Over the past 30 years, the Zhejiang business community has grown from its formation to gradually expanding, then becoming popular nationwide, achieving remarkable results. Looking back is important, but looking forward is even more crucial. "Recently, well-known Zhejiang private enterprises like Hangzhou's Nantang Group and Taizhou's Feiyue Group have successively faced survival difficulties due to financial issues. Through these events, it is not hard to see that after 30 years of development, Zhejiang businessmen have indeed reached a crossroads where change is necessary." Hu Xiaoping, strategic advisor to the Zhejiang Businessmen Research Association, pointed out the issue all Zhejiang businessmen must consider: in the next 30 years, how will Zhejiang businessmen transform and reform themselves, and where exactly are the new models for wealth creation among Zhejiang businessmen?
"Zhejiang businessmen represented by Alibaba and Jack Ma have already damaged the credibility of Zhejiang businessmen and caused adverse effects. In our eyes as Zhejiang entrepreneurs, Alibaba is like 'Brain Gold' in the IT industry. Companies don't necessarily need to grow big, but they must be able to last long," said Zhou Yongli, chairman of Zhejiang Yongli Industrial Group. Mass inquiries sent out lead to suppliers competing on price cuts, mutually destroying each other! Many companies that have worked with Alibaba deeply understand this point. Once you activate Alibaba promotions, numerous inquiries come in, and everyone rejoices, thus concentrating resources to respond to online business opportunities. However, after a long time, there is no further contact. This is the real experience of many Alibaba members. "Of course, in the next 30 years, Zhejiang businessmen seeking new wealth creation models require the joint efforts of all Zhejiang businessmen. Only in this way can the collective advantage of Zhejiang businessmen continue."
"Nantang: The 'non-accidental' death of a Zhejiang businessman."
How Nantang was pushed and forced by various internal and external factors, step by step sliding into bankruptcy, is a typical case in the currently devastated Jiangsu-Zhejiang business circle. If it weren't for this round of stormy macro-control, Nantang Group, a security company claiming an annual sales volume of 5 billion yuan, would hardly enter the vision of the World Entrepreneur magazine (bossline.com). Nantang, once the leader in Zhejiang's security industry, is a small company, but the trouble it caused is not small.
In mid-March 2008, 26 banks and financial institutions pursued debts one after another, finally leading to the complete collapse of Nantang Group's fragile capital chain. Its book net assets were only 540 million yuan, but the total debt exceeded 1.4 billion yuan, involving over 200 creditors (ranging from several thousand yuan to hundreds of millions), among which at least 10 well-known Zhejiang companies with mutual guarantee relationships suffered heavy losses, and the shock quickly spread inside and outside Hangzhou's business circle. How this small company was squeezed and forced by various internal and external factors, step by step sliding into the abyss of bankruptcy, is a typical specimen of the current devastated Jiangsu-Zhejiang business circle, a meaningful microcosm.
Recently, the World Entrepreneur magazine visited Nantang's major shareholders and creditors, eventually meeting Zhang Jian, founder and president of Nantang Group, who had disappeared from public view. In the dim coffee shop, a few weak rays of sunlight slid past this 46-year-old man. He had a face that wasn't easy to remember at first glance. His hair had just been dyed, but his chin still retained gray stubble. He sighed incessantly, spoke urgently, and sometimes remained silent for long periods during questioning. During the three-and-a-half-hour exclusive interview, he expressed deep regret, self-reproach, and helplessness about the rapid collapse of the enterprise he had personally built.
What force broke Nantang's backbone? Almost at the same time as Nantang, the famous Feiyue Group in Taizhou also encountered troubles. Four months after the Nantang incident, Zhang Zhengjian, chairman of Jingu Group in Yiwu, Zhejiang, went missing after the capital chain broke, leaving behind high-interest loan arrears of up to 1.4 billion yuan and bank loans of 300 million yuan. Why do incidents of enterprise closures and bosses disappearing happen frequently? The life and death of SMEs in the Jiangsu-Zhejiang area is common, but the stars that fell this year share many similarities: heavy investment in real estate, involvement in huge amounts of private high-interest loans, complex debt chains, short-term borrowing for long-term use, blind diversification expansion, neglecting main businesses. "Sometimes you have to believe, fate can be terrifying!" Zhang Jian shook his head.
