Xu Xiaonian: From the data point of view, China has fallen into the middle income trap.

Text / Sina financial opinion leader (WeChat public number kopleader) agency column Central European perspective author Xu Xiaonian

Has the economy slipped into the “middle income trap”? From the data point of view. “Truthlessness” is just another manifestation of macroeconomic policy failure. Not only is monetary policy useless, but fiscal policy is also useless. It seems that fiscal funds have entered the real economy, but in fact only increased the excess capacity.

Xu Xiaonian: From the data point of view, China has fallen into the middle income trap.

The reform and opening up has been going on for forty years. The Chinese economy is now in a very crucial transition period. The smooth transition of this transition period will determine China’s economic development in the next 10 or 20 years. In recent years, it can be said that Very critical time period. Transformation is the driving force for economic growth from capital accumulation to innovation drive. Why is the economy going to transform? Why is the business model of the enterprise to be transformed? How to transform? This is the main content I want to talk about today.

Depletion of the traditional growth model

Figure 1: Production Function Analysis Framework

Before I talk about these, I will introduce a theoretical analysis framework (see Figure 1) to help us sort out the ins and outs of transformation. The left side of this mathematical formula Y is the output of GDP or firm, the right A represents technology, K represents capital investment, and L represents labor input. This is an input-output relationship. The country's GDP, the Y on the left, is determined by three factors: labor input, capital investment, and skill level. The output of the enterprise can also be expressed by this formula. On the left is the output or output value, and on the right is the technical level of the equipment and the input of capital and labor. This is an empirical formula, validated by data from countries around the world, and is generally established.

We use this empirical formula to distinguish between two types of different growth. One type is “quantitative growth”, which is driven solely by the input of capital and labor, and the increase of K and L leads to the increase of Y on the left. The second category is “efficient growth”. It is not by the increase in the number of K and L, but by the improvement of the technical level A. This A is a generalized technique that includes both narrowly understood techniques such as the Internet, big data, and institutional factors. The characteristic of efficiency growth is that if the value of A is larger, without increasing the capital and labor input, the Y on the left will be higher, that is, the same amount of capital and labor will obtain higher output. For example, a mobile phone production plant, given the production capacity, what is the production value of the production of Apple mobile phones? If you produce a cottage phone, what is the output value? The same production equipment K and the same labor input L, different output values ​​come from different A, the technical content of the Apple mobile phone is not comparable to the cottage products.

The essence of these two types of growth patterns is sustainability, not growth. Through continuous investment to increase capital, although it can achieve high growth in a certain period of time, such growth is unsustainable. The reason is that today's core economic law is called “the diminishing marginal return of capital”. This word sounds too academic. It is actually a common sense that everyone can understand: in all other conditions, the additional capital investment can bring about an increase in GDP, but the income generated by each unit of investment will lower and lower.

To give an example, imagine that farmers should plant a piece of land. At the beginning, there was no capital investment, no tractors, fertilizers, irrigation equipment, and farming by simple labor tools. In the case of pure physical labor, what is the yield per mu? When I was in the northern part of Shaanxi, when I was in the countryside, I had only 300 kilograms per mu. During the "Great Leap Forward" period, some people said that the yield per mu was tens of kilograms. But anyone who has a little knowledge of agricultural production knows that this is impossible? I can't imagine how much grain can be produced on the land of northern Shaanxi. At that time, only 300 kilograms per mu was produced.

Now imagine how much more per mu can be added to a farmer with a tractor? Suppose you can add about 100 pounds, if you give him a second tractor? The output will increase, but the production increase will be less than the first one, because the land has been turned over once with the first tractor, and the second tractor has been ploughed again, the effect is worse than the first time. Assuming that the second tractor increases the yield by 50 kg per mu, the yield increase effect of the third tractor may be zero. Although these figures are hypothetical, the economic laws behind it are very clear, continue to increase capital investment, new output continues to decline, and eventually will reach a critical point, at which point new capital has no impact on output, also That is, the marginal benefit of capital is equal to zero.

