The term "involution" originally described a kind of ingrown shell, which became more and more curled inside, but its growth was completely invisible in appearance.
The first to put forward the concept of "involution" was anthropologist Clifford Geertz, who published a book "Involution of Agriculture: The Process of Ecological Change in Indonesia" in 1963, which explained it with "involution". The agricultural society of Java Island has not broken through for a long time. The agricultural economy is becoming more and more refined, and the unit land investment is increasing. However, the increase in grain output is limited, which cannot offset the increase in labor costs, and finally forms a phenomenon of equilibrium.
Anthropologists interpret "involution" as a society or organization that has neither sudden development nor gradual growth, but self-repetition on a simple level. This term suddenly became very famous in 2020, because people realized that "involution" is the most appropriate term to describe their current living conditions: fierce competition, competition for scarce resources in society, and do their best to squeeze the survival of others Space in order to allow oneself to gain a competitive advantage, but it results in mental internal friction and huge waste. From entering school to finding a job, from love to marriage, from market competition to career promotion, "involution" is everywhere, making people anxious. "Introduction" is like a kind of "gyro-style endless loop that keeps beating oneself", making people unable to see the way out.
In the article "Prisoner’s Dilemma, Nash Equilibrium, and Price War Analysis", the author tells the story of a shoe store competition in a small town in Italy. Because a new shoe store opened by the Chinese broke the original market balance, the shoe store From the original 955 to the 996 working mode, the result is that working hours have become longer, labor costs have increased, but income has not increased. This is the legendary "Prisoner's Dilemma", a typical "involution".
Without innovation, the result is bound to be "involved" and into a dead end. Just like Chinese parents know that there is not much value in their children going to extracurricular tuition classes, but they have to sign up for their children and spend money to do meaningless things, because other children are participating, and they dare not not do it.
The "involution" of the construction machinery industry is also very serious. The first is the price war. Other companies cut their prices for promotion. Do you dare not participate? If you don’t follow up, it means that your customers may buy products of other brands. Do you dare to take this risk? You cut the price by 50,000, and he also The price is reduced by 50,000, and the result is that you have reduced your income, but you have not gained any market competitiveness. It is easy to reduce prices and increase prices are difficult. In 2020, the construction machinery market will hit a record high, but many agents have suffered serious losses.
Then there is credit sales. The competitor’s down payment is 30%, and we reduce it to 20%. For the sake of competition, some people reduce it to 10% or even lower. Everyone wants to sell the equipment in full, so that the risk is the lowest, but the result of "involution" makes the down payment lower and higher, and the risk is higher and higher. Once the market fluctuates, can such large accounts receivable agents afford it? The lesson a few years ago seems to have happened yesterday, but many people firmly believe that it will never happen again.
"Free service" is a more typical "involution". Some companies initially had less reliable equipment quality. In order to let customers have no worries, they shouted the slogan of free service for life in order to promote the sale of the whole machine. However, after the slogan was shouted, other companies followed up with the slogan of free service. The result was that the company gave up the service income, but did not get one more customer, and it made the service staff feel worthless. More labor is paid, but the gain has not changed. This is "involution."
The same is true for working hours. In many Chinese companies, the working hours of employees far exceed the legal time. Under the 996 culture, how can the subordinates dare to leave the office if the leader does not leave the office? The result is another kind of "involution", and the salary looks good, but Once you calculate the total working hours per month, it is difficult to calm down. The weekend breaks and time with family are all included. What is the meaning of work?
Of course, the agents are not immune to this kind of "involution". The construction machinery industry is highly integrated competition. The OEMs have set annual market goals. Who dares to raise objections to the agents? The OEMs want everyone to look for this year’s goals without hesitation. At all costs to achieve this goal. On the surface, the agent and the OEM are two independent companies. The two parties are completely equal in cooperation, but when will they be truly equal? If the sales task is not completed, the agency will be cancelled, and all previous investment will be wiped out. This kind of competition does not allow failure and withdrawal.
When the market declined a few years ago, how many of the agent bosses who withdrew were sued by the OEMs? Freezing property, restricting travel, and bankrupting the property. The cost of failure and withdrawal was too great to bear, so agents "lost money and earn money" The strange phenomenon of yelling, selling one and losing one, has made market competition very impure. In order to complete the task of the main engine factory, it bears huge risks of accounts receivable and creditor's rights every year, day after day, year after year, when will this kind of "involution" end?
