In the early 1990s, the famous German management scientist Professor Hermann Simon introduced the concept of "hidden champions" into the business world and academia. As an important pillar of German export trade and economy, the "hidden champions" group also Began to surface.
"Invisible champions" refer to companies that have global or regional leadership in certain market segments, but are not well-known to the public. In 2005, Dr. Deng Di from the School of Management of Jinan University translated Professor Simon’s book "Invisible Champion" into Chinese, and combined the concept of invisible champion with the development of Chinese enterprises. In 2006, Deng Di published his own book "Focus-Interpreting China's Invisible "Champion Enterprise", unconsciously, his research on China's invisible champion enterprise has been going on for more than 10 years.
Recently, a reporter interviewed Dr. Deng Di, director of the Center for Cross-Cultural Management Research of Jinan University, and listened to him share his findings on invisible champion research over the past 10 years.
Why are there many hidden champion companies in the manufacturing industry?
"Invisible champions" and "specialized and special new" enterprises. These two concepts have their own identification standards. Are they referring to a type of enterprise? Why do manufacturing industries dominate?
According to Simon's latest standards, invisible champion companies need to meet three conditions at the same time: they have the largest market share on the continent or the top three in the world in a certain market segment, and their annual sales are less than 5 billion euros. They are not for the general public. Well known.
Among these three conditions, the most important is the first, that is, the market position of the company. In other words, the focus of the "invisible champion" is on the "champion" rather than "invisible", because "invisible" is more about the industry. Characteristics, not the size of the enterprise or the personality of the entrepreneur.
"Specialization, special newness" was actually proposed in 2011, and it is now divided into four categories: national, provincial, and municipal specialization and special new enterprises and "specialization, special newness" small giants, and small giants are the closest to "invisible". Champion" category.
In fact, in communicating with experts from the Ministry of Industry and Information Technology, they also mentioned that the concept of "specialization, special innovation" is indeed affected by the concept of "hidden champion". However, 90% of the "specialization, special innovation" enterprises are manufacturing The industry segment is very critical (for the country or the industrial chain).
But Simon came up with this concept for not the reason. In 1986, Herman Simon, then dean of the European Institute of Marketing, happened to encounter Theodore Levitt, a professor at Harvard Business School. Theodore Levitt asked Simon: "Germany's economic aggregate is only 1/4 of that of the United States. Why does its export value rank first in the world?"
At that time, Internet technology and service trade had not yet emerged. International trade was mainly manufacturing. And the export of raw materials, when tracing the reasons for the strong exports of Germany, one would naturally find manufacturing companies. However, the large German companies at that time were less than one-third of those in the United States. As a result, Simon’s answer is very clear: it really supports the German economy and the international community. It is not a few large companies that trade, but a large number of small and medium-sized enterprises that quietly work in their respective market segments and become global industry leaders. So there is the concept of "hidden champion".
In your opinion, since the concept of "hidden champion" was introduced into China, what course has China's "hidden champion" enterprises have gone through? What are the characteristics?
The development of hidden champion companies in China has two major engines: export and urbanization. According to the changes in the competition mode (high value or low cost) and market scope (local market or global market) of these champion companies, I believe that the development of China's "hidden champion" companies has roughly gone through four stages: The
first stage is, Before and after China joined the World Trade Organization in 2001, a group of export-oriented companies grew rapidly and became pioneers in the global market with low-cost manufacturing advantages. At this time, the cost advantages brought by low factor costs and economies of scale are the key factor. Representative companies include CIMC and Galanz. Among them, CIMC, commonly known as the "King of Shipping Containers", became the champion company in 1995, occupying 50% of the global market share.
The second phase started in 2001 and accelerated in 2008. A group of import-substitution enterprises, under the core advantage of low cost, have seized the explosive growth opportunities of the huge domestic domestic demand market and have grown into the leading champion enterprises in the country. Such as Sany Heavy Industry, Goldwind Technology, Pearl River Piano. For example, as the global champion of concrete pumps and excavators, Sany Heavy Industry's concrete pumps and excavators account for 35% and 15% of the global market share respectively.
