is Anna Sui.It may be impossible for us to squeeze into the brand triangle. Of course, ZARA and H&M understand this truth, so they don’t move closer to the fashion brand triangle at all. Instead, they give up the cost-effectiveness of fashion clothing2, and instead focus on cost-effectiveness1 through the efficient integration of the industrial chain.Many of our mainland fashion brands are still building brand strategies through advertising, but they don’t understand the situation. No matter how hard you work, you are unlikely to enter the brand triangle. The ideas of ZARA and H&M are worth learning from our entrepreneurs. How many minutes does it take ZARA's designers to design a piece of clothing? 5 minutes.Do our designers dare?Our stylists usually have long hair and braids for a stylist look.But we just don’t know how to design clothes. It takes half a year to design a piece of clothing, and the clothes we design are all fancy. This is our level.So, if the design is made in 5 minutes, how can we guarantee that it can be sent out in 12 days?It depends on the level of the company's operation and management. It is very difficult to compress the cycle to 12 days. In the "6+1" industrial chain, I will take one of the links as an example to see how it is compressed to 12 days.For example, taking manufacturing as an example, ZARA has 20 large factories, all of which are high-tech mechanized factories, and there are also 400 small supporting factories, many of which use pedal sewing machines.You may find it strange that this kind of pedal sewing machine is no longer used in our Chinese factories.Our textile factories are all mechanized, why can't they? You see, ZARA has only 20 large factories like China, and another 400 small supporting factories that use pedal sewing machines.What are people doing?Its large mechanized factory does only two things, dyeing and cutting.They don't do sewing at all, because the dyeing and cutting in large mechanized factories are the most efficient and fastest, but it is very troublesome to use machines to sew, so the sewing is handed over to 400 small factories, and each factory has one model. , A factory only sews one type of clothes, so the efficiency is extremely high.Their thinking is different from ours. We have been calling for the transformation of the textile industry. The textile industry in the whole country has turned all manual work into mechanization.They do not transform, and their highest strategic guiding ideology is to compress the time of the industrial chain, fast, fast. Fast fashion brands generally have a very strong new product development team, and their designers are typical trapeze people, who often fly between various fashion conferences or go to various fashion places to collect various fashion-related information. Information, a large design team obtains design inspiration from fashion clothing information collected from various places, and uses this as a blueprint to carry out their design procedures.This enables ZARA to produce a large number of styles of fashion every year. In 2004 alone, ZARA launched more than 12,000 styles of fashion. Industry insiders believe that ZARA and H&M are not the creators of trends, but quick responders.By choosing to quickly imitate fashion trends and reduce the risk of inventory, the gestation period of the design is greatly shortened, so as to achieve rapid imitation, rapid response, and meet the needs of consumers for fashion at the fastest speed. So, how did these two companies achieve "fast"?
They play a combined punch in terms of manufacturing. Large mechanized factories and small factories have a clear division of labor, and each is responsible for its most efficient work. Together, the speed of the entire process has been greatly improved. Let's look at warehousing and transportation again.In order to shorten the time, how do they send the dyed and cut clothes from the big factory to the small factory?How to send the clothes sewn by the small factory back to the logistics center?And how to send clothes from the logistics center to Shanghai and Beijing?I ask you to think about it, but the answer you think of must be wrong.Because we lack creativity, we think very simple, such as express delivery, such as the Wal-Mart logistics system, or transport by truck.These are all wrong. They use neither Wal-Mart's logistics methods, nor trucks, nor conveyor belts.In order to achieve the fastest speed, they have created a model that has never been seen in the whole world.They dug 200 kilometers of underground tunnels and transported them with high-pressure air. Just "swipe". Once I talked about this, my students asked me, Mr. Lang, what if they "swipe" and send the wrong one?I said you don't need to worry about it, its error rate is about one in a thousand.Then there will still be mistakes, Mr. Lang, if there is a mistake, how to transport it back, use a truck?Or send it back with a transmission belt?Let me tell you, if you still ask similar questions, your life is hopeless. Its purpose is to be fast, so in order to be fast, what should I do if I send it wrong?Throw it away on the spot.That's what they do. What is the concept of 200 kilometers?It is less than 200 kilometers from Beijing to Tianjin, and less than 200 kilometers from Shanghai to Hangzhou.It is a huge project to build a 200-kilometer expressway, not to mention digging a 200-kilometer high-pressure tunnel, how much energy does it need to consume?But they do not hesitate to compress the time.This is their warehousing and transportation. In addition, in order to compress the time, the clothes made in Europe are not transported by traditional ships to Beijing and Shanghai, but by planes.Readers may say, isn't this very expensive?Let me tell readers clearly that this is not what they consider. They don't care about cost for the sake of speed. This is their warehousing and transportation. Usually when ladies go to a clothing store, they fumble here and there. After searching for a long time, they finally pick out a piece of clothing to try on. It takes 20 minutes for them to come out, and they basically don’t know how to buy it.But he still didn't leave, he was still groping here and there, which made my husband feel embarrassed, and ran to the door to smoke a cigarette and wait for his wife.This phenomenon will change when ZARA arrives. The first thing ladies do when they visit ZARA is to turn over their collars to see if there are medium-sized ones.If you have any, hold it in your hand first, and then pick it up. After picking out a bunch of medium-sized clothes, you can try them on, or just pay the bill and try them on when you go home. If you don’t like it, you can return it tomorrow.Why are they behaving so abnormally?This is the careful planning of ZARA. Fast fashion brands have done a good job in the efficient integration of the industrial chain, which is completely different from our past thinking that only by reducing labor costs can we reduce product costs.In fact, labor costs only account for 2.5% of the cost of the entire industrial chain, and cheap labor is not the only option to save costs.Therefore, ZARA did not hesitate to spend a lot of money to dig 200 kilometers of tunnels, build an underground conveyor belt network, and even use air transportation to ensure the supply of the US and Japanese markets. This is a new idea for efficient integration of the industrial chain. So, in terms of retail methods, what are the magic weapons for these fast fashion brands to win by surprise?What can my country's clothing retail enterprises learn from it?
