3 Stars in the Ninety-Seven Financial Crisis (Excalibur Finishing)
Samsung also encountered serious difficulties in the financial crisis of 1997, but achieved considerable development due to the timely and effective measures taken. I think there are some things that can be used as a reference for Aida's future development.
Samsung's Crisis Survival Guide: Preserving Cash Flow
"The days ten years ago are something I always want to forget. The financial crisis that began in 1997 is the saddest thing I have experienced in the 30 years at Samsung." On November 3, at China Merchants Building, China Samsung Headquarters, 55-year-old Park Geun-hee, president of the Samsung Group in Greater China, looked a little sad when recalling the past, "We made very strong structural adjustments at that time, and I participated in the entire process from the previous planning to the final crisis. One in three people left the company and it was a very painful memory."
In 1997, in South Korea amid the Asian financial crisis, many consortiums struggled to survive. At that time, Samsung was already on the verge of life and death. At its worst, long-term debt reached 18 billion U.S. dollars, almost three times the company's net assets. The Korean company was on the verge of bankruptcy.
At a critical moment, Samsung embarked on a painful journey of self-salvation. Through layoffs, cost reduction, divestiture of bad debts and low-profit businesses, he has been reborn from Nirvana and has grown into a role model for companies all over the world.
However, history always repeats itself. Ten years later, the world economy is once again in a precarious economic crisis. The difference is that at this time, Samsung has already been well versed in the rules of survival in a crisis.
On October 24, Samsung's third-quarter financial report showed that its net profit fell 44% year-on-year to US$1.15 billion. But Samsung executives say they have reason to be optimistic about the company's future. This first stems from the fact that Samsung has a huge "war fund". At present, Samsung's cash reserves are as high as 7.6 billion U.S. dollars, so that it has enough funds to support R&D, marketing and factories. And for its cash-strapped competitors, this can only be an unattainable luxury.
Park Keun-hee told reporters that Samsung, which stood up again from the financial crisis in 1997, has become accustomed to arming all employees of the company with crisis awareness. "First of all, we must ensure cash flow and at the same time ensure competitiveness. We must challenge the ultimate cost reduction."
In fact, in the recent world economic crisis, Samsung's performance is far beyond the reach of its rivals. For example, as the world's second largest semiconductor manufacturer, Samsung is the only memory chip manufacturer that has not lost money. In addition, as the second largest mobile phone manufacturer in the world after Nokia, Samsung is also the only mobile phone manufacturer whose shipments increased in the first three quarters as of the end of September, and the market share of Samsung mobile phones in China has also increased from 11 % increased to 19%.
Addition and Subtraction in a Crisis
Let's revisit how Samsung made crisis change.
At the end of July 1998, at the Shilla Hotel, more than 20 top executives of Samsung Electronics held a far-reaching "life and death countermeasure conference" for the final structural adjustment reform. The more than 10-hour meeting process was full of tension and tragic atmosphere. On the spot, everyone decided that if the reforms were unsuccessful, all of them would resign. The company urgently formed an action team to come up with a plan for structural adjustment within two weeks. The meeting made an almost cruel decision. Within 5 months, Samsung Electronics' management layoffs by 30%, and non-management layoffs by 35%.
Park Gen-hee told reporters that at that time, the company first carried out structural adjustments in terms of manpower reduction. In South Korea, 25,000 employees were laid off, which means a reduction of 40%.
At the same time, in terms of expenditure, it has saved 1 billion US dollars a year, and the inventory pressure has been reduced by 4 billion US dollars. The sale was worth about $800 million, and 120 product projects were divested.
"All the operations of the company are based on this cash flow basis. In this way, we have reduced our debt ratio from 3% in 1997 to 85% in 1998. This is our first stage The content of structural adjustment." Park Geun-hee said.
According to his recollection, in order to reduce expenses at that time, Samsung saved every detail. For example, to reduce the number of company drivers, it is estimated that the management will drive their own cars; dinners at large conferences will be avoided, and executives will only fly in economy class. "At that time, there were no beverages in Samsung's meeting rooms, and free uniforms were no longer distributed in the factory. These had to be bought at their own expense."
Yes, all of this is for one purpose, to preserve cash flow. Meanwhile, Samsung is starting to recover in the battle to defend its cash.
It is worth noting that Samsung did not ignore "addition" in its self-help method. During the Asian financial crisis, many chip manufacturers began to reduce investment and shorten the battle line. At that time, Samsung Vice Chairman Yoon Jong-yong made an opposite decision. In the autumn of 1997, when all rivals were shrinking their front lines, Samsung increased investment in chip factories for a simple reason: entering the industry during the low tide period can obtain higher returns when the industry recovers in the future. Now it seems that this is undoubtedly the most correct decision.
Samsung, which successfully used the method of addition and subtraction in the economic crisis, has finally achieved nirvana, but now Samsung must start a new battle of defense.
new defense
Park Geun-hee admits that this is a rapidly changing digital age. We will constantly remind us of the crises we have faced in the company. Different crises will occur every month. We continue to arm all members of the company with crisis awareness. "
In 2005, Park Keun-hee returned to China to serve as the president of the Greater China region of Samsung Group. Among the former Samsung China presidents of Park Keun-hee, none of them had a term of more than 3 years. Park Keun-hee publicly proposed "to build a second Samsung in China" for the first time in his speech as president of China.
