In the past, China relied on abundant labor costs to vigorously carry out export and foreign trade business. In the past, when labor and other costs were low, China's product export had great advantages, but in recent years, with the continuous rise of workers and other costs, the price of products will also rise, and these products do not have much advantages compared with some countries with relatively low labor costs. I sorted out why business is difficult in 2019. I hope I can help you.
Why is business difficult in 2019
In recent years, many entity bosses around have said that business is becoming more and more difficult, the market environment has changed, how many factories have closed down and how many stores have been closed. That's the problem. Is it difficult to do business, or is there a problem with business people?
Some people say that it is because of the development of the Internet that everyone has gone shopping online, others say that it is because the market competition is becoming more and more fierce, others say that it is because the rising costs are squeezing profits, and others say that the support of the local government is not enough. Anyway, everyone has their own explanation to find reasons for themselves.
What is the truth? This time, let's talk about the transformation of China's real industry. Today, this set of knowledge is very rich. I hope you can read it with 12 points of spirit. This set of thinking logic is basically applicable to most industries.
In the front, we will talk about some theories to pave the way, and in the back, we will focus on traditional manufacturing and traditional stores.
Before I start, I'll ask you a few questions:
1. Why do some factories raise money everywhere and continue to invest, but the profit is getting lower and lower, while some factories do not spend much money on purchasing a large number of equipment, and the benefit is getting better and better?
2. Why can't some decoration companies develop their business all the time, while others can decorate customers free of charge, with an annual turnover of tens of millions?
3. Why are some people struggling to find customers in the same business of red wine, while others use red wine to operate a club with an annual income of tens of millions in a few months?
I won't say the answers to these questions today. You should think about the reasons first. Let's start today's discussion on why many people find it difficult to do business.
A while ago, there was a report describing Shenzhen Huaqiangbei, once the world's largest mobile phone wholesale market, which is now in a depression. At the same time, compared with Zhongguancun in Beijing, how the country's largest computer market changed from prosperity to decline and then to transformation.
After reading it, I felt deeply, because I also went to these places in those years, saw their prosperity and saw the myth of sudden wealth of many people.
At the beginning of today, I will first talk about several economic concepts. The first is the "law of diminishing investment returns". The profit margin of capital continues to decline with the increase of investment. It's not easy to understand, is it? In short, if a business is easy to do, many people will follow up and invest. Once the market tends to be saturated, the competition will become more and more intense, the cost of obtaining customers will become higher and higher, the profit margin will continue to decline, and the return on investment will gradually decline.
At the same time, it introduces the first important concept: social average profit margin.
Every industry will have a profit bonus period. At this stage, the average profit margin of the industry is relatively high. For example, the group of people who first sold computers in Zhongguancun, the profit of assembling a computer is very high. Selling a computer for tens of thousands of yuan can earn up to thousands of yuan by installing a computer for others. With more and more people entering the industry, the competition is becoming more and more fierce, and the market begins to tend to be saturated.
Many customers can be found by sending small cards on the side of the road at the earliest time. Now a large number of advertisements may not have any effect, right? Customer acquisition costs have become higher. Now, when assembling an ordinary computer, there are generally only three or four hundred yuan of profits left. That is to say, the social average profit margin of the business of assembling computers has decreased. Continuing to use the original method to increase investment in the market will have little impact on the profit margin of the industry of assembling computers, and even squeeze and reduce profits.
Why is it difficult to do business in all walks of life this year (2019)?
There are many reasons why it is difficult to do business in all walks of life, but to sum up, I think the following factors determine the reality of difficult business.
1. Industry is the foundation of the country, so the fundamental factor affecting the overall economy must be industry. At present, the problems of industry have been exposed very prominently. The era of using cheap labor force has passed. Industry urgently needs to inject new business model and shape new product value. To achieve this goal, we need to do a good job in the pursuit of standardized products with the help of modern production system and intelligent production technology. However, most industrial enterprises do not have such transformation ability at all.
2. Overcapacity is the most important problem to be solved at present. No matter which industry, the threshold for newcomers to enter will not be very high. After the newcomers enter, due to the lack of funds, technology and talents, they can only seize their own market through price war and homogeneous plagiarism. The resulting problem is that all walks of life show a scene of Red Sea, which is a little shocking. In the past two years, the state's policies towards enterprises have become more and more strict. For example, checking the problem of environmental protection is not only to improve China's sustainable development ability, but also a rational measure for the survival of the fittest enterprises.
3. The industry is highly competitive. How big is the blue ocean that hasn't been excavated? Now there are many people who want to do business. The opportunities that can be tapped have been tapped, and there are few opportunities that can be found. 4. Exports fell. As soon as the trade war is fought, the export volume drops sharply. In fact, the trade war is not fought. With the increase of the cost of China's products, the competitiveness of low-end products becomes worse. Logistics friends at the airport said that the company had no business this year, and many people were laid off, especially in the warehouse department, because the company closed the warehouse.
5. Product price competitiveness decreased
In the past, China relied on abundant labor costs to vigorously carry out export and foreign trade business. In the past, when labor and other costs were low, China's product export had great advantages, but in recent years, with the continuous rise of workers and other costs, the price of products will also rise, and these products do not have much advantages compared with some countries with relatively low labor costs. 6. The impact of industrial transfer on supply chain enterprises.
In recent years, China has vigorously engaged in industrial upgrading and industrial transfer. Moreover, due to the rise of operating costs, foreign-funded enterprises are also moving to Southeast Asia and other regions with lower labor costs. Once these large foreign-funded enterprises leave, the upstream and downstream enterprises relying on their supply chain will be greatly affected. For example, after a large enterprise leaves, its supplier orders will be greatly reduced, which is one of the reasons why enterprises that rely on foreign-funded enterprises to survive have closed down in recent years.
Of course, the factors affecting the difficulty of doing business in 2019 are complex and multifaceted. The reasons for the difficulty of doing business in different enterprises may be different. However, if the house price can not be effectively controlled, the tax cost can not be effectively reduced, and the financing environment can not be effectively improved, the living environment of small, medium-sized and micro enterprises will face greater challenges in the future. In short, business is not easy to do, and foresight industrial capital continues to flow out, so now strictly control foreign exchange. I remember a few years ago, we had a boss who engaged in auto parts (family industry). He said that it was difficult to do business. He sold the factory for 100 million before environmental protection rectification. It was wise for the whole family to emigrate!