Sanhua Group of Zhejiang is the second largest shareholder of Nantang. Its chairman, Zhang Daocai, is a fellow townsman of Zhang Jian. Zhang Daocai still remembers the first time he met Zhang Jian, when he left the impression of "not being someone who talks fluently, simple and honest, and upon meeting you, he would describe the technical prospects." By the end of 2007, when Nantang was on the brink of collapse, Zhang Jian borrowed 50 million yuan from Zhang Daocai, stating it was a short-term loan, but Zhang Jian failed to repay it in time, giving Zhang Daocai a faint sense of unease.
In early March 2008, Zhang Daocai received a call from a bank executive, "I heard Nantang has some problems, did you hear?" "Yes, what did you hear?" Both sides got wind of the news, but neither was willing to reveal their cards. Not long after this mutual probing conversation, on March 18, Bank of Communications Hangzhou branch applied to the Hangzhou Intermediate People's Court for asset preservation, sealing all of Nantang Group's assets, and limiting funds to "only in, no out." Even for some executives of Nantang, this news came very suddenly; they merely knew the company had difficulties in capital turnover, but did not expect the hole to be so large. An insider recalled that at the time, he was participating in a bid in Ningbo with a project manager from Nantang Group, "Nantang already knew it had a sure win, but on the night before the announcement, someone from Nantang received a phone call, froze for a moment, and rushed back that night. It was quite a significant deal, unfortunately lost."
Alibaba: From Zhejiang's pride to shame for Zhejiang businessmen.
SMEs succeed with Alibaba but also fail with Alibaba. Alibaba really brought sweetness to SMEs! Old user Zhang Jun of the Alibaba platform revealed: "We started doing e-commerce on the Alibaba platform since 2003, and the effect was very obvious at the time. After using this platform, our performance increased by 70% that month." Cooperation with Alibaba on the road to growth was truly a pleasant matter.
Those who tasted the sweetness often ended up perishing because of it. Everyone jumped on board (first lured, then praised) and Alibaba made these SMEs addicted to its "heroin", fiercely competing on the internet. Shaoxing Jinding Company indicated that now a buyer can send out inquiries to dozens or even hundreds of suppliers at any time. If your quote is higher than others, the buyer won't come back to you, making business increasingly difficult. Now we are gradually shifting our e-commerce platform to Baidu's bidding ranking and Google keyword advertising. Many companies spent 2,800 yuan to obtain Alibaba's TrustPass membership and found it did not bring them any customers. Nowadays, a popular keyword often has dozens of pages of search results, and companies ranked lower basically get no clicks, let alone business opportunities. To seize this opportunity, Alibaba added bidding services on top of TrustPass. If you want your company or product to rank in the top five for a keyword, you must pay Alibaba an additional monthly fee ranging from 500 to 1,600 yuan.
The hidden increase in costs and the reduction in business opportunities led to an increasing number of SME owners starting to leave Alibaba. Data confirmed this trend: the growth rate of paid users for Alibaba was 44.5% in 2006, dropped to 39% in 2007, and even plummeted to 7.1% in the first quarter of 2008. "Many 'China Suppliers' companies have also tried purchasing keyword advertisements from foreign search engines, and orders brought by search engines have surpassed those from the Alibaba platform," said Mr. Yang, a boss in Guangdong exporting security equipment. "China Supplier" is a product under Alibaba targeting exports, with each member required to pay an annual fee of 80,000 to 120,000 yuan.
Assistant Director Jing Linbo of the Institute of Finance and Trade of the Chinese Academy of Social Sciences wrote an article pointing out four major problems existing in Alibaba today: excessive personal worship of Jack Ma, potential risks in equity structure, too small a proportion of management equity, and decision-making delays caused by the expansion of organizational structure. In addition to some users and industry experts expressing concerns about Alibaba's future prospects, the company's revenue risks are also gradually increasing. Data shows that Alibaba's China Trading Market generates over 2 billion RMB in revenue, accounting for 32% of total revenue. Alibaba TrustPass members account for 87% of total paying members, more than six times the number of international members.
Why could Alibaba make so much money in previous years? "Because most SMEs in China do not understand online marketing, and even most large enterprises do not understand online marketing! Jack Ma's persuasion was very successful, making most Chinese enterprises believe that getting on Alibaba means having business, so they all paid Alibaba to go online. After understanding more knowledge about online marketing, they realized that it was not that simple," said Feng Gensheng, a famous entrepreneur in Zhejiang. "Alibaba collects money from customers but cannot close deals. Such behavior is fraud, and it damages the credit of Zhejiang businessmen."