ZARA's retail is also very peculiar.In order to attract customers, it completely violates the theory we have learned in books in the past.What we have learned is that we must pay less and more to achieve economies of scale.It is exactly the opposite, it is more money and less quantity, it pursues "diseconomies of scale", because only "diseconomies of scale" can be creative.Entrepreneurs who enjoy economies of scale are uncreative people.Therefore, ZARA has 12,000 styles of clothes a year, and the number of each style of clothes is very small.If 10 people want to buy clothes, usually their body proportions are 10% large, 10% small, and 80% medium.So we may make 10 pieces per one, including 1 large size, 1 small size, and 8 medium sizes. How does ZARA do?It does 1 large, 1 small, 2 medium instead of 8 medium.This is called more money and less money.What does it mean to have 12,000 styles of clothes a year?That is to change the new style every week. Many clothing stores change it once a season, and others change it once a week. That's why everyone likes to go shopping in ZARA stores, because the styles of clothes are different every week, even if you don't buy clothes, it's good to go shopping.When you go to the LV store, every week is the same, every season is the same, if you go once, you don’t want to go there again.More styles and less quantity, this is ZARA's new thinking.Why 1 large, 1 small and 2 medium and what are the benefits?What if there are 8 people who want to buy a medium size, but there are only 2 pieces of clothing, what will happen if these people can't buy them?What they found was that when women couldn't find the clothes they wanted, the extreme frustration in their minds kept them coming back the next week. ZARA in Shanghai buys goods on Mondays and Thursdays. You may notice that only Mondays and Thursdays have medium sizes, and there are basically no medium sizes at other times. Why?This is the way of thinking, deliberately only enter 2 pieces of medium size, so that you can't buy them.If you can't buy it, you will come again next week.And when you come back next time, like other old customers, you will first turn over the collar to see if it is a medium size, and if it is a medium size, hold it in your hand first... And come back next week to change all the styles, because it has 12,000 styles of clothes.It is because of this "diseconomies of scale" thinking that ZARA's sales are extremely fast.It is also because of this that the average global consumer visits ZARA stores 13 times per person, while visiting other stores only 3 times.So you see, from manufacturing to warehousing and transportation to retail, ZARA has grasped a principle in every link of the entire industrial chain, that is, the efficient integration of the industrial chain.So it can guarantee both cheap and stylish, in order to fight against the financial tsunami.And this also explains why Jinjiang's enterprises are relatively resistant to pressure, because they also have "6 ten 1" before 230,000 retail outlets.Then why are they not as good as ZARA?There is only one reason.Although they have completed the integration of the industrial chain, they have not achieved the "efficient" integration like ZARA. Is the recession scary?horrible.Is there a way to cope?Of course there is.We discussed the highlights of the "lipstick effect" in the previous chapters. If we can lay a good foundation for the efficient integration of the industrial chain, we can strengthen these highlights.Those industries that have been hit hard by the economic depression, especially the export industry, must take the efficient integration of industrial chains as the basis for transformation, from export trade to efficient integration of domestic industrial chains. Only in this way can they enter the extremely competitive domestic market . Finally, I want to emphasize what is real domestic demand.It is not simply building a few highways and printing a few banknotes to stimulate domestic demand. The real domestic demand must come from the profits of enterprises.Our current approach of increasing investment in infrastructure construction is a one-shot approach. We discussed in detail in Chapter 1 that the essence of this policy is to drive today’s excess capacity through future excess capacity.Take the expressways in the Midwest as an example. After the completion of the construction, there are basically no traffic on the expressways in the Midwest. This is the so-called expressway with overcapacity.In the construction process, steel, cement, etc. need to be used, thus stimulating the steel industry with excess capacity.What about after the highway construction is completed?Not only are the highways themselves overcapacity, but the steel industry has returned to overcapacity because steel is no longer needed.Unless new growth points are found, there will be two crises of overcapacity in the future.Therefore, this kind of infrastructure construction is a short-term behavior of the so-called "one-shot deal", which cannot stimulate China's economy for a long time. Our economic development model based on infrastructure construction mainly relies on reinforced concrete to drive the economy. The proportion of reinforced concrete in our GDP has reached 57%, while consumption has been reduced to about 35%.The reason why we consume too little is not simply because of the lack of a social security system, but because of too much steel and concrete.In addition, we usually simply think that our country’s savings rate is high, which is purely misleading. Our per capita savings is less than 20,000 yuan. If we remove the richest 1% to 5% of rich people, the per capita savings is less than 10,000 yuan. Ten thousand yuan, what kind of high savings rate is this?There is only 10,000 yuan in savings in your hand, do you dare to spend it?What about the child's tuition?What if the parents are sick?We currently hope to improve the social security system and solve the worries of the people to stimulate consumption. In fact, we have not figured out the essential reasons for the low consumption. The consumption of one of the "troika" is too little to stimulate the economy; the