In the third stage, from the mid-2000s, a group of invisible champion companies focusing on local unique market segments and producing high-value products began to appear, such as Fang Tai and Tan Carpenter.
In the fourth stage, starting in the 2010s, a group of global leaders in innovation driven by both market and technology began to appear. At this time, these hidden champion companies began to show the same characteristics as the German hidden champion companies, such as cultivating a real niche market. , Have long-term plans for innovation and R&D, and have a global vision. Representative companies include DJI and Ningde Times.
Longevity Values of Hidden Champion Companies
In China, most enterprises have experienced the problem of choosing whether to focus on the main business, focus on market segments or diversified development. Diversified development means that they can seize the huge domestic demand market in China and stick to it. Focusing on market segments and taking the path of professional development is expected to become the hidden champion of the industry, but facing the limited capacity of the niche market, how should SMEs balance the relationship between the two in the development process?
In the final analysis, this is an issue of corporate values, which requires managers to think clearly, what is the highest goal of running this company? Companies that choose a diversified path have their success defined by their scale and short-term profits, while the invisible champion companies that focus on subdividing professional tracks have their success defined by their competitiveness and long-term viability, using Huawei Ren Zhengfei’s It is said that a company "is successful if you are alive after nine deaths."
The development of hidden champion companies in China has two major engines: export and urbanization.
Take the world's strongest lithography machine manufacturer Asmar as an example. Its sales in 2020 will be 110 billion yuan, which is less than 1/7 of Country Garden; but its market value is 2.150 billion yuan, which is 12 times that of Country Garden. In fact, the lithography machine was once a business of Philips, but it was regarded as "meaningless" by the senior management, so it was spun off and established Asmak. At the beginning of its establishment, there were only more than 30 employees, working in temporary boardrooms, and almost closed due to a capital break. However, since its establishment, Asim has been specializing in breakthroughs in lithography technology. From an unknown small company to a giant in the industry, Asim has a 74% share of the lithography machine market.
At present, in our country, no matter the market environment or national policy, there are obvious changes. This is a big test for entrepreneurs and the new generation of entrepreneurs. Entrepreneurs have to think clearly, should they tell a good capital story, make quick money, or insist on sustainable, long-term survival and development?
On this issue, what lessons can the development experience of German "hidden champion" companies provide for the development of Chinese SMEs?
The invisible champion companies believe in the longevity value of "Being in the top 500 is not as good as being a full 500 years." That is, they value the longevity of the company more than the size of the company. A survey shows that the average lifespan of Fortune 500 companies is 69 years, while the median lifespan of German hidden champion companies is 66 years, and the average lifespan of Chinese hidden champion companies is 30 years, but the lifespan of Chinese SMEs It is 4 years.
Sorting out the development path of the invisible champion companies in Germany, I think there are some obvious strategic characteristics, mainly in three aspects:
First, they all insist on focusing on their main business and continuous innovation. Focusing on market segments means that companies choose to be "big fish in small ponds." When focusing on niche markets, companies will feel more crisis, prompting them to make their own products irreplaceable. In this way, companies can not only have A very high market share can also extend its development life. Continuous innovation requires companies to continuously overcome the "entropy increase", maintain the industry's leading position, and even leapfrog the "moat" of technological change. In this process, companies can create a deeper "moat" and often reap dramatic growth in demand. For example, when DJI first made consumer-grade drones, no one knew what it was used for, but it is now a market of tens of billions.