We will observe some familiar phenomena. First, regardless of the amount of investment, GDP growth has not even increased, and the economy has fallen into the “middle income trap”. The so-called "middle income" is probably about 10,000 US dollars per capita. This is not to say that the per capita income of 10,000 US dollars is a magic barrier. No one can pass it, but a developing country can achieve economic growth through industrialization, but when accompanied by After the industrialized capital accumulation reached a certain level, the investment income became lower and lower, and the growth was weak. The per capita income was now stagnation at around 10,000 US dollars. In the early days of reform and opening up, China's economy was dominated by agriculture and its capital was seriously scarce. At that time, investment and the development of industry and commerce with advanced technology and equipment could quickly increase GDP. Nowadays, the process of using large machines in all walks of life has basically been completed. At this time, the role of increasing capital investment is not as good as before. Just like the second and third tractors of farmers, the investment income is declining.

In the past few years, China’s GDP growth rate has been declining, although the annual increase in investment has not decreased. Everyone still remembers 4 trillion. In fact, it is only a symbol. The real investment is more than ten trillion. In 2009, we called 4 trillion, now 40 trillion, and added a 0 later, but why is GDP growth still falling? Because the marginal return of capital diminishes. The declining GDP growth rate confirms that China's economic growth model is quantitative growth rather than efficiency growth.

When the marginal return of capital is equal to zero or close to zero, what should farmers do to increase their yield per mu? He already has three tractors, and it is useless to add one. At this time, he is going to find Academician Yuan Longping and ask him some good seeds. The rice variety of Academician Yuan Longping is not given by God. It is the seed that he has worked hard through scientific experiments for many years. It is much higher than the average seed quality of farmers, which is higher A. If farmers do not buy tractors and go to Yuan Yuanping, it is to turn the power of agricultural production from capital accumulation to technological innovation. This is the core content we are talking about today, which is the economic law we are talking about today.

It is unsustainable to drive economic growth by increasing the input of resources, and the growth of economy through the increase of A is sustainable, because human beings have the ability to understand nature and understand the economy is infinite, and technological progress is endless. . Since the beginning of the industrial revolution, I have been raising A. The first wave of technological innovation is the steam engine, which is much more efficient than manpower, animal power, wind power and water. After the steam engine, there are electric power, railways, automobiles, atomic energy, electronics, computers, and the Internet. The growth of the modern world economy since the industrial revolution is not based on the government's stimulating policies, but technological progress.

The current difficulty facing the Chinese economy is that capital accumulation has reached a critical point, marginal revenues are close to zero, and technological progress cannot be sustained. From the data point of view, the investment of RMB 1 yuan in the middle and late 1990s can bring about 4 to 5 cents of new GDP. In 2015, a one-dollar investment can only generate 7 cents or 8 cents of new GDP. Macro investment returns have fallen rapidly. Looking at a set of PPI (production price index) data (Figure 2), from 2012 to the second half of last year, all negative growth, the company's product ex-factory prices continue to decline, due to overcapacity. Under the pressure of oversupply, companies are competing to cut prices and try to keep their market share.

Figure 2: Excess capacity behind PPI deflation. Source: CEIC

Overcapacity means that all industries no longer need new investment. If new investment occurs, investment income may be negative. Capital accumulation may have passed the critical point of zero marginal revenue, and investment cannot be recovered.

Has the economy slipped into the “middle income trap”? From the data point of view. From the perspective of investment income, some current economic phenomena are easy to understand. There is now a word called “de-reality”. The government is in a hurry to print down a lot of money, but the funds don’t enter the real economy and rush to stocks.

In 2015, I experienced a major stock market crash. The stock did not dare to touch it. Last year, I turned to speculation in the house, that is, I did not go to the real economy. The government always says "guide funds into the real economy," but how to guide it does not go because the investment income of the real economy is close to zero. In the case of a general surplus of capital, in the shadow of overcapacity, funds will not enter the real economy. At this time, printing money, in addition to creating inflation, has no other effect. Inflation includes commodity prices and asset price inflation.

