What kind of Chinese companies do you need in the “Belt and Road”?

Abstract Today, China's rise has become an important variable in the changes in the world's structure. As the world's second largest economy, the largest industrial country, the largest exporter and the largest foreign exchange reserve country, China has never been close to the center of the world stage as it is today. It has never been like this...
Today, China's rise has become an important variable in the changes in the world's structure. As the world's second largest economy, the largest industrial country, the largest exporter and the largest foreign exchange reserve country, China has never been close to the center of the world stage as it is today. It has never attracted attention as it is today. The one hundred and ten thousand are half-nine. The closer we are to the goal, the more we must keep our heads calm. We must be clear that there has never been such a rapid rise in such a huge country in human history, and there has never been a comprehensive modernization of such a large population.

A rational and objective understanding of the strategic framework and basic connotation of China's peaceful rise is not only a matter for the Chinese, but also the focus of the international community. China's peaceful rise is a systematic strategy that can be summarized as: one road, two breakthroughs, a strategic triangle, and four principles. One road is to unswervingly follow the path of peaceful development; the two major breakthroughs are to break through the "One Road, One Belt" strategy, co-ordinate the two major domestic and international situations, and coordinate the two major centers of the northwestern frontier and the southwestern frontier, of which the northwest frontier is the security center. The southwestern seas and seas are the focus of development; the strategic triangle is to build a stable Sino-US-Russian triangle relationship from the perspective of global security; the four principles are the four basic diplomatic principles that China must adhere to and consolidate under the new situation.

Specifically, the four principles include: First, the general idea of ​​doing something positive has not changed. Second, the overall framework of China’s diplomatic layout has not changed. Third, the general direction of combining the world's material contribution and value contribution has not changed. Fourth, the pillars of security, economy, trade and humanities that have strengthened relations between countries have not changed.

In the context of the Belt and Road Initiative, the rise of Chinese companies should not only be economic events, but also cultural events. There is a saying that makes sense. Five years of enterprise depends on products, ten years of enterprises rely on technology, and a hundred years of enterprises rely on culture. Chinese companies may not lack products or technology at present, but cultural soft power is the biggest "soft spot" of Chinese enterprises.

The core of soft power is culture, the core of culture is value, and world-class companies must have the core values ​​shared by the world. Therefore, the core of corporate culture is to successfully shape and effectively disseminate the core values ​​of the company. As early as 2006, the State-owned Assets Supervision and Administration Commission pointed out that the framework for the construction of “soft power” of central enterprises has begun to appear. According to a survey of 146 central enterprises, 84% of enterprises have initially established corporate spirit, core values ​​and management concepts, and 78% of enterprises have initially established concept recognition systems, behavior recognition systems and visual identity systems.

Today, these two data may have become 100%, but when I went to the central enterprises, I found that most of the company executives still don't know what the core value of the company is. Some people even think that "this thing is optional." Although the state has determined that the central enterprises will use soft power to enrich their core competitiveness, soft power is still a thing in China that is generally familiar but seriously lacks consensus, which is considered important but often not taken seriously in practice.

Therefore, the author believes that not all Chinese companies that “go out” can represent China and can represent the “Belt and Road” project. Chinese companies that can represent the “Belt and Road” should have the following five requirements:

First, Chinese companies that can represent the “Belt and Road” must not only “go out” but also “go in”. “Belt and Road” should enhance the quality of Chinese enterprises “going out”. The report of the 17th National Congress of the Communist Party of China clearly pointed out that "the basic national policy of adhering to the opening up to the outside world, better integration of "introduction" and "going out", expanding the open field, optimizing the open structure, improving the quality of openness, improving internal and external linkage, and mutual benefit A win-win, safe and efficient open economy will form a new advantage in participating in international economic cooperation and competition under the conditions of economic globalization."

The report of the 18th National Congress of the Communist Party of China emphasized in a concise manner, "accelerate the pace of going out, enhance the ability of enterprises to operate internationally, and cultivate a group of multinational corporations at the world level." "Going out" is not an end. This is easy, "going in" The purpose is to win respect and cultivate a multinational company with world-class status.

In 2011, the US "World News" article "Chinese-funded enterprises should pay attention to the image of globalization" pointed out that "from the pursuit of its own economic development, to play a pivotal role in the world economic and trade system, Chinese enterprises value this transition period, how to take advantage of the volume The advantage of excessive quality, it is easy to say, how to change from the biased sales data to the pursuit of long-term consumer recognition and loyalty is a topic that Chinese companies should consider at this stage."

