Play cross-border risk 8 enterprises cross-border pig raising lost 5

Wanda invests 1 billion to raise pigs, Goubao bun mixed coffee, Letv sells hairy crabs, Lenovo grows blueberries, and animal husbandry companies run cemeteries. For most powerful enterprises, "not putting eggs in the same basket" has become a consensus, but the cross-border operation of the "sideline", which has nothing to do with the main business, can eventually help the enterprise to turn around. or make the enterprise hit the rocks and sink the ship? An Lin, chairman of Beijing Qiushi United Management Consulting Co., Ltd., said that at present, enterprises have a 50% chance of success or failure across the border.

The Cross-border Journey of Enterprises

2014 has been an unusually busy year for Alibaba. In addition to successfully listing in the United States, public data show that Alibaba invested and acquired no less than 30 enterprises of various types within a year, including e-commerce and logistics directly related to Ali. there are also media, video, transportation, sports and entertainment, online travel, application software and other fields. In particular, Ali cooperated with Evergrande strategically and invested 1.2 billion yuan to acquire a 50% stake in Evergrande Football Club.

Some media said that behind Tuhao's "unprofessional work", there is a deep strategic layout, upgrading the traditional e-commerce model, and through the acquisition of data that can be generated in the context of work, life, and learning outside of user e-commerce transactions, a virtual business social system has been established, resulting in a series of business models and value-added services.

In addition, following mineral water, grain and oil, Evergrande diversification is the next city, Evergrande Dairy Group officially announced that it has acquired New Zealand Kawaxiong Dairy in September last year. Due to the back of the real estate, Evergrande's buildings will also join the sales channels of infant formula milk powder, consumers can order products on the spot in the real estate sales office.

In this regard, there are doubts in the industry. Li Zhiqi, a marketing expert, said in an interview with the media that Evergrande is a cross-border operation after all, and many problems can not be solved by money. It takes time for the fast consumer industry to attach importance to the talent team and the construction of market channels. Coupled with the fierce competition for mineral water in supermarkets, hotels and convenience stores, it is not so easy for Evergrande to gain a share in these areas.

In June 2014, Amazon and the California government reached an agreement to inject $55 million over five years, focusing on testing a variety of interconnected home hardware. The plan is described as "electronic equipment research and development".

It is understood that Amazon has already begun testing devices that "users can order products from home at the touch of a button" and will engage in hand-to-hand combat with tech giants Apple and Google in the smart home field. A person familiar with the matter told the media that Amazon's experiment is still in its early stages, so it is not clear whether the final product will be on the market, but it is inevitable to enter the smart home market.

In July 2014, Samar clothing entered the children's education and training market. Signed an "asset purchase agreement" with Hong Kong Ruizhi Group Co., Ltd. to buy 70% of Yuhan Information Technology Co., Ltd. Sema said that in the future, the company will continue to carry out investment mergers and acquisitions and resource integration in related industries such as children's education, animation, film and television, and games, so as to build the company into a comprehensive one-stop service platform for children.

According to industry insiders, after years of operation, Senma clothing has successfully operated the children's clothing business dominated by the Barabara brand, and has achieved a leading position in China. At present, in the children's business, the company has more than 3500 stores, more than 5 million VIP customer resources and more than 400 full-time employees. The e-commerce company has obvious advantages in channels, customers, management capabilities, product development, supply chain resources, online and offline business. Senma enters the children's education and training market and combines the company's advantages to carry out the integration of resources in China's children's education market, which will help to promote Yuhan's development into a leading children's education enterprise in China.

In September 2014, there was news that Bill Gates was going to launch the world's thinnest condom. It is reported that Gates has provided $100000 in sponsorship to the University of Manchester in the UK to develop condoms using the ultra-light conductive material graphene, and $100000 to the University of Oregon in the United States, which plans to use polyurethane to make condoms, which is less than half the thickness of the thinnest condoms on the market.

However, some enterprises play cross-border wind unboiled water, some enterprises cross-border but decline, just like the pig boom some time ago.

Cross-border pig raising tide

After investment banks such as Goldman Sachs and Deutsche Bank raised pigs in China in 2008, many domestic giants raised pigs one after another. These include Fosun Group, Lenovo Group, NetEase, Guangzhou well-known real estate enterprise Merrill Lynch Group, Shunde listed chemical company Demi Chemical and so on.

Raising pigs, chickens, growing vegetables, selling red wine, early childhood education, water and electricity maintenance, car rental. As a leading enterprise in the iron and steel industry, WISCO has carried out a series of attempts in the non-steel industry, trying to break through the current situation of overcapacity in the iron and steel industry.

Steel prices fell by more than 10 per cent in 2014. Although the price of iron ore has fallen and the efficiency of the industry has improved, the whole industry is still facing a situation of low demand. At present, the crude steel production capacity of our country has reached 1.16 billion tons, and the overcapacity ranks first among all industries. The reporter calculated that based on the current rebar price of about 3000 yuan per ton of steel, the average price of steel is 3 yuan per kilogram of steel, while the price of pork is already 25 yuan per kilogram, and the price of one kilogram of steel is less than 150g of pork.