“Truthlessness” is just another manifestation of macroeconomic policy failure. Not only is monetary policy useless, but fiscal policy is also useless. It seems that fiscal funds have entered the real economy, but in fact only increased the excess capacity. In the case of overcapacity, it is also logically ridiculous to say that expansionary monetary and fiscal policies are aimed at stimulating investment, and the economy does not need more capital. The policy at this time should not be to stimulate demand, but to increase the effective supply we will talk about below.

Has China’s economy stabilized and rebounded?

The PPI rebounded in the second half of last year. Some people say that the Chinese economy has stabilized and the rebound is imminent. A careful analysis is not necessarily so optimistic.

Figure 3 Source: CEI

The first and most important reason for the PPI to turn from negative to positive is the speed of money supply. The blue line in this picture (Figure 3) is just the PPI. The tail was tilted up in the second half of last year, and it is positively related to this red line (the narrow money M1). Who is the cause and who is the result? Money is the cause, and price is the result, because we have done a technical treatment on this picture, pushing the money supply backwards for 6 months. The positive correlation between the money supply and the price index indicates that the water was released in the first half of the year. After six months, the tail of the PPI in the second half of the year was tilted up. In the first half of last year, the growth rate of M1 quickly increased from 5% to 25%. Such money will certainly be reflected in the price.

Say good supply side reform? How do you go to the demand side to release water? Not sure. In May last year, an authoritative person said that the Chinese economy is not U-shaped, not V-shaped, but L-shaped. I agree with this view. There are different judgments on the current economic situation in the market. I personally think that it is still on the horizontal side of L, it takes a long time to come out, and some people think that it is the vertical of L.

In addition to the money supply, there are other reasons for the rebound of the PPI. One is to go to capacity, and the capacity has a certain impact. It feels so important that there is no currency. The inventory cycle is another factor. Inventories in some industries reached historically low levels last year, and replenishment stocks have driven a little demand.

This red line of money growth has been going down this year, indicating that the economy will follow this red line in the second half of the year. You may ask, since the effect of money release is obvious, why not continue to pull it up? Where will the price rise to go? Now the government has used almost all administrative means that can be used to suppress housing prices - limit purchases, price limits, limit loans, and then increase the money supply. I am afraid that even administrative measures can not control housing prices.

The skyrocketing asset price is one reason for the slowdown in monetary growth. The second reason is that the RMB exchange rate is under tremendous pressure. Increasing the money supply will further depreciate the renminbi. In order to maintain the exchange rate, the government also used administrative means to control the capital account. Although it eased the exchange rate pressure, it also paid a lot of price, which affected the normal import and export and foreign investment of enterprises.

Now the operation of economic policy shows the embarrassing state of "stretching", and the head can not be managed. The economy has its own laws and cannot obey the subjective will of people. As for the length of L, depending on the progress of the reform, if there are no substantive measures in this regard, the macroeconomic situation in the next few years will be more severe, and friends in the business sector should be fully prepared.

New economic normality and supply side reform

In the case that quantitative growth has little potential, the central government has proposed a very important policy direction shift in the past few years. As the subsequent policy explanations were not clear, it caused confusion in the market and folk thoughts, and did not pay enough attention to this major policy direction change.

The first signal of policy direction adjustment is the "new normal" proposal. The high-speed growth phase driven by capital accumulation has passed. Don't expect 10% or even 8% growth. 6% and 7% will be the new normal. The second signal is the “supply side”, and we will start the policy on the supply side. The Chinese economy is at a turning point, and the driving force for growth will shift from the demand side to the supply side. During this transition period, the economic growth rate is inevitably low. The supply side is actually the efficiency-type growth we have called for many years, and the shift to the supply side is from K and L to A. Why do you say this? A is the technical level. It is not the Ministry of Industry and Information Technology and the Ministry of Science and Technology that determines the technical level. The government departments only decide the financial subsidies for science and technology projects. The technical level is determined by the enterprise, while the enterprise is on the supply side. Therefore, when the supply side's proposition was put forward, I expressed support and called for efficiency growth for so many years. The government finally reached a consensus with the people. Of course, what we are talking about is to rely on the improvement of corporate efficiency to drive the growth of China's economy, rather than relying on the government to engage in local financing platforms, industrial funds and industrial policies.

