Transformational innovation "where to turn" is the key

China Coatings Network
News: Recently, "transformation and innovation" in the
coatings enterprises
has been frequently raised and attracted great attention. Here, many
coating
enterprises are seeking transformation and innovation. But paint companies should first think clearly "where to turn" the problem, otherwise, transformation and innovation will lose direction, or fall into empty talk.
of local paint companies to grow through low-cost, large-scale manufacturing. This is also the main driver of China's economic growth in the past. Under the original global division of labor system, the overall position of Chinese paint enterprises is at the bottom of the smile curve, which is a low value-added processing and manufacturing link. We rely first on strong export demand, then strong domestic demand growth, then strong investment of 4 trillion yuan, each wave brings rapid expansion of market size, enterprises only need to solve a large number of production problems, can bring rapid growth and prosperity.
However, the current economic situation reversed, exports contracted, domestic demand growth slow or even declined, China's economy in the search for overall transformation and investment fell sharply, paint enterprises to pursue a large-scale manufacturing strategy, will inevitably fall into the overall passive. To reverse this passivity, one must seek to transition to both ends of the smile curve, a key link in the industrial value chain.
in short, there is only one direction of strategic transformation: to enhance the position of coating enterprises in the industrial value chain, to become the control of the industrial value chain, or at least become an indispensable link. This is the primary problem of strategic thinking, but also the local paint enterprises do not pay enough attention to the problem.
according to the value chain theory, the closer the customer's paint enterprises have more influence. Therefore, the first choice of transformation is to end-user brand development, that is, "control the market", to avoid the fate of being replaced or abandoned at any time. The overall characteristic of the rich economic era is that there is a brand of replacement of no brand, no brand of user products through back-to-back integration to replace intermediate products.
control customers of the paint enterprises, higher degrees of strategic freedom; And processing and manufacturing enterprises, the space for scaling is much smaller, the ability to resist risks is also extremely fragile. Zara, the Spanish clothing brand, was a manufacturing factory in the 1970s, as a result of the cancellation of a German order, the company is in a desperate situation, and then aspired to become a value chain controller, strong transfer to the user brand, and now become an industry leader.
"the economy has a cycle, technology will progress", which is the objective law of social development. And end-user brands naturally have more strategic space because they control the industrial value chain. Like the Jura brand, which owns only half of its capacity, surplus orders were outsourced during the economic boom, external orders were cancelled during the economic trough, and its own capacity was still well maintained. The same is true of South Korea's Samsung, which also ensures that, as technology advances, backward technology is transferred to its affiliates in the value chain to avoid its own risks. Those in the value chain of light assets have greater strategic freedom.
, processing and manufacturing can easily become a reservoir or even a dump for value chain controllers, becoming passive or even bankrupt during economic troughs. Local enterprises must seek to develop to the final product and user brand, improve the ability to control their own destiny, to avoid falling into the passive situation of Jianghuai bus. Moreover, this should be a priority because China itself has a huge market, and local companies are more likely to be close to the market and understand the values and environment of local users. Like Changsha Sany in the field of engineering machinery, and Shenzhen Meito in the field of medical equipment, are the benchmark for the successful implementation of strategic transformation in the past decade, their transformation direction is to control the market.
, the second option for transformation is to develop to the technical or resource side, the so-called "control technology" to improve the user brand paint enterprises on their own dependence. Intel, seen as a role model for global coatings companies, is typical. This transformation is more difficult for Chinese paint enterprises, the accumulation and development of technology is not overnight, especially in Europe, the United States and Japan and other countries to some extent there is a technical blockade on us.
needs to be addressed in the transition to control technology is that technology or resources also need to be branded. Like Intel, putting technology brands on the end product increases customer stickiness and creates mutual constraints with user brands.
In recent years, the trend in control technology has been that paint companies that try to control the industry's value chain have mostly emphasized overlaying technology brands with user brands, and Coca-Cola is a well-known model for overlaying raw liquid technology and user brands. PetroChina and Sinopec from the field of crude oil processing, vigorously to the lubricant brand and gas station brand penetration, and then form an absolute control of the industrial chain. And the world's famous high-end menswear brand, from the user-side brand to the technical end of the extension, in the world to find the best wool, silk, cotton production, such as its almost control of the world's best Angolan wool production, and vigorously develop a variety of materials blending technology, strengthen the control of the value chain.
For Chinese paint companies, following this law, from the control market to control technology transfer, and the formation of a positive interaction between technology and the market, is the future can control the value chain, with Europe, the United States and Japan and other world-class enterprises to compete with the key. This is where Huawei's continued success stems.
, from simple processing and manufacturing links to control the market and control technology transfer, is the direction of the strategic transformation of coating enterprises. We hope that more Chinese paint companies will develop in this direction, thus forming the global competitiveness of China's economy. But not all paint companies can go in that direction.
, a healthy industrial value chain should have controllers and franchisees. As a franchisee, forming an indispensable position in the value chain is the realistic choice of many local paint enterprises. To do this, local paint companies need to follow the strategy of value chain controllers, continuously improve their process capabilities and efficient management capabilities, and preferably form a "you have me, I have you" partnership with controllers, or direct asset ties.
, coating enterprises can not blindly carry out the transformation strategy, need to better understand the direction of strategic transformation. Only when the transformation goal is clear, can enterprises take a longer-term path in the future.