Professor Xiaobo Wu

On 22^nd February, the tenth edition of People’s Daily published the interview on professor Wu Xiaobo, dean of the School of Management of Zhejiang University and the director of innovation management base, in terms of the intention of supply side reform. Mr. Wu pointed out that the significance of the supply side reform is the structural reform carried out to fundamentally upgrade the overall social requirements. The ever increasingly upgraded requirements on high quality on the basis of the well-off level will experience the new round outburst in the next few years, which is a great opportunity for outstanding enterprises.

Enterprises shall clarify internal difficulties

At present, how to transform and upgrade the huge stock assets is the great challenge for the majority of enterprises. In Zhejiang Province, for example, big and medium-sized enterprises face different difficulties which have been or will be confronted by enterprises in other provinces.

In the fierce market competition, big enterprises boasting firm stand and emerging “hidden champion” enterprises are facing difficulties in the development innovation of high value added products and services. There is still a room for them to improve the management capacity of resource integrative application and innovation in the larger scope. In particular, they are confronting with great challenges in comparison with the global operation and competencies of international giants. However, such is not the survival crisis, but the “crisis” that how to perform better in the new stage transforming from “supporting role” to “leading role”.

Survival risks mainly appear in the small and medium-sized enterprises. At present, it is those enterprises which do not have independent technology, independent product and independent brand that facing the most challenging situations. They suffer a lot currently. Their competencies based on the low-cost labor could hardly exist continuously and they may face the difficulty of “collapse” and the phenomenon of “a drowning man will clutch at strand” and even trigger the troublesome issues of mutual protection.

Explore strategic opportunity in difficulties

The significance of side supply reform lies in the structural reform carried out to fundamentally upgrade the overall social requirements. At present, the ever increasingly upgraded requirements on high quality on the basis of the well-off level in China is in the eve of actual outburst, which calls for side supply to provide qualified products, service and brands featuring sound reputation. In the new normal, people tend to purchase better products and services with more money, which could be detected from the rapidly increasing Chinese who go overseas for visiting and shopping. In the next few years, the requirement of the whole society on the high quality would experience a new round of outburst, which is the great strategic opportunity for many outstanding enterprises.

Confronting opportunities, enterprises in the transformation process shall consider how to handle the modernization issue of governing structure at the same time of addressing the upgrading requirements of the next round development, coping with the new requirement upgrading with the innovation-driven supply side new structure.

To seize opportunities, it shall first comprehensively deepen the scientific management system. Currently, many enterprises have problems of low efficiency resulted from “rule by man” and “incompliance”, which calls for methods and systems of scientific management. For enterprises in Zhejiang, there is still a big gap between the existed management model “on the basis of personal abilities of bosses” and the scientific management. Compared with the world class enterprises, there is also a big gap. In the next stage, enterprise shall first make up its competencies in this aspect.

The economy enters the new normal, which does not mean the economy is deteriorated, but indicates that the whole society enters a rational environment supported by higher added value and great creativity. The original extensive money earning style has gone forever. This by no means ends the favorable life of entrepreneurs, but indicates that excellent entrepreneurs are embracing their good lives and the beginning of qualified lives of Chinese people.

>>>> Information source: People’s Daily