All measures on the supply side should focus on the improvement of corporate efficiency, which is not given full attention in the official documents and media reports we have seen. There is no need for policies to improve the efficiency of enterprises. What is needed is institutional guarantees, because efficiency comes from technological innovation, and innovation must have institutional support.

When it comes to innovation, we have to give a definition. The generally understood innovations are new technologies and new products like smart phones, but this is only a narrow sense of innovation, and the content of generalized innovation is much richer. In addition to narrow technology and product innovation, it also includes innovation in business models. For example, Jingdong's e-commerce is the innovation of the retail industry model. The electricity is used in the Internet, and there are some innovations that do not use any new technology. For example, when Wal-Mart started, it purchased directly from suppliers without going through wholesalers, reducing intermediate links. To reduce costs, this is also innovation. Generalized innovation also includes organizational and institutional innovations. For example, Vanke introduced the “business partner system”. Each real estate project has a number of partners. Although they are not shareholders of Vanke, they are equivalent to the shareholders of this project. Sharing the benefits of the project, using such organizational innovation to encourage Vanke executives to maximize the interests of shareholders. Vanke's business partner system, in 1978, Xiaogang Village farmers' package-to-households changed the incentive mechanism and improved management and production efficiency, which were included in A.

Efficiency growth depends on innovation. I think Shenzhen is the first place in the country's innovative city. Every time I come to Shenzhen, I feel very happy. The city is full of vitality. There are the most innovative companies and the most innovative technologies. Many students from the China Europe Business School are here. The business environment and innovation environment in Shenzhen are significantly different from those in other cities in the country.

Why can Shenzhen become an innovative city? One of the reasons is that the government has less management. Improving the efficiency of the supply side does not require industrial policy. Last year, Lin Yifu and Professor Zhang Weiying argued about industrial policy. I strongly support Professor Zhang Weiying, firmly believe that innovation does not require industrial policies and requires a good and fair competitive environment. Who has seen China's innovative company supported by the government's policies? Huawei is a private enterprise in Shenzhen. Tencent is also a private enterprise in Shenzhen. What policy support is there in the early stage of entrepreneurship and development? Now that it is bigger, the policy has been sent to the door. Ma Yungang couldn't find an investor. Tencent was looking for money everywhere when he was young. Finally, an investor in South Africa gave him a purple color. It is estimated that he is far away from the mile, and he does not know much about China. He has made an investment. I did not expect to develop into Tencent today.

The supply side does not need industrial policies and needs system support. We propose the following four items:

First, protect private property rights.

Innovative R&D needs to be accumulated for a long time. Even if the idea of ​​inspiring ideas is to invest in manpower and capital, after many attempts to achieve technological breakthroughs, it can become a product. In order for companies to make long-term investments in research and development, private property rights, especially intellectual property rights, must be protected. The significance of protecting property rights is to enable entrepreneurs to establish stable expectations for future earnings. Only under the control of stable expectations, companies are willing to make long-term investments. One reason why Chinese companies like short-term projects is that the uncertainty in the future is too high. Investing in research and development for more than a decade has only produced results. If it is unclear what happened in more than a decade, it is better to transfer funds to foreign countries instead of taking this risk.

During the Spring Festival this year, I attended the establishment ceremony of the China Europe International Alumni Association of China Europe International Business School. More than 70 alumni came to the inaugural meeting in Sydney. I told them: I am very touched when everyone comes here to participate in the activities of the Alumni Association. On the other hand, it is a bit sad. I am moved by the friendship between my alma mater and alumni. It is sad that so many alumni have come to Australia and come to New Zealand to develop. They should have stayed in this land of China, invest in this land, develop your career, and now run to Australia is here. Of course, we can't blame these alumni. Their behaviors and choices are rational, worrying about the safety of the property, the children's education, air quality, and environmental problems, so they have left.