second is too much public construction, excessive and inefficient one-shot transactions, and it is difficult to stimulate the economy; the export of the third is also due to the U.S. The consumption bubble burst and it is difficult to return to the previous level, so it is also difficult to stimulate the economy. I said at the end of 2008 that after the Spring Festival in 2009, the real winter will enter, and the so-called winter is bottoming out.But the problem with China's economy today is no longer a question of when it will bottom out, but what force will be used to pull up the depressed economy after bottoming out.At present, it seems that there are problems in the "troika" that we used to drive the economy. Moreover, in the first half of 2009, the scale of bank credit increased by more than 7 trillion yuan, which caused great pressure on inflation half a year later.Since June this year, the international inflation has started to move again. In August, the oil price broke through the US$74 mark again. These two factors have caused great inflationary pressure on our country.In fact, the current inflation has already started.The Bureau of Statistics announced that the consumer price index in July fell by 1.8% year-on-year, so it was identified as deflation.This is nonsense.The so-called year-on-year decrease of 1.8% is only 1.8% lower than the price level in July last year when the inflation was severe. What kind of deflation is this?And the price level has been rising for several months, which is the beginning of inflation.For example, as of late August, the price of eggs has risen by 6.2% for 5 consecutive weeks; the price of live pigs has risen by 23.1% for 10 consecutive weeks; the price of a 32-inch LCD TV, which had dropped to 2,500 yuan in May, rose to more than 3,000 yuan in late August. If the economy is difficult to pull, coupled with inflation, the biggest crisis in the future of our country seems to be the "stagflation economy", that is, economic stagnation and inflation occur at the same time.If stagflation occurs in a country, all policies will fail. This is the biggest crisis we face, and we must find ways to avoid this crisis. We need the "fourth carriage" to drive the economy. This "fourth carriage" is not industrial upgrading, but the profits brought about by the efficient integration of the industrial chain.My point is very clear that only corporate profits are the only long-term source of domestic demand.After the enterprise makes profits, it can reinvest. In coastal areas, reinvestment can create 5-10 times the benefits, and then earn more money, hire more workers, and give workers higher salaries, so that consumption can Increase, and then reinvest, create higher benefits, and earn more money... thus forming a virtuous circle of sustainable development. In fact, my concept of industrial chain integration has been promoted in Guangdong Province. On June 8, 2009, when I gave a speech in Dongguan, I witnessed the enthusiasm of thousands of entrepreneurs for the efficient integration of industrial chains.The integration of the industrial chain in Dongguan is very much in line with the concept I promote (please refer to my book "Model" about how H&M completes the efficient integration of the industrial chain through the information system). All the information of the "6+1" link input by a leading enterprise in a certain region must be standardized and normalized.Other supporting manufacturers pay to use this system.What is the benefit of this for a certain product?In the past, when buying goods, you had to make phone calls, send faxes, set a time, and then send someone to wait for the unloading when it was time for delivery. Such a process may take several days.Now these factories can complete all the purchase process online through the information system, and the entire purchase time can be greatly shortened, thereby reducing costs and increasing profits.And profit is the "fourth carriage" that drives China's economy and gets rid of stagflation. The book is over!
Against the background of the global financial crisis, some enterprises are still able to develop against the market and expand their scale. Their net profit rose 13%, and sales were not affected by the economic crisis.Why? How does a fast fashion brand rise so rapidly in such a short period of time? What they do is to highly compress and integrate the entire "6+1" industrial chain into 12 days. Efficient integration of the industrial chain, how to achieve "efficient"? What did they do?They dug 200 kilometers of underground tunnels and transported them with high-pressure air. We talked about cost-effectiveness 1 and cost-effectiveness 2 in the previous chapters. Many consumer products must advertise the essence of the industry to improve cost-effectiveness 2 in order to stand out during the recession.But I noticed that in recent years, a clothing brand ZARA, which never advertises, has sprung up suddenly. Not only has it defeated GAP in the United States, Uniqlo in Japan and Esprit in Hong Kong, Even better and better.How did it succeed?Without advertising, it is impossible to show the essence of the clothing industry, but it strengthens the cost performance 1 through the efficient integration of the industrial chain and completely ignores the cost performance 2. The success of ZARA deserves the attention of our traditional labor-intensive industries. If Bank of America abandoned its acquisition of Lehman Brothers in September 2008 as a symbol to calculate the outbreak of the global financial crisis, it has been more than nine months.The global economy is heading for recession due to the financial crisis in the United States.However, in the context of the economic crisis, we found that some industries are relatively resistant to pressure.Such as e-commerce industry, network industry, pawn industry, training industry, entertainment industry, etc.Even in the same industry, some companies can still find business opportunities and find the warmth of the market in the crisis.So, in the context of economic depression, why are some companies still able to develop against the market?What kind of new thinking is there in this?
