◆More than "growing pains" for SMEs in manufacturing
An official economic expert said: "2008 can be said to be the year with the strongest uncertainty in macroeconomic trends, the biggest differences of opinion, the highest difficulty in prediction, and the most difficult policy choices in the 30 years since China's reform and opening up."
This is serious, even official economists have used four "mosts". It is easy to imagine how unfavorable the trend and situation of the national economy will be in the present and in the near future.
However, compared to these relatively painless "mosts", countless small and medium-sized enterprises (SMEs) in the manufacturing industry are experiencing real hunger and cold, and deep pain.
The structural integration trend of the global industrial chain has already confronted China's manufacturing sector with a cold and ruthless iron hammer. Many small enterprises and small factories have been shattered by this hammer. Even if the country rescues them through various policies, it is merely distributing a small amount of life-saving porridge because the pot has already been smashed. Even if the economic environment improves, factories that only produce but do not sell face the pressure of continuously rising costs and an extremely compressed profit margin. Everyone still cannot live comfortably.
Now, exports are also difficult. So, are the high-quality products we manufacture using excellent raw materials really valueless? Is there really no one domestically who likes to wear clothes of international brands like Polo and Hugo Boss?
Manufacturing is very passive, and SMEs in manufacturing are even more so. Because the vast majority of them only produce but do not sell. In an era of severe overcapacity, it is destined that the manufacturing sector will be subject to price cuts and constraints. Now everyone knows this problem, everyone wants to create brands, wants to engage in marketing, and wants to establish sales channels. To consider this issue at this point, how easy is it?
Without technology, without sufficient capital, without talent, without brands, and without marketing experience, wanting to take a share in the traditional competitive market is akin to attempting to punch through a wooden board with bare fingers.
◆Paralleling the 30 years of reform and opening-up, "online individual entrepreneurs" dominate the online shopping market
This year is 2008, coinciding with the 30th anniversary of China’s reform and opening-up. Looking back at the early stages of opening-up, the rise of a special group may give us some enlightenment - the individual entrepreneurs.
30 years ago, 8 million educated youth returned from the countryside. For a time, everywhere was overcrowded. Many people who could not find good jobs started doing small individual businesses such as hairdressing, snack shops, and street stalls. With the impetus of policy, flexible operations, and the sudden release of consumer demand, many individual entrepreneurs accumulated their first pot of gold. Some even became tycoons and evolved into today's "big shots".
Small investment, small-scale operation, flexible management, and quickly meeting the needs of segmented consumer groups - these advantages of individual entrepreneurship translate very similarly to the current market situation of C2C e-commerce platforms like Taobao today. Even the situation where a product becomes hot-selling, profit margins increase, and a large number of sellers rush to follow is similar to the situation of individuals following trends in those days.
Speaking of which, it is inevitable to mention the recent heatedly debated new rules for online stores.
Friends who have read the article "The Vicissitudes of Chinese Individual Entrepreneurs" should understand that today's group of individual entrepreneurs in China is slowly declining. Why? The biggest reason is the deterioration of the business investment environment, among which the biggest reason is the rise in operating costs. Skyrocketing rental fees and high taxes mean that for individual entrepreneurs, any slight change in operating conditions can make the rise in these two costs enough to eat up the small boss's labor or even capital.
The rise of online shopping has avoided competition with traditional commerce, gathered a relatively new market demand, and more importantly, e-commerce has given those hoping to "start from scratch" a real, low-cost, low-risk opportunity to "earn a meal." Speaking of this, we need to mention not just C2C Taobao, but also countless B2C online shopping platforms established by individuals, families, or small and medium-sized enterprises. Think about the SMEs in our manufacturing sector shivering in the cold wind. If they want to enter this market, what difference is there between individual entrepreneurs or small companies and small enterprises?
From a certain perspective, we can compare China's online shopping market to the situation at the beginning of the reform and opening-up 30 years ago. The scale of the online shopping market is still small (with a transaction volume of 56.1 billion yuan in 2007), but it is developing rapidly (with an average annual growth rate of 80%). At this point, large enterprises have not yet begun to covet this market, leaving "online individual entrepreneurs" and SMEs expecting to enter the sales service chain a new opportunity for reform and opening-up.