“Going in”, that is, pursuing the long-term identity and loyalty of consumers, is definitely not an easy task, but it has to be done. "For the country and for the enterprise, "the superior culture and the persuasiveness of the more attractive political philosophy" is obviously more effective than resorting to military and economic means, because "its purpose is not to conquer the territory and control economic life, but It is to conquer and control the hearts of the people as a means of changing the power relations between nations." Indeed, a great company must have a lasting philosophy in order to survive. The core value is the belief of the employees of the company. The reason why visionary companies succeed is that their core values ​​(corporate culture) are unwavering no matter what happens.

Second, Chinese companies that can represent the “Belt and Road” must not only sell products, compete for the market, but also enhance their ability to learn, adapt and integrate resources. The purpose of Chinese enterprise reform is not to establish a so-called modern enterprise system or shareholding system (these are all ways), but to build a "world-class enterprise", that is, to be bigger, stronger, and more sustainable. The so-called "big" mainly refers to the size of the enterprise to be large; the so-called "strong" refers to the creation of good performance and influence in the industry; "the long-term success of the industry" is to establish a great company that can stand the test of time. .

For Chinese companies, it is not difficult to be big. To be strong and to grow up in the future requires enterprises to build long-term vision, values, mission and corporate culture on the basis of profit.

At present, there is a big gap between Chinese enterprises and world-class enterprises: in terms of innovation, Chinese enterprises have more gradual innovations, but less breakthrough innovations; Chinese companies are still at the stage of imitating world-class enterprises, and have not made substantial breakthroughs; In terms of investment mergers and acquisitions, the company's resource integration and effective management are not enough. Even some enterprises have expanded in scale and management level has not kept up, which has brought about greater operational risks. In terms of international operations, Chinese companies have relatively low cross-border indices. It is still in its infancy in terms of global layout, integration of global resources, and building a global industrial chain.

Compared with neighboring Japan, Japan has long abandoned the use of the army to conquer the world and switch to "Made in Japan" to conquer the world. Today, there are more than 22,000 companies in Japan in the past 100 years, 7 companies with more than 1,000 years of history, nearly 40 in more than 500 years, and more than 600 in more than 300 years. The century-old enterprises in mainland China are pitiful: there are fewer than 10 companies with a history of more than 150 years. The “Belt and Road” will not happen overnight, and world-class companies need to do great things that stand the test of time.

Third, Chinese companies that can represent the “Belt and Road” must not only have products, technology, but also brands and brand values. At present, there are no brands in the products, or brands have no brand value, which is the "sickness" of the Chinese economy. Lack of brand value is often inseparable from the lack of masters and everyone. When thinking about Chinese companies, they are densely packed workers and craftsmen, but there is a general lack of masters and everyone, lack of human understanding of the product itself and the production process. Such products are not. Deeply, such a company is difficult to conquer.

In 2013, among the top 100 global corporate brand values, there were no Chinese companies (although among the world's top 500 companies, there are as many as 100 Chinese companies). The top ten companies come from three countries: Apple, Google, Coca-Cola, IBM, Microsoft, GM, McDonald's, Intel, Samsung in South Korea and Toyota in Japan. The report said in the selection of indicators: "Many times, a company changes our lives not only because of its products, but also because of its spirit." Research shows that consumers are turning to brands that can improve people's lives: "Like Apple, Google. And Samsung's brand is changing our behavior: how we shop, how to communicate with each other. They change our way of life."

Fourth, Chinese companies that can represent the “Belt and Road” are not only popular, but also create a glamorous and sustainable business empire. Fortune magazine's “World's Most Admired Companies” selection criteria include: (1) the status of products and services; (2) the value of long-term investments; (3) the rational use of company assets; and (4) the ability to innovate; 5) Management quality; (6) Financial soundness; (7) Ability to attract and retain talent; (8) Social responsibility; (9) Effectiveness of global operations.

William Newman puts forward the criteria for "world-class companies": (1) first-class products and services; (2) the pursuit of appropriate scale; (3) the ability to compete with global companies in domestic or international markets; (4) Operates according to world-standard standards; (5) is capable of cross-border and cross-cultural management; (6) is highly flexible (having the ability to dynamically adjust to changing customer needs); (7) is good at making trade-offs and maintaining core expertise.

The author believes that Chinese enterprises that build business empire should work hard in three directions: the first basic elements, including the main business, strong profitability, well-known brands, high-quality management, and strong innovation ability. The direction of the second international element is to have international competitiveness. The third subjective factor direction mainly includes the high quality of leaders and employees, corporate culture and social responsibility.