Guo Guangchang criticized saying: "Alibaba's weakness lies in setting up scams from the beginning." For a long time, the threshold for joining TrustPass has been low, requiring only copies of the company’s business license and other documents, certified by the Jiesheng Certification Company. Alibaba and the certification company originally bore the responsibility of review, trying to keep companies providing false information out, but since this certification process itself was not strict, and many agency companies deliberately relaxed supervision to attract more users, in fact, in some places, paying an annual fee of around 2,300 yuan could make one a TrustPass member. This somewhat led to some organizations and individuals forging business licenses, conducting fraud through Alibaba's network. Some users complained about Alibaba's behavior on the network, but due to Alibaba's ambiguous attitude, always passing the buck, users find it hard to get satisfactory answers, ultimately letting things fizzle out. Such situations have severely damaged Alibaba's reputation.
Facing the new round of competition, how should Zhejiang businessmen respond?
"The Young General Class" has added a new course. At 67 years old, Mao Lixiang has been pondering recently what new courses to offer to students in the "Family Business Longevity Class" starting in September to help them better understand and grasp the current situation.
As chairman of the FOTILE Group in Cixi, Mao Lixiang founded the "Family Business Longevity Successor College" last year, known as the "Young General Class" externally. Facing macroeconomic regulation, the pressure on business operations is evident, and the focus of the "Young General Class" students is surprisingly unified. These second or even third generations of Zhejiang businessmen are striving to clarify their thoughts and consider countermeasures.
On June 28, the fourth specialized training class for successors of family businesses in the "Young General Class" opened. This time, an eight-day training session introduced a new course, taught by Bao YuJun, President of the China Private Economy Research Association, focusing on the new round of competition among Chinese entrepreneurs. This course breaks away from the conventional framework of corporate succession, addressing the shared confusion of current private entrepreneurs and discussing how to respond to the macroeconomic situation.
Dean Mao Lixiang explained that during this period, through individual exchanges with many students, they all mentioned these issues, so we felt that complementary courses should be offered. When people are still doubting whether these young people with assets worth hundreds of millions can shoulder the heavy responsibility, they have already unanimously turned their attention to the ever-changing macro background, beginning to reflect on and think about the predicaments of their enterprises. Mao Lixiang said: Jack Ma's "winter theory" has caused panic among people. Now, looking back at the meaning of that letter from Jack Ma:
Firstly, stabilize morale. Jack Ma is a very competitive person who never admits defeat. Once he gives in, the consequences are often worse than expected. However, it can be seen that Alibaba is indeed facing internal and external difficulties. Therefore, Jack Ma needs to stabilize morale. If Alibaba collapses, Taobao, Alipay, and the loss-making Yahoo China will all face the domino effect. When things get out of control, even gods cannot save it. Perhaps at that time, the only option will be to shut down.
Secondly, shift responsibility and attribute most of the reasons for the stock market downturn to the global economic slump, portraying himself as a victim, completely losing the former vigor. It seems that the saying "a fallen phoenix is worse than a scalded chicken" applies here. But Jack Ma's cleverness lies in turning his own winter into the entire industry's winter, achieving two goals with one action. I believe that "this is the winter for e-commerce platforms, but it has little impact on NetEase, Baidu, Sina, etc." Moreover, Sina's recently announced profit information sufficiently illustrates the above situation.
New Zhejiang businessmen calmly deal with pressure and quickly shake off the shadow of people like Jack Ma.
"Recommend that Zhejiang Province quickly disclose the blacklist of the first batch of credit-bankrupt enterprises, and Alibaba must be included." Mao Zhongqun calmly told the World Entrepreneur magazine. New Zhejiang businessmen calmly deal with pressure and quickly shake off the shadow of people like Jack Ma. Huang Yilong from Cangnan, Wenzhou, who owns nearly ten million in assets, vividly recalls borrowing money in 1984. Back then, to contract an engineering project in Sichuan, he exhausted his words and promised to repay by the end of the year, gathering 10,000 yuan from relatives and friends. By the end of the year when it was time to repay, another project was also bidding, but he only had enough money to repay his relatives and friends. Under the circumstances at the time, he had no choice but to grit his teeth and repay, watching helplessly as he lost another project.
"Credit comes first, especially when dealing with relatives and friends." Huang Yilong said this. He believed that if he didn't repay, under the conditions at the time, apart from the circle of relatives and friends, no one else would lend him money again. Therefore, rather than lose one project, he couldn't "breach the contract," because the cost of breach in a small circle was too high. Gao Xiaoyong believed that during the early stages of reform and opening-up, Zhejiang lacked natural resources such as oil, coal, and metal mines, and also had few state-owned enterprises, naturally lacking national loans. Thus, resource-deficient Zhejiang private enterprises had to rely on relatively low-cost information among relatives, friends, neighbors, villages, and hometowns for civilian lending.