In November last year, the Central Committee of the Communist Party of China and the State Council jointly issued a notice, "Opinions on Perfecting Property Rights Protection System to Protect Property Rights According to Law", stating that the issue of property rights protection has been highly valued by the central government. At the Politburo meeting in April this year, the "Opinions on Further Encouragating and Protecting Entrepreneurship" was adopted, which is roughly the same as last year's document. Explain that this problem has become more serious now, causing high-level attention. To protect private property rights and respect entrepreneurship, there is no way for innovation to proceed.

It is certainly a good thing to release the documents, but why didn't they play the role of anticipation? The most effective way to protect property rights is the rule of law, not the rule of man. The law is very clear and stable, does not change with the transfer of government officials, and protects property rights more effectively than government commitments. The depreciation of the renminbi has a lot to do with confidence. One reason for the outflow of funds is the lack of confidence.

Second, narrow the scope of the state-owned economy.

State-owned enterprises can't do A (technology). They have policy advantages and capital advantages. They can do K (capital investment) and L (labor input). The investment impulse is strong and employs a large number of people, but the redundant staff is full of people. The reason why state-owned enterprises can't do A is that it has neither the power of innovation nor the pressure of innovation.

If private enterprises fall behind in innovation, they will be punished by the market and eliminated. Take the mobile phone as an example. The NO.1 in this industry was Nokia. Now? I can't hear the sound, the boss fell to the end, it is a step backward in innovation, did not develop smart touch screen mobile phone in time, in fact, Nokia has mastered this technology, but did not launch products. When Apple's mobile phone entered the market, Nokia was still pressing the keyboard. In the fierce market competition, innovation is not a icing on the cake, but a top priority for the company.

The CEO of the enterprise must grasp innovation, and the chairman must pay attention to innovation. If the innovation fails, the enterprise will fail. It can be said that the purpose of the existence of the enterprise is to innovate, not production, nor sales. The innovation is slower, the enterprise is eliminated, and the state-owned enterprises don't say that they are slower. They don't care if they are slow. Because it is eating royal food, the government will save the problem, so it has no pressure to innovate.

State-owned enterprises also have no incentive to innovate, and the motivation comes from the incentives of entrepreneurs. Why should Jobs innovate? Why is Bill Gates innovative? Jobs wants to make Apple a century-old store, a good company that can last forever, and he has the feeling of changing the world. Bill Gates is innovating to make a fortune. Although the motives of the two are different, they are all great innovators. We don't have to blame Bill Gates for the low realm, and I don't have to pretend to be Jobs, pretending to be tall. People are very complex animals, and their behavior is driven by multiple incentives. Some people want to change the world, some people want to make a fortune, some people use their accumulated wealth to do charity, in short, there are all kinds of motives to innovate. But these incentives are not visible to one of the state-owned enterprises. The success of state-owned enterprise executives has not been able to make a fortune. The bosses of central enterprises manage hundreds of billions of dollars or even trillions of assets, but only 600,000 yuan are issued each year. The wages are capped, and the benefits of innovation cannot be shared. There is no incentive for innovation.

Therefore, state-owned enterprises cannot be the main body of innovation, and the main body of innovation must be private enterprises. In order to build China's innovative economy, it is necessary to moderately narrow the scope of the state-owned economy.

Third, relax and deregulate.

Regulation is the enemy of innovation. Why did China have a world-class big-market Internet company? One of the reasons is that when the Internet just entered China, the government did not respond, and without excessive intervention, it suddenly developed. The free environment and the free flow of resources are necessary conditions for innovation. Innovation does not require government support and requires the government to create a good competitive environment.

Fourth, comprehensive tax cuts.

The significance of comprehensive tax reduction is not only to help enterprises tide over the difficulties of economic downturn, but more importantly, to implement the “Decisive role of the market in resource allocation” proposed by the Third Plenary Session of the 18th Central Committee, and to more resources from the administration. The liberation of sexuality is liberated from the hands of the government and deployed by enterprises in the market. This is the most important significance of tax reduction.