I remember that in the past few months, I went to Jinjiang, Fujian to give a speech. The leaders of Jinjiang City told me that more than 60% of Jinjiang’s export manufacturing industry has been hit hard, but some famous enterprises in Jinjiang are currently operating well and are relatively resistant to pressure. .He said that there are 230,000 retail outlets of branded enterprises in Jinjiang, and the operating conditions of these enterprises are not bad.At that time I said, your observation is correct, but your explanation is wrong. In fact, the reason why these companies are resistant to pressure is not because they are brand-name companies, but because they have 230,000 outlets.You know what else is before 230,000 outlets?There is still a series of work to be done.Has there been wholesale before the outlet?Is there any storage before wholesale?Is there any transportation before storage?Is the order processed before shipping?Also, the products sent to the warehouse must be manufactured first, right?Before manufacturing, there must be product design, right?It seems like because you have 230,000 retail outlets, it is relatively resilient.In fact, these brand-name products are resistant to pressure because they have a series of things before 230,000 outlets, which I will discuss in detail in the next section. Under the impact of the global financial crisis, the newly renovated Qianmen Street in Beijing seemed deserted.On April 23, 2009, the opening of H&M, a well-known fashion brand from Sweden, added vitality to this most prestigious and time-honored commercial street in Beijing.Many photos taken on the opening day recorded the hot sales at that time.The young people came out of the store excitedly, almost everyone had several H&M paper bags. The "hotness" of H&M and the "coldness" of Qianmen Street form a moderate contrast.At the same time, ZARA, another fashion brand from Spain, recently announced that in the coming year, the company will expand its investment in Asia, especially in the Chinese market.So, in today's sluggish global economy, what are the reasons for these two fashion industry giants to increase their investment in China against the market?What kind of strategic thinking and development model are behind this?
Let me take the garment industry as an example to give you a hint as to what kind of enterprises can withstand the impact of the financial tsunami.We have recently collected a lot of data on the clothing industry. I will use two foreign-funded companies that have just entered China as examples. One is Zara, a Spanish company with an English name of ZARA, which has opened stores in Guangzhou, Shanghai, and Beijing.There is also a Swedish company, H&M, which also makes clothing, and has opened stores in Shanghai and Beijing.What are the characteristics of these two companies?That is, the price is low, the style is fashionable, but the product quality is average.However, the two advantages of low price and fashionable product appearance have greatly improved the cost performance. Our data shows that although ZARA is a general consumer product, its current operating conditions are good. On March 26, 2009, ZARA President Isla said that they were not affected by the financial crisis. The net sales in the first quarter of 2009 were 2.338 billion euros, a year-on-year increase of 5%. Develop new markets. The first Beijing store of ZARA's biggest competitor, H&M, opened in Qianmen on April 23, 2009. H&M's net profit in 2008 increased by 13%, but its global sales in 2009 were not good. It fell 12.6%, the first decline in net profit in five years. For these two general consumer goods companies, compared to the plight of Nike and Adidas, it is not easy for ZARA and H&M to achieve such achievements during the recession. H&M and ZARA have the same concept as the 230,000 retail outlets in Jinjiang I mentioned earlier.This can be illustrated by the characteristics of their products.After I arrived in Beijing a few days ago, I went shopping in Lufthansa. I wanted to buy a women's camisole.I didn't buy it for myself or anyone else, I was just asking for a price.I saw that the camisole was four to five hundred yuan a piece, and such a thin camisole was actually sold for four to five hundred yuan. I was reluctant to buy it, it was too expensive.I went to ZARA to buy it for 100 yuan.Lufthansa's counters are mostly domestic brands, and they sell for four to five hundred yuan a piece. What chance does it have to survive? ZARA is an imported brand that only costs 100 yuan, and 80% of ZARA's products are produced in Europe, and only 20% of its products are produced in Asia, including China.We usually think that such labor-intensive garment industry should of course be produced in China in order to reduce costs.But people ignore China and don't come at all.Because their success is different from what we used to think, they simply look down on China's cheap labor. The camisole shirts produced by our Chinese brand using cheap Chinese labor cost four to five hundred yuan a piece, while ZARA’s camisole tops, which 80% of their products are produced in Europe, only sell for 100 yuan a piece without cheap Chinese labor. What's the point?Moreover, the clothes of these Chinese brands are weird and have no sense of fashion.It's not that I'm making fun of them, the level of our Chinese design is a weird level, the clothes are very complicated and have no aesthetic feeling.Because our designers lack the experience of the economic depression, so they always make some superficial articles, this flower and that flower, this is not fashion.Take a look at H&M and ZARA. Their clothes are very simple, but even a simple camisole has a very fashionable and artistic sense.Why?We used to think that cheap products must be due to the use of cheap labor and low cost, and fashionable products must use the best designers.Let me tell you, ZARA is almost the largest clothing brand in the world, but it does not have big-name designers, and all of its designer team of hundreds of people are young people in their 20s. A fashion company without big-name designers, why are its products so fashionable?It's completely different from what we thought.What is their company philosophy?Only by giving up innovation, the product will be fashionable.A nation like ours that calls for independent innovation every day is usually a nation without much creativity.How much creativity does it take to think of giving up creativity?A company that neither relies on cheap Chinese labor nor on product innovation can not only withstand the financial tsunami, but also perform well. Their products are cheap and fashionable.What is the reason? GAP in the United States, ZARA in Spain, H&M in Sweden, and C&A in Germany are currently the four most successful clothing retail brands in the world.Except for GAP in the United States, these four companies have settled in China. The ZARA brand has gradually expanded since its birth in 1975. At present, there are more than 2,000 ZARA chain stores in 56 countries around the world, and there are already more than a dozen of its chain stores in China.Sweden's H&M was founded in 1947. If calculated by sales volume, it can be said to be the largest clothing retailer in Europe. At present, H&M has about 1,700 fashion stores in major cities around the world, including Shanghai and Hong Kong. Nearly 55,000 employees. At the end of 2008, H&M's annual financial statement showed that despite the impact of the global financial crisis, its net profit was SEK 15.3 billion, an increase of nearly 13% over the previous fiscal year.So, why do ZARA and H&M still maintain a strong sales momentum even though the economic environment is not very good and the purchasing power is reduced?What is the mystery of this?
