Dachen Venture Capital Managing Director Rao Wei
Sina Finance News October 18th news, sponsored by the Business Media Group, "Business China", "Business Review" hosted the "2016 China Product Innovation Summit" was held in Chongqing on October 18. Rao Wei, managing director of Dachen Ventures, said that the usual product innovation is mainly focused on the competitiveness of enterprises, and my product innovation is stronger than the competitors. In the current economic environment, product innovation has changed, and now product innovation It is a life-and-death innovation.
The following is a speech record:
Rao Wei: Good afternoon everyone! At the invitation of General Zhou, we will share with you the issue of product innovation from the perspective of investors. Let me first talk about two cases. This case is a classic case of consumer product innovation that we invested in the previous years.
The first one is Qingdao Red Collar. It is a custom-made clothing company. It is considered to be a model of Industry and Industry Industry 4.0, and a model of C2B. We know that there are big problems in the apparel industry. We have already invested a lot, including now. Many listed companies have huge business model problems, such as large industry inventory, heavy store burden, e-commerce impact, and many manufacturers' average inventory equals sales revenue. This is very scary. We know that there are some places to operate. The brand has struggled in the past few years, and the cash flow is almost exhausted. Usually, the sales revenue is equal to the inventory, which is equal to the accounts receivable or the inventory plus the accounts receivable is equal to the sales revenue. Many enterprises are in this state. How to do? Must do product innovation, Qingdao Red-collar enterprise has made such an attempt, to be customized, we know that customized clothing, especially formal wear, must pay the full amount, after you pay the full amount, the enterprise will place an order, while at the same time The tailor made a set in two weeks, so the company built a system with the means of industrialization, integration with informationization and industrialization, and tempering for about seven or eight years. Personalized customization can be quickly transmitted to the factory of the enterprise by means of the Internet. A very good thinking model is set up in the form of big data. A set of 23 data sets is produced, and the production time is about 5,000 to 6,000. It is sent to the production line, and the customized suit can be produced in an industrialized way within a week. The cost is very low. This company was inspected in 2012, and I made an investment in 2014 after investigating. Very low, the money has now turned 4 or 5 times. The most important thing is that the company’s cash flow is very good. In the first half of this year, the company’s operating cash flow and the company’s existing monetary funds far exceeded the industry, especially in the later stage. The investment company has already melted 600-800 million. A traditional clothing company can easily reach such a financing amount through traditional innovation, so product innovation is very important. After we invest, we will invest in 2014. In the fourth quarter of this year or in the first quarter of next year, companies will apply for the GEM. We estimate that it will be listed in a year or two.
This enterprise is called Shangpin Home Furnishing, which is also a typical case of product innovation. This enterprise is the first to do furniture customization. The biggest problem is that we must first produce a lot of sets of furniture. We must distribute the goods nationwide. After the goods are distributed, the customers choose according to his needs. In this case, if I press a lot of money and inventory, what should I do? This entrepreneur feels that I can customize the furniture to let the user choose the furniture according to the grade of his specific residence and the size of the house, including the special shape. The earliest is the C2B mode.
This company is expected to have dozens of times of reports, so product innovation is very important, especially want to report to everyone, how do we look at this topic, product innovation is a lifetime, the previous guests are very specific, we are investing From a human perspective.
The usual product innovation is mainly focused on the competitiveness of enterprises. My product innovation is stronger than the competitors. In the current economic environment, product innovation has changed, and now product innovation is a life-and-death innovation. The current background, the first point of overcapacity, all the problems we face now, especially the biggest problem in the manufacturing industry is overcapacity. One result of overcapacity is that we often hear manufacturers say that we produce 2,000 cabbages. Block money, and now a pound of steel is only about 1600 yuan, the current manufacturing industry is very difficult to spare capacity, there are cost reduction, labor reduction, efficiency, quality, to respond quickly, you have to meet this Claim.
Second, consumption upgrades. The current economy is a downward environment. From the subprime mortgage crisis in 2008, there has been a major change in demand. On the one hand, there is insufficient effective demand. On the other hand, new demand or upgraded demand is not met. For example, many traditional brand traditional products, a new generation of consumers, suddenly did not recognize after 80 and 90. Suddenly, the very classic brand we know is suddenly gone. This is very scary for entrepreneurs, and there are many more. The traditional factory suddenly has nothing to do, a lot of fixed assets are idle, fixed assets are converted from cash, and restrictions on that place will create huge costs, various costs, and new demands of consumer customers. Not satisfied, the so-called go to Japan to buy a toilet cover is ridiculous, but it is not satisfied.