The above are the four supply side measures I proposed. Can the government accept it? What if I don't accept it? My job is research. My task is to put forward policy recommendations based on the results of the research. I will not like it because of the government's adoption, nor will it be sad because the government has shelved. I will continue to do my research.

The key to transformation is innovation

The same is true for enterprises. If we are unable to influence macroeconomic policies, then we should do a good job in doing business well, especially to make innovations. Some companies are aware of the urgency of innovation, but there are some vague understandings of innovation that seem to fall into some kind of paradox.

Misunderstanding 1: Transformation is equal to changing

The student told me "Professor, I found that not transforming is waiting for death, transformation is looking for death. What should I do?" The reason for this paradox is that there is a misunderstanding of transformation. Some entrepreneurs mistakenly understand "transformation" as "transfer", but transformation does not mean switching. Transformation can lead to a path of life, and the change may be really dead. You have transferred to a brand new industry, no industry experience, no customer base, no team, no familiarity with the regulatory environment, you challenge the industry boss, where is there any chance of winning?

There is a story in China called "Tianji Horse Racing". When the opponent comes out, you will be out. When the opponent is out of the middle horse, you will be out. When the opponent is out, you will be out. This story tells us that we must foster strengths and avoid weaknesses, and use our own long-term strikes to be short-lived. The change of travel is based on the shortcomings of our own people, just like the new guns that use the big-blade spears to attack the foreigners. You should use your strengths to compete in the market, not with your shortcomings, and the transition is precisely to use your short board to compete with companies that have established a dominant position in the industry. The best way to transform is to think about and change the status quo in the industry you are familiar with and find a way to survive.

Misunderstanding 2: Innovation requires high technology

Here is a book for you, Peter Drucker's "Innovation and Entrepreneurship", which was published in 1984. Today we still have no outdated feelings. Drucker put forward a few ideas in this book. I agree very much. One is that innovation needs to be focused. The second is that innovation does not necessarily require high technology. It can still be done in traditional industries. Drucker used the figures from the United States in the 1980s to show that three-quarters of innovative companies come from traditional industries, and only one-four from the technology industry. So we don't think we can leave the Internet, big data, and we can't innovate without knowing artificial intelligence. Wrong, selling onions, selling garlic, opening restaurants, making shoes, and making clothes can all be innovative. Innovation is high-tech, of course, but it is not based on high technology. In this book, Drucker lists many innovations in the traditional industry. There is no high-tech, and there are huge economic benefits.

For example, McDonald's is a great innovation. From this innovation, a new industry has emerged, that is, the fast food industry. McDonald's innovation began with a milkshake machine supplier in New York, and he found that the annual milkshake machine was the most ordered in a burger store in California. He was very curious, so he flew to California to go on a field trip and found that it was different. The traditional method of hamburger production is that an employee is responsible for all the production processes at one station, from bread cutting, cutting slices, croquettes, spreads to packaging and selling to customers. The first pain point of this production method is that the consistency of product quality cannot be guaranteed. Different people have different flavors for different lengths and tastes different. The burgers bought in one store have different tastes, not to mention in India or The burger made in China. The second pain point is low efficiency. One person completes all the processes in turn, the production time is long, and the customer waits for a long time.

This burger store in California is different. It separates the processes completed at different points in the same space point, distributes them at different spatial points, completes them at the same time, and uses space for time. Cut bread, cut-to-order bread, cut lettuce and tomato specializing in cutting lettuce and tomato, croquettes specializing in croquettes, special sauces for sauces... Turning the single-station production of hamburgers into assembly line production, And standardize every process. Shorten the production time and reduce the waiting time of customers, so this burger shop customer has the most ordered milkshake machine every year.

The New York businessman, who called Crocker, was greatly inspired to buy the burger shop and promote the business to the whole of the United States. Without any high technology, it created a big-cap company and created a brand new fast food industry. The fast food restaurants we saw today, KFC, Burger King, etc. are all emulating McDonald's. Without high technology, traditional industries can still innovate.