You must be surprised to see this, because their success is completely different from what we think, do you know why it is different?Because our China is a nation that lacks creativity extremely, so we cannot see the essence of the problem clearly, and all we see are superficial phenomena.So what's wrong with our apparel industry? The reason for ZARA's success is the same as that of companies like Jinjiang, which is to control the entire industrial chain.The Jinjiang enterprises I mentioned earlier have wholesale, warehousing, transportation, order processing, manufacturing, product design and other links before the 230,000 retail outlets.Only by controlling the entire industrial chain can we control the pricing power and the products will be cheap.Only by controlling the entire industrial chain can the products be fashionable. The four apparel retail companies ZARA, H&.M, GAP, and C&A are called the world's four "fashion killers" by the industry, and some people vividly call them fast fashion brands.For example, ZARA's well-known market positioning is "affordable fast fashion".The data shows that the storage time of China's clothing industry is generally 6 to 9 months, and that of international famous brands is generally 120 days, while ZARA's fastest time is only 7 days, generally 12 days.Obviously, ZARA's warehousing and other costs are very low, and reducing warehousing costs means lower costs and faster new fashion products.Often the latest season of Dior's new clothing has just appeared on the Paris T-stage. Two weeks later, fashionable men and women in Beijing and Shanghai will be pleasantly surprised to find the shadow of Dior's latest style in Zara's store, and the price may even be 1/10 of Dior's. None.So, how do these fast fashion brands meet the seemingly contradictory market requirements of fast and fashion in design?
I want to offer our readers a new mindset.First of all, I would like to talk about what is called the whole industrial chain.The entire industrial chain can be divided into seven major links. Our Chinese enterprises are mainly manufacturing, which is one of the seven major links in the industrial chain.In addition to manufacturing, there are six major circulation links, including product design, raw material procurement, warehousing and transportation, order processing, wholesale operation, and terminal retail. 6 major logistics plus 1 manufacturing, I give it an interesting name called "6+1".This "6+1" is the entire industrial chain. Only by controlling the entire "6+1" industrial chain can you achieve the level of Jinjiang enterprises.Only after the industrial chain is extremely compressed can you achieve the level of ZARA.What does it mean?Let me compare ZARA with our enterprises in Guangdong.Our garment enterprises in Guangdong have to go through the entire "6+1" industrial chain, from product design to sale, do you know how long it will take?180 days on average. How many days is ZARA?It compresses the entire industrial chain from product design to retail into 12 days.Our Chinese companies need 180 days, ZARA is 12 days, and H&M is 21 days.Why are their products so cheap?Please think about it, if it takes me 180 days to sell the clothes I made, a piece of clothing will have to be stored in the warehouse for 180 days, assuming that the storage cost of a piece of clothing is one yuan per day, I will It costs 180 bucks to store the dress.What if it only takes 12 days?Then the storage cost of a piece of clothing has dropped from 180 yuan to 12 yuan, so you have reduced the storage cost by 168 yuan. Do you still need to consider labor costs?Labor costs don't matter at all.That's why they don't care about China's cheap labor at all, because it doesn't matter at all. ZARA has greatly reduced costs through the efficient integration of the industrial chain, which is its first advantage. What ZARA has done is to highly compress and integrate the entire "6+1" industrial chain into 12 days, thereby greatly reducing costs.Because of this, its camisole can sell for 100 yuan, but we need 180 days, and our camisole must be sold for four to five hundred yuan to recover the cost.Why are its products cheap?There is only one reason - the high degree of integration of the "6+1" industrial chain.So it does not need to rely on cheap labor, so 80% of the production is in Europe, and there is no need to come to Asia for production. Why are its products particularly fashionable? ZARA has hundreds of designers, all young people, and there are no famous designers at all.And as far as I know, ZARA told its designers not to innovate.why?Because only by giving up innovation, the product will be fashionable.This is a concept, whether it is true or not, a nation that can think of giving up innovation is the most creative nation. So how exactly does it do it?Give up innovation and be a quick responder to the market.What is a quick responder?For example, let’s say it made 100 pieces of clothing, sold 