Note: Represented by Taobao, C2C e-commerce accounts for 92.3% of the entire online shopping transaction volume. Therefore, in the field of retail e-commerce, "online individual entrepreneurs" occupy an absolutely dominant position. As a few "online individual entrepreneurs" complete their initial accumulation and with the entry of many SMEs, the development speed of B2C e-commerce has surpassed C2C, becoming a more attractive business hotspot.
◆What SMEs urgently need to develop e-commerce is not government financial support
In this market and at the current stage of development, due to the relatively small scale of operations and the relatively small operating costs and risks of e-commerce, if individuals or SMEs want to engage in e-commerce, funds are actually not the most urgent need. So, what is important? From the perspective of the government, SMEs and online individual entrepreneurs most need three aspects:
1. Loose policies;
2. Advocacy and encouragement of e-commerce consumption markets by the government;
3. Industrial support;
Why only these three points? These three points seem quite abstract.
Actually, if we think about how China's first generation of individual entrepreneurs made their fortune, we will understand.
Firstly, during the early stages of reform and opening-up, the government "released water to nurture fish," allowing a relatively loose policy to enable a new market group to grow rapidly. Nowadays, the development of e-commerce can be said to be in its infancy. If strict regulations were imposed now, the water hasn't even filled the bottom of the pool, and the market hasn't grown. The result would only be the suppression of this batch of individuals and SMEs trying to "start from scratch."
Of course, I don't mean that it can be left completely unregulated. Here, I want to talk about another very interesting phenomenon: e-commerce makes transactions fairer. Why? In traditional small shops, we find that apart from relying on the self-discipline of small bosses, we can only rely on the supervision of functional departments. This management model is quite tiring and inefficient. However, the transparency and openness of e-commerce transactions instead provide a condition and opportunity for market regulation of merchants. Taking Taobao as an example, buyers do not depend on Taobao or other third-party institutions' certification or affirmation, nor do they depend on the supervision of functional departments or credit institutions' ratings. Buyers can evaluate sellers through their sales history and feedback from buyers and their shopping experiences, and even assess whether a particular product from the seller is worth purchasing. Due to the mode and technical application of e-commerce, regulating sellers through the market has become an efficient and smart means to promote honest transactions.
Regarding the second point: From a higher perspective, does achieving transactions through e-commerce really save transaction costs? The answer is definitely yes. From the perspective of producers and sellers, the flatter the marketing channel, the lower the time, resources, logistics, and other costs consumed in the middle. When there is a channel that can save transaction costs, even social circulation costs, shouldn't it be advocated at the government level? Although we know that whether consumers choose to consume through online platforms ultimately depends on their own preferences and habits, the advocacy and encouragement of the government can drive the development and prosperity of this market.
Regarding the third point: The true development of e-commerce is not simply about buying and selling. We all know that third-party payments, logistics, and industrial integration are all basic conditions for the growth and success of e-commerce. Not to mention the fact that although many SME bosses want to engage in e-commerce, unfortunately, they don't even know how to send emails. Supporting each link in the industrial chain, academic support led by the government, improving the basic environment of e-commerce, popularizing knowledge, and promoting resource integration are all works that the government can do and that greatly help the development of e-commerce.
Conclusion:
In today's economic environment, the government's macroeconomic control policies are being introduced one after another, and SMEs' development has reached a new turning point. Combining the history of the development of individual entrepreneurs during the early stages of reform and opening-up, I hope that through the above brief discussion, a call is made to all "individual entrepreneurs," SME bosses, and relevant administrative departments. At the same time, it expresses a view: In fact, what SMEs lack most in developing e-commerce is not money, but rather a relaxed, fair, and vibrant business investment environment; a fertile soil for taking root, sprouting, blossoming, and bearing fruit. (ProBIZ Business Software E-commerce Observer www.probiz.com CK)