Fifth, Chinese companies that can represent the “Belt and Road” must not only talk about the story of the company, but also use the excellent cases that can impress themselves to conquer the hearts of the people. On one occasion, a senior executive of a private enterprise could not help but share the story of the chairman of the company. She said that the chairman had a famous saying, "I am working for this person alone." This is a fishery and shipping company with 10,000 employees. The chairman's office has no air conditioning, because the chairman of the board thinks that his employees (sailors and fishermen) will not blow in their own offices when they are bumpy and windy at sea. Cold wind.

Although such a story is small, it reflects the pragmatic spirit of an entrepreneur. The value of the individual is inseparable from the value of the enterprise. Such a corporate story is internationally popular.

Chinese companies need to gather the positive energy of the “Belt and Road”. CITIC Construction Co., Ltd. is the first quality enterprise to go out. In November 2010, when Xi Jinping, then vice president of the country, inspected CITIC’s project in Angola, he praised CITIC’s construction and created “South Mud Bay in Angola”. Angolan President Dos Santos has repeatedly inspected the project and praised it as a model for post-war reconstruction in Angola. It is a pearl project in Angola and even on the African continent. In addition, CITIC Construction successfully implemented large-scale projects with international influence including Algeria's East-West Expressway, Angola's social housing, Venezuelan social housing, and Iran's Tehran Metro.

There are many factors that contribute to the success of CITIC, but one of the important points is to build a platform for cooperation between Chinese and foreign companies, the “CITIC Joint Fleet”. Fleet members include China Architecture Design Institute, China Planning and Design Institute and other design units, China Railway Construction, China 15th Metallurgy, Beijing Construction Engineering and other construction units, Sany Heavy Industry, Zoomlion, Volvo, China Building Materials and other equipment materials suppliers , Sinotrans and other logistics companies. Regularly hold "high-level contact meetings" attended by the top leaders of all units to strengthen internal communication, integrate resources, and promote work.

In addition, Vietnam Baosteel Can Co., Ltd. is the first physical project invested by Baosteel Group's multi-components overseas, and is also an important step for Baosteel's metal packaging business to develop globally. The company was incorporated in Pingyang, Vietnam on August 18, 2011 and is a manufacturing enterprise.

Before going to Vietnam, the company got the news that Vietnamese employees are not willing to work overtime and have no sense of responsibility. Through several years of work contact, I found that many of the employees in Vietnam are responsible for their work and hard work. Therefore, the salary system is optimized to ensure that employees perform their duties and their rewards and penalties are clear. At the same time, through internal corporate culture to strengthen internal cohesion. Many Vietnamese employees don't understand why they have a corporate culture. Why do they have to make career plans? They feel that as long as they do the job at hand, it is enough to get the living expenses they need, so more people are paying for their jobs because of their wages.

From the initial stage of construction, the company transplanted Baosteel's concept of “reality decision pattern” to the minds of Vietnamese employees. Through activities such as “Employees' Collective Birthday Party” and “Family Consolation”, Vietnamese employees gradually changed their views on Chinese companies. In addition, the company adheres to the principle of localization of personnel, the sales manager, the manager of the finance department, the head of the general department, and the quality control manager of the production department are all Vietnamese. At present, except for the 8 Chinese employees of the expatriate and the 3 Chinese employees temporarily borrowed from the domestic tank factory, the remaining 153 are Vietnamese employees.

Vietnam Baosteel cans is the first step for Baosteel's metal to cross overseas and is the first stop for Baosteel's metal internationalization. Different countries and different regions will encounter different cultures and challenges, but the only thing that is the same is to adapt to the times, adapt to local conditions, and keep pace with the times. In 2014, when there was a violent Chinese outbreak in Vietnam, many Chinese-funded enterprises were hit, but it was precisely the Vietnamese employees of Baosteel's cans who took the initiative to protect Chinese-funded enterprises.

In short, Chinese companies must seriously consider a question. Are we ready for the “Belt and Road”? What kind of Chinese companies do you need for the “Belt and Road”? Take power engineering enterprises as an example. There are at least 60 state-owned and private enterprises engaged in power engineering construction in China. Of course, most of the power construction enterprises are built by China Power Construction (14.62, -0.36, -2.40%) and China. Group management, but competition at home and abroad is still relatively disorderly and chaotic. Every family is going out in a brilliant way. Whether or not they can go on, let’s grab a jackpot and say.

