Since entering society, I have been intentionally learning and thinking about the knowledge of enterprises. Whether as a grassroots employee or occasionally being promoted, I have never given up on studying and researching corporate knowledge.
I have found that the most easily lost core competitiveness of Chinese enterprises is their identity, often getting lost in the pursuit of profit, sometimes leading to absurd situations like looking for a horse while riding one or biting the leg to protect food.
Since China's reform and opening up was not initiated after educating talents, but rather decisively opened in response to the trend of the times, most entrepreneurs are self-taught. They have navigated the situation relying on certain advantages, and their self-assessment is often overly optimistic. Without policy protection, it is difficult to gain a competitive edge in globalization.
Of course, there are exceptions, such as Huawei, but this is based on their extraordinary insights, which were not recognized by most entrepreneurs before Huawei emerged, and many even predicted their decline.
For a company, understanding its core competitiveness is extremely important. Unfortunately, when you ask this question, the response is often superficial, lacking awareness of the question's significance.
Some only stay at the verbal level, but when it comes to specific actions, it changes flavor. They use the mindset of running a street stall and a penny-pinching financial awareness to implement surgical-like profit divisions with any parties involved in or about to be involved in profit relationships.
I once worked at a small company that indeed made a decent profit in its first year, so in the second year, it became complacent. While studying how to increase profits, it completely abandoned the previously held customer-first philosophy.
It discovered that certain products were selling well, so it began to raise the export prices of those products, believing that as long as the export prices increased, unit profits would rise, and based on past sales volumes, its own profits would surely increase.
Partners collaborating with it saw the warning signs of price increases and began to stock up on certain products because, after a year of promotion, some consumers had recognized the product. If it were suddenly taken off the shelves, it would inevitably affect their business. However, if they also followed suit with price increases, they would start to think because raising prices is a double-edged sword.
Some partners chose to continue selling at the original price, even though profits became lower, because they believed consumers were more important. Faced with increasing competition, having a consumer base is equivalent to having a market.
However, they also calculate costs. When selling at the original price, if the costs are too high, they quietly choose substitutes or similar products. After partial testing, if they find the effects are not significantly different, they start to promote the new product. If the new product can become popular after a brief promotion, they will choose to shelve the original product or even directly request a return.
If the new product does not become popular after a brief promotion but has late-mover advantages, in order to gain greater profits during busy seasons, they may choose to dump products they do not plan to cooperate with long-term, disrupting the market price of that product. Even if the owner later transfers the product to their store, it will be difficult to sell.
After conducting surveys, I reached two high-frequency conclusions. Some merchants reported that cooperating with this company is unsafe; as long as a product sells well, it will inevitably increase in price, so they are reluctant to promote it. The reason they still choose to sell this product is that customers will actively come to them. They do not want to lose these customers because as long as they come, they can promote other products. Some merchants reported that they originally sold it as part of a package with other products, which is why it had such good results from a technical perspective. Now that it has been marked up, they can no longer form such packages. Rather than lose loyal customers due to price increases, they prefer to seek alternative solutions.
Therefore, in a buyer's market, rashly raising prices on well-selling products is not a wise move, especially without adequate market research and thinking it is a simple math or financial problem, which is utterly ridiculous.
It is not that price increases cannot be made, but they must be based on investigation and research. For example, are different regional markets experiencing different market environments? What specific reasons are behind the good sales of certain merchants? Are partners sensitive to price or to relationships? These factors must be understood; otherwise, it is easy to shoot oneself in the foot.
However, this method of raising prices may be based on past experiences of a company, believing that as long as it is used continuously, it will always work. However, it ignores the subtle changes in specific conditions from the past to the current market.
For example, the past market may have been in a period of market dividends, where possessing quality resources meant there were no sales issues, and the market was in a seller's state. In such cases, price increases could still lead to booming sales.
Or in the past, partners were passively choosing due to certain cooperative conditions, but today the conditions have changed, and they no longer have to choose, having already established a relatively complete sales user system.
Therefore, failing to understand these issues and simply discussing with accountants to think that price increases are possible, then calculating greater profits based on past static sales, is clearly mechanical thinking.
I have long recognized these situations, but unfortunately, there are always people saying that finance is paramount, allowing financial management to direct marketing, so all business personnel are passively obedient. Just think about how great a risk this is.
At the same time, applying the same policies to old and new markets is also a continuation of this problem. The old market has some well-established cooperative relationships with clients who know how to navigate related products, but what about the new market? New market clients are not only unfamiliar with your products but also have a low understanding of the company. Building relationships takes time. Today, the purchase price is one thing, and soon after, they are told that prices have increased again. This rollercoaster-like sales relationship will cause them to lose the sense of security in cooperation. Even if a product seems to be opening up sales channels, they will hesitate and quickly look for alternatives. Some decisive clients may even proactively say they will no longer cooperate.
Therefore, for the new market, cultivating customer relationships is very important, sometimes requiring the sacrifice of temporary profits. For the old market, maintaining customer relationships becomes less important; instead, it is more about providing effective sales solutions and sales capability support to clients.
I found that the leaders back then got this relationship wrong. They were obsessed with maintaining customer relationships in the old market, weakening sales solutions and sales capability support, believing that the other party would definitely be stronger than themselves, allowing the market to run wild. As a result? They would think this company has no prospects; apart from supporting products, it seems to have no other commendable capabilities. Do you still think you can raise prices and exploit them? No way!
As for the new market, the leaders back then always focused on proposing sales solutions and sales capability support, even when the relationships were not yet solid. They rushed into a big leap forward, which gave the impression of wanting to teach others how to do things, while there were various problems in their own cooperation. Failing to grasp the main contradiction is the key reason for the new market's inevitable failure.
In summary, companies must always remember and be vigilant against behaviors that deviate from their core competitiveness, because after N years, the consequence of deviation is that all the hustle and bustle leads to nothing more than making a wedding dress for others.