12 pieces the day before yesterday, sold 6 pieces yesterday, and sold 7 pieces today.Then ZARA told its designers, brothers, don't innovate.You design clothes based on two principles. The first principle is to design clothes based on the commonality of 12 to 6 to 7 pieces.For example, the clothes sold in the past three days are all dark series, so the new clothes you design are dark series.The second principle is to slightly modify it according to the trend change.For example, when selling 12 pieces, there are 4 buttons, when selling 6 pieces, there are 3 buttons, and when selling 7 pieces, there are 2 buttons, so the new model is 1 button.Then put it on the market right away, get on the market and sell it within 12 days. After 12 days, the market demand will change from 4 buttons to 3 buttons to 2 buttons, and then to 1 button in the dark series, and you just launched a new style, which just fits, so your product is very fashionable. Through the efficient integration of the industrial chain, ZARA makes the products particularly fashionable, which is its second advantage. Through these two advantages, ZARA has greatly improved the cost performance 1, without considering the cost performance 2 at all. This concept of ZARA deserves our attention.When we discussed Prada and Anna Sui, we said that fashion brands all over the world have occupied the entire fashion brand positioning triangle, and the last one to join is Anna Sui.It may be impossible for us to squeeze into the brand triangle. Of course, ZARA and H&M understand this truth, so they don’t move closer to the fashion brand triangle at all. Instead, they give up the cost-effectiveness of fashion clothing2, and instead focus on cost-effectiveness1 through the efficient integration of the industrial chain.Many of our mainland fashion brands are still building brand strategies through advertising, but they don’t understand the situation. No matter how hard you work, you are unlikely to enter the brand triangle. The ideas of ZARA and H&M are worth learning from our entrepreneurs. How many minutes does it take ZARA's designers to design a piece of clothing? 5 minutes.Do our designers dare?Our stylists usually have long hair and braids for a stylist look.But we just don’t know how to design clothes. It takes half a year to design a piece of clothing, and the clothes we design are all fancy. This is our level.So, if the design is made in 5 minutes, how can we guarantee that it can be sent out in 12 days?It depends on the level of the company's operation and management. It is very difficult to compress the cycle to 12 days. In the "6+1" industrial chain, I will take one of the links as an example to see how it is compressed to 12 days.For example, taking manufacturing as an example, ZARA has 20 large factories, all of which are high-tech mechanized factories, and there are also 400 small supporting factories, many of which use pedal sewing machines.You may find it strange that this kind of pedal sewing machine is no longer used in our Chinese factories.Our textile factories are all mechanized, why can't they? You see, ZARA has only 20 large factories like China, and another 400 small supporting factories that use pedal sewing machines.What are people doing?Its large mechanized factory does only two things, dyeing and cutting.They don't do sewing at all, because the dyeing and cutting in large mechanized factories are the most efficient and fastest, but it is very troublesome to use machines to sew, so the sewing is handed over to 400 small factories, and each factory has one model. , A factory only sews one type of clothes, so the efficiency is extremely high.Their thinking is different from ours. We have been calling for the transformation of the textile industry. The textile industry in the whole country has turned all manual work into mechanization.They do not transform, and their highest strategic guiding ideology is to compress the time of the industrial chain, fast, fast. Fast fashion brands generally have a very strong new product development team, and their designers are typical trapeze people, who often fly between various fashion conferences or go to various fashion places to collect various fashion-related information. Information, a large design team obtains design inspiration from fashion clothing information collected from various places, and uses this as a blueprint to carry out their design procedures.This enables ZARA to produce a large number of styles of fashion every year. In 2004 alone, ZARA launched more than 12,000 styles of fashion. Industry insiders believe that ZARA and H&M are not the creators of trends, but quick responders.By choosing to quickly imitate fashion trends and reduce the risk of inventory, the gestation period of the design is greatly shortened, so as to achieve rapid imitation, rapid response, and meet the needs of consumers for fashion at the fastest speed. So, how did these two companies achieve "fast"?