In this "flocking" out of the situation, regardless of corporate performance, ability, brand, background, etc., all in the hands of China's banner, pockets in China's funds, mouth shouting "One Belt, One Road" The slogan, its scene is quite spectacular. However, the hotter it is, the more it needs to be calm. It requires the state to classify and classify participating Chinese companies, establish a watch list and blacklist system, support capable enterprises to expand and strengthen overseas business, and encourage enterprises that are willing to go out gradually. Enhance the ability, establish a brand, and on behalf of China on the basis of comprehensive assessment to implement the “Belt and Road” initiative.

Some Chinese companies have quality problems in power stations in Africa, which not only affect other Chinese companies to bid for follow-up power station projects, but also related infrastructure projects. Imagine that if all the Chinese enterprises go out of the project and are linked to the “Belt and Road”, the problem will inevitably lead to dissatisfaction and rejection of the Chinese government and the people on the Chinese enterprises and the “Belt and Road” initiative.

Chinese enterprises need financial support to implement the “Belt and Road”. But overall, Chinese financial institutions are still not familiar with the internationally accepted financing model. Most of the internationally accepted financing models are project financing. The basic principle is to organize financing and execute projects in a purely commercial mode, so that the participants who are most capable of undertaking the project bear the risks. Chinese financial institutions are still more accustomed to and prefer sovereign guarantee projects rather than project financing projects. Looking at the countries that have been exposed to the Belt and Road, there are only a handful of governments that are willing to provide sovereign guarantees. If China's financial institutions do not change, it is difficult to meet the urgent needs of Chinese companies for internationalization. Therefore, China's financial institutions must do more things in the "snow in the snow," and not just "the icing on the cake."

At present, China's financing costs are difficult to say on commercial projects. China currently has huge foreign exchange reserves, and there are many good projects that want to finance from China. However, the financing costs are high, and 7% of the premiums are required to be paid to CITIC. Many projects promoted by the business model have stopped and turned to South Korea. And Japanese companies. The reason is very simple. The borrowing costs and insurance rates of import and export banks and export credit insurance institutions in Japan and South Korea are far lower than those in China, and the financing period is long, the approval time is short, and sovereign guarantees are not needed. These are the current Chinese financial The organization could not do it.

Taking the Saudi market as an example (international rating is AA), the financing interest rates of Japanese and Korean financial institutions are around Libor+200 points, the financing period can be as long as 25 years, and the financing cost of China is Libor+350 points, with a term of 15 years. This financing cost is reduced to 25 years of power plant operation period considering the life cycle cost, China's solution is not attractive at all.

Now a prominent challenge is that many of the current “going out” of Chinese companies are heavy assets: ports, canals, high-speed rail, nuclear power, dams... These projects have large investment, long cycle and high risks. How can we keep a low profile? Being looked at by high-profile people will naturally lead to "strategic intentions." We must create a group of light asset projects that can be justified and promoted, such as agriculture, Chinese catering, folk culture, Chinese medicine, etc., but the premise is not only to sell scarce resources that are historical, unique, and valuable, but through the integration of resources and Transformation can closely match international demand and make a fuss about “necessities”.

In addition, Chinese companies that represent the “Belt and Road” must handle the relationship between corporate development and green ecology. The author was training at the "Central Party School" in Canada nine years ago. At that time, there was a case in which the discussion was very intense. That is, whether to repair a second large dam in BC, this project was not repaired at the time. For ten years, although slow, it is necessary to ensure scientific decision-making. It can be seen that Chinese enterprises “going out” must not only handle the relationship between economy and culture, but also deal with the relationship between economic development, social responsibility and eco-friendliness. Otherwise, "the longer you go, the more passive you are."

At this stage, the “Belt and Road” must first face the ocean. Chinese enterprises must give priority to enhancing the sense of the sea, that is, openness consciousness, risk-awareness, and competition consciousness. They must have care for details, conscious of innovation, and worship of the game. To this end, we must abandon the localization tendency of exclusionism in the Chinese economy and the localization tendency of conservatism. We must use ocean consciousness to reshape the entrepreneurial spirit of Chinese companies.

The future of global business prospects may be the combination of Western technology and China's potential and Tao. In the construction of the “Belt and Road”, it is not only the collision and competition of products and technology, but also the reference and game of different commercial civilization and strategic culture. Chinese enterprises representing the "Belt and Road" should carefully discuss strategic issues and political needs in the international community, talk more about cross-border economic and trade cooperation, and talk more about global corporate social responsibility. The competitors of Chinese companies may not be European or American countries, not other countries, but our cause: to be a great, time-tested, world-class enterprise that can earn respect and has a cultural heritage.

The author often sighs that this is the worst era, but it is also the best era; it is not the time to create a hero, but the hero to create the times. I believe that there will be a large number of Chinese companies that will take advantage of the trend and make a difference.

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