Drucker advocates focusing on operations in an industry. He believes that only long-term cultivation and accumulation can find out what the pain points in the industry are and can find effective solutions to these pain points.

Recently, I have seen some companies and feel that Chinese companies are still promising. The reason why I came to Shenzhen is quite enjoyable. I also saw that some companies are actively thinking about how to innovate and see the future of China's economy from these enterprises. Some of these companies' innovations have used new technologies, and some have not used new technologies, and they have done a good job. For example, there is a hot pot restaurant called Haidilao, which is indeed innovative. The customer found that the service of Haidilao is not the same as that of other catering industry. My personal feeling is that the service is just right, and there is no high and no whisper. The service industry is prone to these two extremes. For example, when you enter the door, he nods and says, "Mr. You are here," making you very uncomfortable. The service of Haidilao makes you feel very kind and just right. The most rare thing about Haidilao is that the store services are the same throughout the country, and the consistency of service quality is very high. It is not that the service in Shenzhen is good and the difference in Jinan is the same in the country.

I did not conduct a detailed and in-depth investigation, guessing that Haidilao has made innovations in human resource management to ensure the quality of service. Not only that, but it also has continuous micro-innovation, which has made it a brand different from its competitors. There is a customer's pain point in the hot pot, soot, some hot pot restaurants have a smoking machine on the shabu-shabu, but the problem is that the noise is too loud. I had a few friends who went to the restaurant to chat at the weekend. The sound of the smoking machine was very loud. The atmosphere of the chat is gone, and you can only hear and talk to your friends.

Haidilao does not have a smoking machine on the pot, but instead has a groove around the crucible. When the oil smoke comes out, it is sucked away from the side groove. This is innovation. Small innovations can be accumulated, and the ultimate customer can understand that you are different from others. When I went to a business trip to eat a shabu-shabu, I first thought of Haidilao and then consider other homes. There is no high-tech in the innovation of Haidilao.

In the age of the Internet, everyone said that if you don't use the Internet, you will die, not necessarily. The Internet is a powerful sales tool, but cell phone companies that use traditional sales methods can do a good job. China's mobile phone shipments ranked first Oppo last year, second place Vivo, third place is Huawei, followed by Internet sales of Xiaomi, the top three all use traditional sales channels. I don't exclude the Internet, but the Internet is just a tool. What tools and technologies are used in business and on the market depends on a comparative analysis of comprehensive costs and comprehensive benefits. There is no need to surf the Internet, and sometimes the traditional methods are more effective than the Internet.

Of course, if you can use the Internet, I suggest that you use it as much as possible, but emphasize that there is no Internet thinking, just like there is no steam engine thinking or computer thinking. I and the friends in the Internet industry often exchange and argue. I think the Internet obeys the same science, economy and market rules, and it is impossible to rewrite or subvert the law.

Below I introduce a traditional industry, using the Internet and data technology to transform itself, and achieved very good benefits, adding a little confidence to friends working in the traditional industry. Of course, I don't deny that the Internet industry, mobile technology, and artificial intelligence will be very active innovation areas in the future. I just want to explain that a company outside the technology industry can still innovate.

This is a traditional clothing company that makes custom suits. We know that custom suits generally go to the tailor shop. The tailor master will first give you the size, draw the publication on the cloth according to your size, then cut it with scissors, sew, sample, adjust, and finally finish delivery. The pain point of the traditional business model is that the delivery time is long, because the experienced masters do it by hand one by one, and it can't be done in one or two months. The second pain point is that the hand-made price is high, the fabric is better, and the two-piece suit is nearly 10,000 yuan. The tailor shop is not big. The experienced master has a few helpers to open the store by himself. It cannot be industrialized on a large scale, and the cost cannot be reduced.

The company solved these pain points with big data and information technology. In fact, the amount of data is not too large, compared with the data of autonomous vehicles, it is not an order of magnitude. The customer enters the door and puts on the tights. The three-dimensional scanning of the human body is first carried out. The shoulder width, waist circumference and arm length are all input into the computer. It is not the tailor's drawing, but the computer is transferred from the database and your body. The closest plate type, and then use the algorithm to narrow the difference between the shape of the library and your size, replacing the tailor's experience with computer design.