They play a combined punch in terms of manufacturing. Large mechanized factories and small factories have a clear division of labor, and each is responsible for its most efficient work. Together, the speed of the entire process has been greatly improved. Let's look at warehousing and transportation again.In order to shorten the time, how do they send the dyed and cut clothes from the big factory to the small factory?How to send the clothes sewn by the small factory back to the logistics center?And how to send clothes from the logistics center to Shanghai and Beijing?I ask you to think about it, but the answer you think of must be wrong.Because we lack creativity, we think very simple, such as express delivery, such as the Wal-Mart logistics system, or transport by truck.These are all wrong. They use neither Wal-Mart's logistics methods, nor trucks, nor conveyor belts.In order to achieve the fastest speed, they have created a model that has never been seen in the whole world.They dug 200 kilometers of underground tunnels and transported them with high-pressure air. Just "swipe". Once I talked about this, my students asked me, Mr. Lang, what if they "swipe" and send the wrong one?I said you don't need to worry about it, its error rate is about one in a thousand.Then there will still be mistakes, Mr. Lang, if there is a mistake, how to transport it back, use a truck?Or send it back with a transmission belt?Let me tell you, if you still ask similar questions, your life is hopeless. Its purpose is to be fast, so in order to be fast, what should I do if I send it wrong?Throw it away on the spot.That's what they do. What is the concept of 200 kilometers?It is less than 200 kilometers from Beijing to Tianjin, and less than 200 kilometers from Shanghai to Hangzhou.It is a huge project to build a 200-kilometer expressway, not to mention digging a 200-kilometer high-pressure tunnel, how much energy does it need to consume?But they do not hesitate to compress the time.This is their warehousing and transportation. In addition, in order to compress the time, the clothes made in Europe are not transported by traditional ships to Beijing and Shanghai, but by planes.Readers may say, isn't this very expensive?Let me tell readers clearly that this is not what they consider. They don't care about cost for the sake of speed. This is their warehousing and transportation. Usually when ladies go to a clothing store, they fumble here and there. After searching for a long time, they finally pick out a piece of clothing to try on. It takes 20 minutes for them to come out, and they basically don’t know how to buy it.But he still didn't leave, he was still groping here and there, which made my husband feel embarrassed, and ran to the door to smoke a cigarette and wait for his wife.This phenomenon will change when ZARA arrives. The first thing ladies do when they visit ZARA is to turn over their collars to see if there are medium-sized ones.If you have any, hold it in your hand first, and then pick it up. After picking out a bunch of medium-sized clothes, you can try them on, or just pay the bill and try them on when you go home. If you don’t like it, you can return it tomorrow.Why are they behaving so abnormally?This is the careful planning of ZARA. Fast fashion brands have done a good job in the efficient integration of the industrial chain, which is completely different from our past thinking that only by reducing labor costs can we reduce product costs.In fact, labor costs only account for 2.5% of the cost of the entire industrial chain, and cheap labor is not the only option to save costs.Therefore, ZARA did not hesitate to spend a lot of money to dig 200 kilometers of tunnels, build an underground conveyor belt network, and even use air transportation to ensure the supply of the US and Japanese markets. This is a new idea for efficient integration of the industrial chain. So, in terms of retail methods, what are the magic weapons for these fast fashion brands to win by surprise?What can my country's clothing retail enterprises learn from it?
ZARA's retail is also very peculiar.In order to attract customers, it completely violates the theory we have learned in books in the past.What we have learned is that we must pay less and more to achieve economies of scale.It is exactly the opposite, it is more money and less quantity, it pursues "diseconomies of scale", because only "diseconomies of scale" can be creative.Entrepreneurs who enjoy economies of scale are uncreative people.Therefore, ZARA has 12,000 styles of clothes a year, and the number of each style of clothes is very small.If 10 people want to buy clothes, usually their body proportions are 10% large, 10% small, and 80% medium.So we may make 10 pieces per one, including 1 large size, 1 small size, and 8 medium sizes. How does ZARA do?It does 1 large, 1 small, 2 medium instead of 8 medium.This is called more money and less money.What does it mean to have 12,000 styles of clothes a year?That is to change the new style every week. Many clothing stores change it once a season, and others change it once a week. That's why everyone likes to go shopping in ZARA stores, because the styles of clothes are different every week, even if you don't buy clothes, it's good to go shopping.When you go to the LV store, every week is the same, every season is the same, if you go once, you don’t want to go there again.More styles and less quantity, this is ZARA's new thinking.Why 1 large, 1 small and 2 medium and what are the benefits?What if there are 8 people who want to buy a medium size, but there are only 2 pieces of clothing, what will happen if these people can't buy them?What they found was that when women couldn't find the clothes they wanted, the extreme frustration in their minds kept them coming back the next week. ZARA in Shanghai buys goods on Mondays and Thursdays. You may notice that only Mondays and Thursdays have medium sizes, and there are basically no medium sizes at other times. Why?This is the way of thinking, deliberately only enter 2 pieces of medium size, so that you can't buy them.If you can't buy it, you will come again next week.And when you come back next time, like other old customers, you will first turn over the collar to see if it is a medium size, and if it is a medium size, hold it in your hand first... And come back next week to change all the styles, because it has 12,000 styles of clothes.It is because of this "diseconomies of scale" thinking that ZARA's sales are extremely fast.It is also because of this that the average global consumer visits ZARA stores 13 times per person, while visiting other stores only 3 times.So you see, from manufacturing to warehousing and transportation to retail, ZARA has grasped a principle in every link of the entire industrial chain, that is, the efficient integration of the industrial chain.So it can guarantee both cheap and stylish, in order to fight against the financial tsunami.And this also explains why Jinjiang's enterprises are relatively resistant to pressure, because they also have "6 ten 1" before 230,000 retail outlets.Then why are they not as good as ZARA?There