Of course, the "inner volume" will also penetrate into the parts warehouse. After years of operation, the sluggish rate in the spare parts warehouse of the agents is increasing. They hope that the OEM can help them revitalize the inventory and reduce losses. It is a pity that OEMs are most concerned about selling more accessories. Activating sluggish inventory will inevitably affect their sales performance. Who would do such a thankless thing? OEMs even link the agent’s parts procurement task with the whole machine sales rebate. , Forcing agents to purchase if they can’t sell it, put it in the warehouse first, at least if they can’t sell it this year, they can continue to sell it next year. Unfortunately, next year’s spare parts task will be even higher than this year, and finally spare parts inventory is getting bigger and bigger, and there is a backlog of more purchased spare parts, so we have to deal with discounts and promotions. The result of the discount not only destroys the price system, but also makes it more difficult to complete the procurement task after the accessories promotion, forming a vicious circle. This is the consequence of "involution".
"Internal volume" also affects end users. It is said that the price of equipment is getting lower and lower, and the end user should be the beneficiary, but it is not. The purpose of price cuts and free services of OEMs is only one: to sell more equipment and digest their serious excess capacity! The result? There are more and more oversold equipment on the market, and the operating rate is declining, and the "involution" is naturally passed on. To end users, it becomes more difficult for them to make money. In order to guarantee the return of the bank's money, many users have to reduce the price to rent, and contract projects at low prices. The "involution" makes every link in the value chain more difficult.
Now, the product quality of many domestic brands is already very reliable, but no company dares to take back the promise of "free service" because they are afraid of losing customers to competitors for this reason. Some OEMs maintain a service team of thousands of people. Both on- and off-guarantee services are free. They know that service costs are rising, but gritted their teeth and continue to insist. Knowing that they have entered a dead end, they still can’t see where the end is. They can't stop and don't dare to take the risk of stopping, so they can only continue to move forward in a dead end. This is "involution."
A few years ago, in the difficult days of a sharp decline in the market, the OEMs gave up on assessing the sales and market share of agents. In recent years, as the market has recovered, the two OEMs’ favorite performance indicators have returned. Up. The product lacks differentiation, and the service is given out for free. The "killer" of the agent promotion is only one way to reduce the price. The result is that the price is raised but the price is actually reduced because the performance indicators are pressed there. Obviously knowing that the "inner scroll" is a dead end, but they have to continue to rush forward, because behind them are the sales representatives of the OEM.
When the "involution" causes the OEMs, agents and end users to make no money, that is the end of the industry. Many people hate these "involutions" in the industry, but they are powerless. Every company pursues market share, how can I turn a blind eye? Just the market share rankings can make people feel full of accomplishment. Everyone is fighting a price war. How can I just sit back and watch? Other brands offer free services. Can I charge? Yes, if your product does not have a selling point that attracts users, you certainly have no other choice.
"Involution" makes everyone in the industry feel more anxious. The OEMs are anxious about how to digest the excess capacity, how the agents are anxious to complete the tasks of the manufacturers, how the employees are anxious to get the year-end bonus, and where to find the engineering project for the users' anxiety. How to settle the project money... The air seems to be filled with anxiety, which makes happiness farther and farther away from us.
The diligence of the Chinese has magnified the magic of "involution", and can even make a sunrise industry survive. Everyone in the industry has had similar experiences, growth, decline, digging, layoffs, riches, bankruptcy, prosecution, rebellion... …The ups and downs of the company, the joys and sorrows of employees. Unfortunately, in the next industry cycle, we may return to the origin and repeat the same tragic and joyous story. This is what anthropologists call "involution."
If you don't get rid of the "involution", the enterprise can only repeat at a low level, and it is difficult to develop. "Overtaking on a curve" will always be just a dream. No one wants this ending, but everyone just shrugged, "What does this have to do with me?" It shows that I can't do anything about it. Why don't we start from our own company/department, start from me, start from the side, and change this situation?
The key to getting out of the "involution" is to improve efficiency. The real way out lies in product technology innovation and customer experience. Only by making product differentiation and service differentiation, and increasing customer viscosity, can companies have the freedom to choose. In any case, there is one thing everyone knows: "involving" will only make us farther and farther away from our desired goal.