"Money and natural resources are different. Natural resources cannot move and must be exchanged for money; however, money can flow. If you treat it well, it will flow to you. How do you treat it well? There are only three words: keep your word!" Gao Xiaoyong said. He analyzed that keeping one's word isn't a special virtue of Zhejiang people, but under the constraints of the conditions at the time, Zhejiang people discovered that keeping one's word was more profitable than not. This differs from Guangdong, where there were investments from Hong Kong people, and later special zone investments from the state, making it easier to obtain money, resulting in some bad habits in using money and more bad debts.
Despite clearly feeling the enormous pressure from rising raw material prices, RMB appreciation, rising labor costs, and other comprehensive factors, when talking about these issues, these new Zhejiang businessmen remain calm and composed. Luo Yu calmly said: "In recent years, the economy has indeed shown signs of overheating, and the country's macroeconomic regulation is normal and within expectations. Economic development always moves forward amidst ups and downs, just like the stock market, it cannot always be a bull market, but it will always rebound."
Even veteran Zhejiang businessman Mao Lixiang agrees with this view. In his opinion, macroeconomic regulation is unavoidable. "FOTILE" is also under pressure from rising costs. But both Mao Zhongqun and he believe that difficulties and opportunities are equal, and the more difficult the situation, the greater the opportunity for excellent enterprises and brands. Of course, the calmness and composure of the new Zhejiang businessmen are not blind. Some may question their youth and lack of awareness of potential dangers, but in reality, many of them remain calm because they have prepared early. How to break through the deadlock for their enterprises? They have moved from the level of thought to the operational level.
They know that the lifeline of an enterprise lies in its products. Therefore, they must resolve the dilemma through strengthening product research and development and technological innovation. Since taking over the reins of "FOTILE," Mao Zhongqun has always attached great importance to products and technological innovation. As early as last year, Mao Zhongqun realized that severe macroeconomic regulation was imminent. He promptly formulated a plan for new product research and development, launching over ten new products this year, including a recently released integrated set of five kitchen utensils. He understands that he must continuously update his products to lead the industry trend, attract more consumers, and keep the market fresh and interested in their enterprise and products.
Mao Zhongqun spared no expense, proposing the concept of design leadership, continuously strengthening his design team, and collaborating with renowned American design companies for research and design, spending tens of millions annually on design and R&D. Just last month, at the new production base of "FOTILE" in Hangzhou Bay New Area, a 6,000 square meter laboratory for kitchen utensils, the largest in the world, was born.
Not the end
According to Schumpeter's definition, entrepreneurs are like mushrooms after rain, they cannot sprout under every tree, but only in suitable soil. Renowned economist and Peking University economics professor Cao Heping believes that Zhejiang's soil has nurtured a group of the best entrepreneurial resources. "But this only represents the past. For Zhejiang businessmen to maintain this advantage in the future, they must form a new generation of Zhejiang businessmen moving from a manufacturing economy to a pricing economy." Cao Heping said that any enterprise only gains the ability to resist external risks once it possesses pricing power.
Over the past 30 years, the Zhejiang business community has grown from its formation to gradually expanding, then becoming popular nationwide, achieving remarkable results. Looking back is important, but looking forward is even more crucial. "Recently, well-known Zhejiang private enterprises like Hangzhou's Nantang Group and Taizhou's Feiyue Group have successively faced survival difficulties due to financial issues. Through these events, it is not hard to see that after 30 years of development, Zhejiang businessmen have indeed reached a crossroads where change is necessary." Hu Xiaoping, strategic advisor to the Zhejiang Businessmen Research Association, pointed out the issue all Zhejiang businessmen must consider: in the next 30 years, how will Zhejiang businessmen transform and reform themselves, and where exactly are the new models for wealth creation among Zhejiang businessmen?
"Representatives of Zhejiang businessmen like Alibaba and Jack Ma have already damaged the credibility of Zhejiang businessmen and caused adverse effects. In our eyes as Zhejiang entrepreneurs, Alibaba is like 'Brain Gold' in the IT industry. Companies don't necessarily need to grow big, but they must be able to last long," said Zhou Yongli, chairman of Zhejiang Yongli Industrial Group. Mass inquiries sent out lead to suppliers competing on price cuts, mutually destroying each other! Many companies that have worked with Alibaba deeply understand this point. Once you activate Alibaba promotions, numerous inquiries come in, and everyone rejoices,