In addition, the non-standardized demand has become a universal standard. Nowadays, facing the end customer personally, whether the C or D end personalized demand is becoming a common phenomenon, then what to do, only innovation. The integration of the Internet and the Internet of Things has been realized in some areas. At the same time, cloud storage of cloud computing, real-time access to massive amounts of information like artificial intelligence, has made users very experienced. Before we did some data, it was very difficult, and now they It becomes very cheap and very efficient, so the current production of products, including services, is more and more accurate, not only can reach your pain points, but also can reach your shallow requirements, deep requirements, even yourself. Have not realized it yet. In addition, green production and consumption are becoming a trend, or are becoming a new standard, which is a very big pressure on product innovation.
Summarize the transformation and upgrading of traditional industries or discuss the return of product innovation to the root cause, the most basic contradictions and the most basic problems to be solved. The rebalancing between supply and demand emphasizes the rebalancing between supply and demand. The intelligence of supply, precisely meet the upgraded or personalized or the deepest effective needs of customers, why make this slogan justified. The second product innovation is still to surpass and defeat your competitors, defeat the competitors, in addition to survival, what are the benefits, that is, excess profits, the gross profit of all our industries must be excessive profits, normal profits are difficult to develop The so-called normal interest is the interest on the average deposit and loan of the bank, so the way to achieve product innovation can only rely on these two. Therefore, from the perspective of investors, it is very important that all innovations that can help solve the above problems mentioned above are worthy of our attention.
The different latitudes of product innovation, the latitude of investors, the extent to which your product innovation can be invested, and the current dual creation must rely on the means of capital. Then we look at it in detail, product innovation has many latitudes. For us, multi-dimensional thinking is very necessary. I hope that through multi-dimensional thinking, your product will eventually be compared with competitors and original products. What do you mean by the products that strike? For example, in the carriage of the streets of New York in 1899, the horse problem of the carriage was always difficult to solve, and the final solution was the emergence of the car. Therefore, we emphasize multidimensional thinking and downsizing.
The second point is that from the perspective of investors, the first is about the positioning of products, which is a product concept for products, narrow sense, tangible physical concepts, broad products and service technologies, and can be exchanged for value. Such things can become products or goods, and you become a commodity when you exchange success. First of all, when you are doing product innovation, it is very important to give innovation a position and what is your strategy.
For example, when you are innovating products, you must first consider whether the investors should pay attention to the industry and market where you are innovating. We often say that men are afraid of getting into the wrong line. . In the industry, in the current downward trend of profits, our net profit still has a growth of 6%-6.5%. Our source is the continuous decline of some traditional industries, and some emerging segments of emerging industries or traditional industries are emerging. The continuous increase of industry products has both a decline and a large number of rapid growth, so the choice of industry is crucial. If you choose the wrong industry and your product innovation is wrong, you may be very hard. When we choose specifically, there are some new standards, such as the scale of the industry, the market energy of the industry, how much should we have for such a large country, and the annual market size should not be lower than the scale of 100 billion yuan or more. Even the trillions of trillions of dollars in the market are worth doing, because there is room for growth, and if the market is small, you will be very hard. The size of the market is a very important indicator. In addition, if the entire market is large, there must be a product market segment. If the market segment is small, then your industry will be very tired and hard to do. In addition, when you choose the industry, you have to look at the industry. Trend, the future is a continuous growth, or a continuous decline, which is also very crucial. If you choose the wrong trend or judge the wrong trend, then your risk in product innovation will become very big. And there is the threshold. When you are making product innovations, your opponents are working hard, so you should consider whether it is high enough to exceed your existing competitors from your product innovation. This is an innovative product. The industry market in which it is located. And your position in the industry, generally this industry or the top three companies in this segment, if you are the top three in this industry, then your situation may be very difficult, of course, unless The market concentration is still relatively small and relatively scattered in the industry, and at the same time it may be ahead, that is, your product has opportunities, that is, the market's industry profits now and in the future, considering the future competitive situation, the first you have resources, the second The two conditions in your change are very important. Success is accidental. The probability of failure is far greater than success, so you have to consider the competitive situation.