There is no doubt that CISA supports the development of non-steel industry in steel enterprises, and it is even required to rise to a strategic height. "Iron and steel enterprises around the main business, the development of non-steel industry, to achieve appropriate diversification, is no longer a local problem, tactical problem, but related to the enterprise sustainable development of the overall problem, strategic problem." Zhang Changfu, vice president and secretary-general of China Iron and Steel Association, once said.

It is not just WISCO, but it has almost become a concerted action of large and medium-sized steel mills across the country, whether it is mine resources, machinery and equipment, processing and distribution related to the main business of iron and steel production. Or less related areas such as real estate investment, financial services, and even green farming.

Although these transformational measures are imminent, the situation of enterprises that have entered the pig-raising tide is not good. According to relevant data, five of the eight listed companies involved in large-scale pig breeding and processing business have suffered business losses, and the rest have also experienced a sharp decline in performance.

Some transitional enterprises said to the media that after years of market training, the pig industry is still a bit green, and the cost of financing increases with the changes in the market, including the advance setting of various rules and terms. the market valuation for the pig breeding and processing industry continues to fall, and the most direct consequence is that the profit space of funds is narrowing day by day, and the capital chain is difficult to maintain.

Wu Xianming, director of the multinational Enterprise Research Center of Wuhan University, believes that there are no more than two reasons for cross-border enterprises. one is that the main business is forced to transform because of poor management. Second, there are good opportunities and financial conditions to carry out long-term strategic layout.

"there are more cases of forced diversified companies to fail, resulting in greater losses." Wu Xianming believes that in the case of pig farming in iron and steel enterprises, for example, due to the crisis of overcapacity, enterprises seek to develop cross-border breeding sideline to survive the cold winter of development, but they have not improved at present. The price of live pig market fluctuates obviously, and the market has a high demand for a complete industrial chain, large farms are difficult to cope with market changes, and small and medium-sized breeding is more difficult to gain a firm foothold in the market. Cross-border operation of enterprises, there is no pig breeding-related business system, this kind of "urgent medical treatment" will bring greater risks to enterprises.

Expert: crossing the border is a double-edged sword.

Should we cross the border or not? How to cross the border? This makes many entrepreneurs struggle.

Cross-border failure cases can be found everywhere, and there are not a few successful cases. An Lin, chairman of Beijing Qiushi United Management Consulting Co., Ltd., said that the overall situation at present is that enterprises have a 50% chance of success or failure across the border.

"it is important whether business development is relevant or not, which can affect the success rate across borders." Professor Wu Xianming said that the operation of cross-border enterprises is generally divided into two types, one is related diversification cross-border, the other is unrelated diversified cross-border routes. At present, the cross-border operation of some enterprises take the route of unrelated diversification, the cross-border areas of these enterprises are not related to their original industries, because they are not familiar with the cross-border areas, their cross-border exploration is often full of risks.

Wu Xianming said that the main business of some enterprises is not clear, the development strategy is not clear, and there is already a crisis in themselves. choosing to enter a certain industry "urgently and randomly" before the capital chain is about to break will bring greater risks to the enterprises. the decline of the pig boom well illustrates this point.

"as far as the enterprise itself is concerned, it must be avoided that when the main business is in trouble, it is' urgent to seek medical treatment at random 'and is forced to carry out diversified cross-border operations." He believes that blindly forced to choose an industry to cross the border, often intensify competition in the industry, put himself in a more disadvantageous position, once failed, often cause great losses. In the light of their own actual situation, enterprises should fully investigate and study the business that is going to enter the industry field, and carefully choose their own cross-boundary road.

"the cross-border development of enterprises, it is best to have the support of relevant business, so that there can be a relevant business information sharing platform to meet customer needs, cross-border success will be higher." Wu Xianming believes that cross-border can magnify profits and reduce the risk of putting eggs in the same basket, which may provide further room for development in the short term.

He also mentioned that if there are enough funds to invest, recruit relevant talents, the barriers to industry entry are not high, seize rare opportunities, and carry out unrelated diversification across the border can also be successful. "therefore, Wanda, which now has strong financial strength, has also invested 1 billion yuan in pig farming, it is not necessarily a failure."

For enterprises preparing to cross the border, Wu Xianming believes that at present, some industries that are well developed and more suitable to enter, such as finance and service industries, have great potential for development, and their markets can be further tapped; in addition, industries with a certain degree of monopoly, regulation and high barriers to entry can also gain income if they meet the standards and can enter. There is also a broad space for development in emerging industries that do not have many people.

"Enterprises should know themselves and enemies, seize opportunities, ensure adequate financial support, and constantly innovate their own management capabilities in order to be prepared to fight a cross-border battle with confidence." Wu Xianming said finally.

(article source: Changjiang Business Daily)