2022 is a year of ups and downs. With the recurrence of the COVID-19 and the dramatic changes in the economic environment, the downward pressure on China's construction machinery industry has increased sharply after five consecutive years of upward cycles. Under the background of overlapping times, how can each participant in the value chain of China's construction machinery industry go through the cycle of industry and macro environment to achieve sustainable win-win development? How to redefine the value of the industrial chain and rebuild the business model?
2022 China Construction Machinery Marketing&Post Market Conference was officially opened on September 15. This conference gathered influential people from China's construction machinery industry, built a high-level communication platform, talked about "going through the cycle", and looked forward to the future with colleagues.
Mr. Cao Weiguo, Chairman of Zhejiang Liyang Machinery Co., Ltd., gave a speech entitled "How do agents go through the cycle?" We shared with you how to understand the "new problems" of this cycle and this downward cycle, and then determine our own cross cycle "strategy" to actively respond to challenges and survive.
Understand this cycle
China's construction machinery agent industry is experiencing a major turning point of "multi wave superposition". On the one hand, the cyclical downturn of the macro-economy under the influence of many factors (international relations, real estate regulation, epidemic, etc.) is closely related to the industry; On the other hand, the cyclical downturn of the industry itself, after six consecutive years of sustained growth, will return to a significant decline in 2021 after an unusually large sales volume, and will continue for another 2-3 years.
Over the years, the traditional and classic business model of "focusing on gross profit of complete machine sales" of agents has been subverted, and the continuous increment has changed into the stage of "stock market". Overcapacity, extreme price war, overall loss of the industry, huge inventory, significant downsizing and other contradictions among various stakeholders in the value chain are prominent. As the link with the least voice, agents are also the closest link to the epicenter, which is greatly affected.
It mainly includes the following aspects:
The bad debt risk of low threshold credit sales has emerged, with serious problems in some areas;
More new problems and uncertainties will be brought about by the switching of emissions from three countries to four countries and the competition of new energy products in non road machinery countries;
The share of domestic brands continues to grow, and brand concentration continues to change and improve. It is estimated that 40% of brands will be "out or substantially out" in 2-3 years, and 50% of agents will be "out".
Correctly understand and rationally judge to determine their own cross cycle "strategy"
The boss should review the company's business development from a strategic perspective, and the employees should evaluate their job pursuit and adhere to long-term value.
First, "we must find a way to survive".
What is an agent's "survival"? There should be no "three important indicators" missed at all:
First, do not break the cash flow. The main reasons for agency cash flow disruption include: huge overdue receivables; Be required to perform huge joint and several guarantee liabilities for customer credit sales; Occupy funds to buy out inventory, and cash flow fails to "roll" in time; Huge stock of overdue mobile phones stored in garage and exchanged for new ones; A large number of equipment that can not be rented accumulates a large number of equipment.
These problems need to be fully evaluated by the agents in a timely manner, and the cash flow measurement should be done every month. At least one year's risk prediction should be done, and even the plan for 2025 should be made.
This is the first problem that agents should pay close attention to in order to "survive".
Second, do not make huge losses. General agents rely on years of accumulation, it doesn't matter if they lose a little, it doesn't matter if they lose a little, but you should not lose all. Because there was a precipitous decline in 2014 and 2015, many companies failed to adjust their expenses in time, resulting in losses of tens of millions or even hundreds of millions of yuan.
Third, do not lose core staff. This includes excellent sales, technical service personnel, management talents, etc., which is another important sign of healthy "living". As far as agents are concerned, people are the core. All abilities and competitiveness of agents depend on people.
There are many indicators to evaluate an agent, but to avoid cash flow disruption, huge losses and staff turnover, I think these are the three important indicators for an agent to "survive" without any loss.
Secondly, the essence of the agent's ability is "efficiency", and the improvement and competition is also "efficiency".
The three core factors that affect the operation of agents are: "macroeconomic environment", "brand competitiveness of agents" and "agents' own strength and ability". Only "own ability" is the "variable" that agents can act as; The essence of agent competitiveness is "efficiency", and what is improved and competed is also "efficiency", which reflects and tests a company's organizational system decision-making ability, basic management, refined management, management culture and execution culture.
Per capita efficiency (per capita number, per capita sales, per capita gross profit, per capita number of service desks...);
Turnover efficiency of capital, assets, inventory and receivables;
Cost efficiency and cost efficiency;
Working time efficiency
How to improve efficiency?