Second, they are all good at international operations. The advantages of international operations are obvious. It can not only diversify risks, but also find crises and opportunities earlier. Specifically, there are two ways for such enterprises to expand the "pond" through international operations. One is to achieve corporate growth by improving product quality and product value. The second is to broaden the customer base and technical application areas. For example, there is an invisible champion company specializing in the production of toothpaste tubes-Essel Packaging, which occupies a third of the global composite hose industry and is headquartered in India. And its subsidiary in China has successfully expanded its customer base from daily chemical companies to cosmetics and pharmaceutical companies. While expanding the "pond" of the company, it also increased profitability.
Third, their management is mostly family governance. At present, in Germany, two-thirds of the hidden champions are still family-owned, and about eight of these family businesses are family governance. For example, Busch SE, the invisible champion of the vacuum pump industry, is currently managed by five people in two generations of the family.
The "hidden champion" companies under family governance generally adopt extremely cautious financial policies and can better practice long-term developmentism. Germany Alai is the global professional camera invisible champion company, and its transformation and development is a typical example. In the fall of 2009, they made a strategic adjustment to stop the production of film cameras when the new digital camera did not meet the conditions for listing. After that, the company went through a full 10 months without a penny of income and no layoffs. And this The execution of the strategy is mainly due to the decisive persistence of the family managers. They didn't come alive until 10 months later, when digital machines started to be sold again.
Brain drain and inheritance issues to be solved
At present, the state has provided great support for financial support and financing facilities for specialized, special and new enterprises. The quantity and quality of the "Giant" enterprise. In your research over the past 10 years, from the perspective of invisible champion companies, what support do they need for their development?
At present, the state's support for specialized and new "little giant" enterprises is definitely a good thing. It shows that the society is paying attention to these enterprises, but I hope that the focus of social attention is not that they create more wealth and scale in the short term. How much has been increased, but to give more encouragement and recognition to them for bringing more valuable products to the world, long-term investment in a certain field, and technical research.
In other words, these hidden champion companies need a social atmosphere that supports innovation and long-termism in the development process. Most of the hidden champion companies nowadays are technology-driven. To create such an atmosphere, we must first ensure respect and protection of intellectual property rights, and secondly the respect of the whole society for the professionalism of different professions. Germany has done a good job. Because the traditions of the German handicraft guild have been preserved better.
Hidden champion companies believe in the longevity value of "Being in the top 500 is not as good as being a full 500 years", that is, compared to the size of the company, they value the longevity of the company.
In addition, it is necessary to give play to the role of industrial policies and technological innovation platforms, and increase technical support and guidance for small and medium-sized enterprises. For example, the Fraunhofer Association in Germany is known as the "Science Porter" and is also the most famous applied technology research institution in Germany and even Europe. It promotes the direct application of current research results to the industry and quickly transforms them into mature products in the market.
At present, what difficulties are facing the development of these hidden champion companies?
Deng Di: When it comes to dilemmas, brain drain and finding successors are common problems faced by hidden champions all over the world. Most of the hidden champions in Germany are family companies, and most of the employees are locals. Therefore, most of the talents of these companies are self-trained. Most of the “hidden champions” are deeply cultivated in market segments, which have high requirements for talents and fewer peers. It is also difficult to find suitable talents from the outside. Once the talents of their own enterprises change careers, it will be an irreversible loss.
In the survey of China’s “hidden champion” companies, most of them will give incentives such as options for core technical talents, and try to retain talents by drawing up a listing plan, but in fact, whether such incentives can be fulfilled is also very different. Certainty.
At the same time, the inheritance problems of these "hidden champion" companies are also very prominent. Most of the children of the founders of "hidden champion" companies are not interested in the career of their parents and are unwilling to inherit the family business. This is the same in Germany. In 2004, I went to Berlin to visit the Federal Ministry of Economics and Energy, which serves small and medium-sized enterprises in Germany. An official told me that there were many family-style "hidden champions" who could not find a successor. They thought of a way: Let small and medium-sized enterprises facing inheritance problems report their respective needs, recruit intentional management talents through a national network, and even persuade enterprises to sell some shares, but with little effect.