The human body is three-dimensional, and the fabric is two-dimensional in the plane. How to project the three-dimensional projection onto the plane, and then sew the planes together to make comfortable and beautiful clothes. In the past, experienced tailors were needed. Now, as long as the database is large enough and there are enough templates, inexperienced college students and secondary school students can operate the computer. This is innovation, a bit of technology, but not a high-tech.

After the computer is designed, the machining instructions are automatically sent to the CNC cutting machine, and the cutting head controlled by the system cuts the cloth one by one. The worker nailed an IC card to each piece of cloth that was cut, and hung it on the assembly line. The piece of cloth began to swim in the workshop, which is a bit of the taste of the Internet of Things. Where is the piece of cloth going, what is the current state, who is doing the next process, and the data is in the system.

When a piece of cloth walks to a certain station, the worker scans the IC card on the piece of cloth, and the processing instruction is displayed on the screen, or the buttonhole, the seaming, or the sewing is performed, and the screen is clear. After this process is completed, the worker sweeps the card again and hangs the return line to continue moving forward.

这家企业把手工操作的定制服装变成了工业化的流水线生产，结果价格降低了一半以上，交货期从至少1个月缩短到7天。谁说传统行业不能创新？

创新需要专注执着的“笨人”，专注于你自己的行业，像华为一样的企业，不炒股、不卖楼、不做金融、不上市，几十年如一日地做通信设备和器件。如果大家觉得华为太高大上了，学不了，学老干妈辣酱可以吗？人家也不炒股、不卖楼、不做金融、不上市，专心干一件事，把这瓶辣酱卖到了全世界。无论中国人走到哪里，悉尼、纽约、巴黎，都可以买到老干妈辣酱，它全球的销售体系一定有独到之处。所以我们不要妄自菲薄，觉得自己在夕阳行业中，没有什么好做的，一定要跨界转移去搞高科技。

有人说，国外的一些知名企业不也在跨界吗？互联网公司谷歌在研发无人驾驶汽车。的确，谷歌是做搜索引擎和网上广告的，造汽车看上去是跨界，仔细地观察和分析，并不是这样。无人驾驶汽车的核心技术不是发动机、齿轮箱等传统的机械制造，而是自动控制，要求强大的图像数据处理能力，而这正是谷歌的长项，它把多年积累的技术优势延伸到无人驾驶汽车上。谷歌的车通过声光电等各种传感器识别周围的环境，把图像、声音等信号输入到中央处理器中去，实时判断周围有几辆车在跑，各个车的方向和速度是多少，预测它们下一秒钟的位置，和我发生碰撞的可能性有多大，如果有车离我太近，电脑发出操控指令，及时改变方向和速度，避免碰撞。谷歌的自动驾驶汽车实际上不是传统意义的汽车，而应该看成是功能强大的数据和图像处理器。

我们的一些企业既没有汽车制造的经验，也没有大数据和图像处理的经验，贸然冲进这个领域，纷纷做起了电动汽车和无人驾驶汽车，误读误解了谷歌。其实国外企业比国内的专注多了，苹果就那几款产品，每一款都产生了世界性的冲击，改变了我们的生活方式和工作方式。

现在来作一个小结：人们说未来宏观经济有很多不确定性，在我看来，没有什么不确定性，而是比较确定的L形长尾巴。我们不必对宏观形势过度焦虑，要思考的是在长L形中企业怎么办，要从过去的制造转向研发，从过去的追求市场份额转向思考创新，专注于产品和技术。以中国企业家的能力，以中国市场的巨大规模，相信只要我们下决心调整方向，转型任务是可以完成的，而只要企业能够保持活力，不断地创新，中国的宏观经济未来就有希望。

(本文作者介绍：中欧国际工商学院是由中国政府与欧洲联盟共同创办，专门培养国际化管理人才的非营利性高等学府。微信号：CEIBS6688)

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