In the current market environment, we should find ways to increase the number of elements and increase the source of income.
The agent shall pay attention to the accessory market, especially the accessories for special applications; Pay attention to post market income, especially the accessories market; Promote paid maintenance fees.
Zhejiang Liyang has been building its post market capacity for many years, which has gradually become the core advantage of Liyang. The "good opportunity and benefit" platform participated in the construction has become one of the successful business models in the post market.
There are also many agents in the industry exploring business leasing, engineering construction, mining shovel subcontracting and other businesses. However, we must realize that only core competitiveness and core competence can we build a reasonable business model and win in the competition.
Plus can also think in a divergent way to innovate and increase income, such as online marketing and integrated complete equipment solutions.
To improve the efficiency of agents, we must focus on the main contradictions, and at this stage, we must reduce the denominator, fine management and reduce expenditure.
It is not the best way to cut down the payment of wages and bonuses and adopt simple and crude layoffs, but to use the most economical and efficient people.
Secondly, the freight of the whole machine is reduced. In 2020, Zhejiang Liyang will again implement the whole machine freight control, saving 12% of the whole machine freight and reducing the freight by nearly 1 million yuan a year.
There are still many details about the operation and management of the agents, including car oil costs, repair costs, annual audit fees, travel expenses, etc., which can be very effectively refined to control each link.
In addition, we should be cautious about expansionary investment, and we should not "gamble" with luck. In the downward phase of the market, there will be many business opportunities, but we must fully analyze, evaluate, calculate, and invest cautiously.
Improving operational efficiency is not achieved overnight. It requires constant accumulation, cultivation and suffering to establish, and once formed, it will become the core competence of the company and transform into core competitiveness. The best state of agents should also be to achieve good performance, high income and high salary with high efficiency.
Make up for lost sheep and keep learning to actively cope with the downward cycle
Today, the scale and management complexity of China's construction machinery agents are very large and high. Many problems are covered up in the rising period, peak period and high tide period of the industry. The problems and crises revealed in this round of "ebb tide" will be ten times stronger than those from 2011 to 2015. Today's problems include not only the objective laws of the traditional market economy, but also the characteristics of the Chinese market and the new problems of the progress of the entire era. The most important responsibility of the agent boss is to deal with the "important things" "in advance" to prevent problems from occurring. Otherwise, it will be necessary to "step on the brake" all day long and deal with various problems and crises of the company "like fire fighting".
We should not just be confused, confused, and hesitating. We must actively face problems, keep learning, exploring, and innovating, and improve the company's decision-making system, basic management, staff quality, implementation culture, and legal compliance awareness. Exploring new growth points and building a new business model can be more efficient to cope with rapid changes in the environment and market and prepare for a deep fall.
Specific implementation method: adjust the implementation based on PDCA (Plan, Do, Check and Act processing).
Find out and understand problems. Learn to collect the quantitative industry average, median and benchmark levels of various management and evaluation indicators of agents, especially the detailed indicators related to per capita sales, per capita gross profit, per capita sales desk, per capita service desk, per capita management desk of credit sales, per capita management desk of sales support, financial personnel and administrative personnel.
The "agent success model" pursued by Zhejiang Liyang is to achieve the best brand performance, the best company benefit and the highest employee salary with high efficiency, of which "high efficiency" is the fundamental. The core of adjustment and implementation is also to "add numerator and subtract denominator" to improve efficiency. The essence of agent ability is "efficiency", and the rectification and competition are also "efficiency". Per capita efficiency should be refined to the above detailed indicators. Based on the turnover efficiency of capital, assets, inventory and receivables, we should forecast cash flow and control expense efficiency, cost efficiency and working time efficiency. These details have been detailed in the previous article "Crossing the cycle".
At the same time, we should always have a sense of crisis and constantly learn, explore and innovate business models such as "online marketing, post market, operating lease, accessory sales, special application modification and second mobile phone auction platform".
Then, formulate the "advanced and operable" rectification objectives, decompose and implement them to departments, personnel, required completion time, define the evaluation criteria and reward and punishment criteria, and then check and evaluate them according to the time nodes.
China is still at the peak of construction and is still the world's largest construction machinery market; The huge stock market contains a hundred billion level post market blue ocean; Channels are indispensable, capable and high-quality channels are the core resources... We must fully realize that at this stage, it is the opportunity to integrate channel resources and brands based on their respective strategies and long-term goals, and to surpass the competitors. This is the rainy day and turning opportunities for F1 racing!
