Economy Talk丨Fan Lipo: To build a world-class enterprise, we need to focus on key areas
(Source: People’s Forum Network 2020-06-09)
The COVID-19 epidemic has intensified economic competition among countries. It is first-class enterprises, especially world-class enterprises, that support the economic strength and output capabilities of major countries. The report of the 19th National Congress of the Communist Party of China proposed to “deepen the reform of state-owned enterprises, develop a mixed-ownership economy, and cultivate world-class enterprises with global competitiveness.” In 2018, General Secretary Xi Jinping pointed out at the private enterprise symposium that "the new generation of private entrepreneurs must inherit and carry forward the spirit of the older generation of hard work, daring to venture, focus on industry, and do the main business, and strive to make the enterprise stronger and better. Private enterprises must also expand their international horizons, enhance their innovation capabilities and core competitiveness, and form more world-class enterprises with global competitiveness."
A world-class enterprise should maintain its global leading comprehensive strength and market competitiveness in the industry for a long time, dominate the allocation of international resources, and be a leading enterprise with voice and influence in global industrial development. The core supporting elements of world-class enterprises should include first-class products and services, first-class technological innovation capabilities, first-class management and governance mechanisms, first-class multinational operating capabilities and first-class corporate value culture.
The evaluation criteria for first-class products and services mainly include large enterprise scale, absolute product market share, reasonable economies of scale, strong profitability and good brand value. Products, services and brands with high quality and excellent reputation are the basic conditions for becoming a world-class enterprise.
The evaluation criteria for first-class technological innovation capabilities mainly include strong independent innovation capabilities and core competitive advantages, core technologies with independent intellectual property rights, and obvious advantages in developing strategic emerging industries. World-class companies pay more attention to original technological innovation and invest huge amounts of money. Once successful, their innovation results often have a huge or even revolutionary impact on an industry, the country where they are located, or the world. Continuous innovation and development of core technologies are the basic characteristics and conditions of world-class manufacturing multinational companies.
The evaluation criteria for first-class management and governance mechanisms mainly include standardized, standardized and process-oriented management systems; constantly summarizing and developing scientific management methods to achieve professionalization, rationalization and scientificization of the organizational structure; and the ability to make appropriate governance arrangements for the complex relationships between shareholders and an increasingly broad range of stakeholders. Adopting and implementing a modern corporate governance system and continuously innovating the management system are the internal guarantees for the sustainable development of world-class enterprises.
The evaluation criteria for first-class transnational business capabilities mainly include enterprises entering the track of global development, strong international business capabilities and operational capabilities, and possession of internationally renowned brands. World-class companies have markets and customers all over the world, and their product marketing, sales, after-sales services, and related management capabilities all exhibit global distribution characteristics. World-class enterprises need both international vision and international business practices to compete globally on the merits of strategic positioning, operational management efficiency, and external transaction costs.
First-class corporate value culture evaluation criteria include attaching importance to leadership building, establishing a learning organization, having an advanced and unique corporate culture and strong social responsibility. Building and forming a corporate culture and values that are suitable for the characteristics of the enterprise and industry, unite people and enhance competitiveness, are the internal foundation for the formation and development of world-class enterprises.
The COVID-19 epidemic has intensified economic competition among countries, and has also brought various risks to enterprises, including rising costs, shrinking orders, deteriorating export and investment environments, and increased uncertainties in the external economic environment. After experiencing the COVID-19 epidemic, world-class companies have derived more new connotations.
First of all, world-class enterprises must have a complete risk management system, strong risk management and control capabilities and core competitiveness for sustainable development.No matter what kind of internal and external environment they are in, world-class enterprises need to have the tenacity and ability to transcend economic cycles and industrial changes, always maintain the world's leading competitive advantage, and achieve sustainable development under highly changing market environment conditions.Secondly, world-class enterprises need to have good dynamic adaptability.Be able to dynamically adapt to the changing external environment, and be able to continuously revise and update corporate development strategies to achieve long-term goals based on a correct understanding of external environmental factors and internal resources and capabilities, ensuring that the company's business management activities are always guided by correct strategic orientation.Thirdly, it has the world's leading industrial scale and industrial chain system.World-class enterprises often take the enterprise as the core and have a relatively complete, globally distributed, and strong cost advantage industrial chain system. Competition among world-class enterprises is not limited to competition between individual enterprises, but increasingly manifests itself as competition between enterprises and their industrial chains. World-class enterprises make use of their own strong industrial chain coordination and allocation capabilities, and by formulating output industry standards and rules to search, compare and fix high-quality industrial chain partners on a global scale, they can allocate resources more flexibly and efficiently, achieve the lowest transaction costs after global evaluation, and gain greater competitive advantages.
Building a world-class enterprise with global competitiveness requires efforts in key areas.First, strengthen strategic orientation and clarify the development direction for cultivating world-class enterprises.Integrate corporate development strategies into the overall development of the country, realize the transformation from scale and speed to quality and efficiency, and provide strategic support for achieving high-quality development and cultivating world-class enterprises with global competitiveness.
The second is to comprehensively deepen reform and enhance development vitality in cultivating world-class enterprises.Only by comprehensively deepening reforms can we effectively remove the institutional barriers that restrict high-quality development, fully unleash the intrinsic vitality, development momentum and market competitiveness of independent market entities, and accelerate the construction of world-class enterprises with global competitiveness. We should take the lead in the major article of supply-side structural reform, speed up the disposal of inefficient production capacity, and improve the quality and efficiency of corporate operations. We should seize the opportunity to organically combine the mixed ownership reform of state-owned enterprises with the transformation of operating mechanisms to achieve mutual reinforcement and common development of various ownership capitals.
The third is to implement innovative development to stimulate endogenous motivation for cultivating world-class enterprises.Nurture strategically forward-looking research and development of key core technologies, strive to achieve breakthroughs in key areas, and at the same time increase intellectual property protection and improve the effectiveness of intellectual property protection. Comprehensively promote management innovation, continuously optimize management concepts, improve management levels, and achieve refined management. Give full play to the synergy of innovation elements and accelerate the construction of a technological innovation system that is enterprise-centered, market-oriented, and deeply integrated with industry, academia, and research.
The fourth is to implement precise policies and cultivate world-class Chinese state-owned enterprises.From "managing enterprises" to "managing capital", we will systematically deepen the reform of state-owned assets and state-owned enterprises with the goal of enhancing corporate vitality, and promote a group of large state-owned enterprises with the foundation and conditions to become world-class enterprises with global competitiveness as soon as possible. Fully support world-class private multinational enterprises, create various environments conducive to the transnational development of private entrepreneurs, formulate and implement corresponding policies, laws, and regulations, and actively cultivate and support the growth of private multinational enterprises.
The fifth is to improve the incentive mechanism for the introduction and cultivation of innovative talents and continue to stimulate innovation potential.Explore business model innovation. Through the integration of industry and finance, we will greatly expand strategic emerging industries. Carry out international operations and expand market space for cultivating world-class enterprises.
(The author Fan Lipo is a researcher at the Beijing Institute of Opening up, w88 casino, a professor at the w88 casino of International Business, and a doctoral supervisor)
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