There is also the threshold for product innovation as high as possible. Usually, it is the threshold of technology. At the same time, there are qualifications for policy protection and resistance, such as the qualification of medical products, and the limitation of capital scale. Accumulation, as well as the segmentation market is particularly large, can make the market threshold for products in innovation when the higher the better, and sustainable. Innovative product innovation sources, the usual innovations are nothing more than three sources. The first is the innovation of business models, and the innovation of institutional mechanisms. The third is technological innovation, innovation of business models and innovation of institutional mechanisms. It is easy in a country like ours. It is imitated, so in addition to the first-mover advantage of business model innovation, many areas should be cautious. Therefore, technological innovation is increasingly becoming a source of future product innovation. Technological innovation usually includes several types, such as original technological innovation, technology iteration, and technology import substitution.
Technological innovation has driven the field of import substitution from the beginning of reform and opening up. It sounds very old-fashioned, but import substitution innovation is very reliable, and the return on investment is very high. If the product you are making is import substitution, investors are willing to invest. Technological innovation, facing the forefront of the world's science and technology, the applicability of investment targets, facing the major economic battlefield, facing the major needs of the country. Also consider that in a relatively good field in our country, this product market is mainly in China, the cost advantage is mainly in China, the complete industrial chain is mainly in China, and there are non-market barriers. Always pay attention to financial analysis before making product innovations. There are many indicators, very professional indicators, and a very simple concept that brings you continuous cash income and continuous cash flow. This kind of product innovation is The real products that can really make money, the other models are bought by others, investors may not vote for you, of course, investors are also learning, you do not earn money for value financing, may take money but It's hard, so continuous cash flow is the most critical one of the financial indicators, even if you are losing money, as long as you have a continuous stream of cash. There is also a development trend for product innovation in the future. This is very important. I have made a lot of resources for innovation. Especially, there are fixed assets investment and market channels. After the customer's investment, there is a cycle if you Failure has been difficult to turn around during this cycle, so consider the continuing trend, the so-called growth. There are many indicators for growth, how to measure the growth of your product innovation, the simplest standard, for example, this year, with this year's growth rate, income and profit growth rate of more than 15%, if your growth next year More than 14%, I think it has an important growth rate.
There are other latitudes. If it is an industrial product, consider the integration of two technologies, industrialization and informatization. The field of intelligent manufacturing and consumption, service integration, industrial and military integration of industrial products, such as drones, unmanned ships, US military unmanned ships, domestic gross margin of more than 100%. When doing product innovation, there is actually a very ready path and method, not blind. I remember that there is a course called innovation in Jiaotong University. Product innovation has become a very technical thing, and there are rules to follow. If you make an analysis of the industrial chain of your product, each segment will find a lot of dozens of hundreds of product innovation points, and each point will be invested. For example, there are ten major areas in China's smart manufacturing. There are products in each field, and each product has parts. In each part of the research, design, testing, production, assembly, after-sales, all aspects are Innovation can be done, and such innovations are very reliable. They are all successful in combination with the industrial value chain. This is also an innovative way. For example, like the upgrade of consumption and the upgrading of modern service industry and its subdivision, it is divided into fine parts. For example, before and after eleven, I saw clothing in a city. Men's clothing has formal wear and underwear. For underwear, it can also be divided into men's underwear fabrics, production, consumption channels, etc. This is a tall market, we measure thousands. Billion-level market. In the field of consumption upgrading and modern service industry, in 2025 to 2030, the middle class of our country reached 850 million yuan, which is the world's largest production class, the most negative in the world, 850 million yuan you can imagine this 850 million yuan What is the concept of spending power. Last year, the number of outbound trips was 120 million, but in fact only 95 million people were leaving the country. After 850 million people became middle class, they went abroad once a year. Now they have become the world's largest outbound tour 850 million people. The number of people who left the country last year was 1.2 trillion. It is such a scale, so it is huge in every segment. The innovation here is also of concern to investors.
You can use a lot of modern technology, which is already familiar. The last means of innovation must be a multi-dimensional, the above elements are combined to do, then the amount of innovation you create will far exceed a single innovation. In the end, the latitude of investors is very simple and straightforward, and it is also very simple. It may not be the same as everyone's traditional innovation. Today is for your reference only, thank you!
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