is only one reason.Although they have completed the integration of the industrial chain, they have not achieved the "efficient" integration like ZARA. Is the recession scary?horrible.Is there a way to cope?Of course there is.We discussed the highlights of the "lipstick effect" in the previous chapters. If we can lay a good foundation for the efficient integration of the industrial chain, we can strengthen these highlights.Those industries that have been hit hard by the economic depression, especially the export industry, must take the efficient integration of industrial chains as the basis for transformation, from export trade to efficient integration of domestic industrial chains. Only in this way can they enter the extremely competitive domestic market . Finally, I want to emphasize what is real domestic demand.It is not simply building a few highways and printing a few banknotes to stimulate domestic demand. The real domestic demand must come from the profits of enterprises.Our current approach of increasing investment in infrastructure construction is a one-shot approach. We discussed in detail in Chapter 1 that the essence of this policy is to drive today’s excess capacity through future excess capacity.Take the expressways in the Midwest as an example. After the completion of the construction, there are basically no traffic on the expressways in the Midwest. This is the so-called expressway with overcapacity.In the construction process, steel, cement, etc. need to be used, thus stimulating the steel industry with excess capacity.What about after the highway construction is completed?Not only are the highways themselves overcapacity, but the steel industry has returned to overcapacity because steel is no longer needed.Unless new growth points are found, there will be two crises of overcapacity in the future.Therefore, this kind of infrastructure construction is a short-term behavior of the so-called "one-shot deal", which cannot stimulate China's economy for a long time. Our economic development model based on infrastructure construction mainly relies on reinforced concrete to drive the economy. The proportion of reinforced concrete in our GDP has reached 57%, while consumption has been reduced to about 35%.The reason why we consume too little is not simply because of the lack of a social security system, but because of too much steel and concrete.In addition, we usually simply think that our country’s savings rate is high, which is purely misleading. Our per capita savings is less than 20,000 yuan. If we remove the richest 1% to 5% of rich people, the per capita savings is less than 10,000 yuan. Ten thousand yuan, what kind of high savings rate is this?There is only 10,000 yuan in savings in your hand, do you dare to spend it?What about the child's tuition?What if the parents are sick?We currently hope to improve the social security system and solve the worries of the people to stimulate consumption. In fact, we have not figured out the essential reasons for the low consumption. The consumption of one of the "troika" is too little to stimulate the economy; the second is too much public construction, excessive and inefficient one-shot transactions, and it is difficult to stimulate the economy; the export of the third is also due to the U.S. The consumption bubble burst and it is difficult to return to the previous level, so it is also difficult to stimulate the economy. I said at the end of 2008 that after the Spring Festival in 2009, the real winter will enter, and the so-called winter is bottoming out.But the problem with China's economy today is no longer a question of when it will bottom out, but what force will be used to pull up the depressed economy after bottoming out.At present, it seems that there are problems in the "troika" that we used to drive the economy. Moreover, in the first half of 2009, the scale of bank credit increased by more than 7 trillion yuan, which caused great pressure on inflation half a year later.Since June this year, the international inflation has started to move again. In August, the oil price broke through the US$74 mark again. These two factors have caused great inflationary pressure on our country.In fact, the current inflation has already started.The Bureau of Statistics announced that the consumer price index in July fell by 1.8% year-on-year, so it was identified as deflation.This is nonsense.The so-called year-on-year decrease of 1.8% is only 1.8% lower than the price level in July last year when the inflation was severe. What kind of deflation is this?And the price level has been rising for several months, which is the beginning of inflation.For example, as of late August, the price of eggs has risen by 6.2% for 5 consecutive weeks; the price of live pigs has risen by 23.1% for 10 consecutive weeks; the price of a 32-inch LCD TV, which had dropped to 2,500 yuan in May, rose to more than 3,000 yuan in late August. If the economy is difficult to pull, coupled with inflation, the biggest crisis in the future of our country seems to be the "stagflation economy", that is, economic stagnation and inflation occur at the same time.If stagflation occurs in a country, all policies will fail. This is the biggest crisis we face, and we must find ways to avoid this crisis. We need the "fourth carriage" to drive the economy. This "fourth carriage" is not industrial upgrading, but the profits brought about by the efficient integration of the industrial chain.My point is very clear that only corporate profits are the only long-term source of domestic demand.After the enterprise makes profits, it can reinvest. In coastal areas, reinvestment can create 5-10 times the benefits, and then earn more money, hire more workers, and give workers higher salaries, so that consumption can Increase, and then reinvest, create higher benefits, and earn more money... thus forming a virtuous circle of sustainable development. In fact, my concept of industrial chain integration has been promoted in Guangdong Province. On June 8, 2009, when I gave a speech in Dongguan, I witnessed the enthusiasm of thousands of entrepreneurs for the efficient integration of industrial chains.The integration of the industrial chain in Dongguan is very much in line with the concept I promote (please refer to my book "Model" about how H&M completes the efficient integration of the industrial chain through the information system). All the information of the "6+1" link input by a leading enterprise in a certain region must be standardized and normalized.Other supporting manufacturers pay to use this system.What is the benefit of this for a certain product?In the past, when buying goods, you had to make phone calls, send faxes, set a time, and then send someone to wait for the unloading when it was time for delivery. Such a process may take several days.Now these factories can complete all the purchase process online through the information system, and the entire purchase time can be greatly shortened, thereby reducing costs and increasing profits.And profit is the "fourth carriage" that drives China's economy and gets rid of stagflation. The book is over!