In his blueprint, "Samsung China's positioning is not just a simple factory or market, but Samsung's business base." This includes not only introducing the financial and service industries under the Samsung Group to China, but also allowing all Samsung products produced in China—the entire chain from planning, research and development, production to sales, to be completed in China.
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By the end of 2007, good news of Samsung's performance improvement came frequently: Samsung's mobile phone business surpassed Motorola and climbed to the second place among global mobile phone manufacturers. At the same time, Samsung TV has also ranked first in global sales for nine consecutive quarters. Data show that in the first quarter of this year, Samsung Electronics' sales accounted for more than 20% of the global TV market for the first time.
However, Samsung is facing challenges from many aspects.
At the beginning of the rise of digital products, the core means for Samsung to surpass its competitors was to introduce new technologies and new products to the market faster than its competitors - it launched the earliest MP3 mobile phone, the thinnest mobile phone in the world, and the highest pixel camera cell phone and the first WiMAX cell phone. But with the popularity of digital products, this advantage is no longer obvious. And on the mobile phone side, Samsung's designs, long known for its innovation, must face new competition from Apple's iPhone and Google's G phone. The bigger trouble comes from Samsung's semiconductor department. This Samsung cash cow is in the continuous decline of the entire industry, and Samsung will inevitably be involved in the price war.
Fortunately, though, Samsung certainly has enough cash to weather the economic downturn and the ability to gain greater market share when the market picks up. "When the company encounters difficulties, it cannot completely suppress parts such as technology research and development, marketing activities, or product appearance design. Even if other areas are reduced, these departments must increase investment." Park Genxi told reporters.
Samsung Electronics thrives as Sony's biggest rival
When Howard Stringer, the soon-to-be chief executive, joined Sony in 1997, then-Korean TV maker Samsung Electronics was in the midst of the Asian financial crisis.
However, in less than 10 years, Samsung Electronics' market value was almost twice that of Sony. There is no doubt that Samsung Electronics is now Sony's biggest competitor. But not only that, Apple Computer has also monopolized with its iPod The entire portable digital music player market. In addition, companies in Silicon Valley have surpassed Sony in portable digital products such as PDAs and digital video recorders. Even in the field of digital cameras, Sony is facing strong challenges from Kodak and Canon.
George Grid, an American IT analyst, believes that the current Samsung is completely different from Sony. The current Sony is full of management and bureaucracy, while Samsung still maintains a simple style. Among its 88,000 employees, a quarter for developers.
In the past three years, Sony's electronics business unit has nearly dragged down the entire company. Because of the huge losses in this unit, Sony's profit in 2004 ended this month. It is only 1 billion US dollars, accounting for 69 billion US dollars in revenue. Only 1.5%. In contrast, the performance of Samsung Electronics is quite dazzling. As of December last year in 2004, Samsung Electronics' sales were 56 billion US dollars, but its profit reached 10 billion US dollars. The high profit makes Samsung It can invest billions of dollars in research and development, and its advanced laboratories around the world have reached 15 levels.
The investment of Samsung Electronics last year reached 7 billion U.S. dollars, ranking first among global IT companies. This year, Samsung Electronics' investment will reach 10 billion U.S. dollars.
In addition, Sony also has a huge capacity to produce memory chips and display panels. Samsung's investment will further cut the cost of its products such as flat-panel TVs, dvd players and mobile phones. Low cost, stylish design and advanced technology for consumer electronics manufacturers is particularly important.
After the Asian financial crisis, Samsung Electronics, a surviving TV manufacturer, began to follow Sony and upgrade its products to high-end products. After spending US$3 billion on advertising within a year, Samsung’s brand was successful, and its The brand value is as high as 12.6 billion US dollars, which is enough to compete with the Sony brand. However, the Sony brand still has great appeal in the US market.
Samsung Electronics is even more invincible in the field of flat-panel displays, and even the proud Sony has to bow its head. Last year, it joined Samsung Electronics' project to build a giant factory in South Korea.
In December, Sony and Samsung Electronics reached a patent agreement that would allow the two companies to share nearly 20,000 patents by 2008.
In the field of mobile phones, Samsung's folding design, clear display screen and powerful functions make the company confident in its sales performance in 2005. Samsung expects its global mobile phone sales to reach 100 million units this year, an increase of 16% over last year. This performance It would allow Samsung Electronics to compete with No. 2 handset maker Motorola, which sold 104.1 million phones last year.
Although mobile phones are Samsung Electronics' biggest business, Sony has not entered the field. As more powerful camera phones come to market, Sony's digital camera business will be weakened.
Last Wednesday, Samsung Electronics launched the world's first 7-megapixel camera phone in South Korea. Most of the current digital cameras are 3-4 million pixels.
Semiconductor radios, wa**mans and color TVs have made Sony a consumer electronics giant, and these products have also changed people's lives. Today's Samsung Electronics is undoubtedly Sony 10 years ago, full of awareness of progress and innovation.
Posted by: Excalibur User Type: Common 2008-12-1718:41:36 Reply
Information Industry and China's Economic Development
(Justin Yifu Lin)
As Chinese intellectuals, especially those from Peking University, we are all thinking about the fate of China. China has the prosperity of the Han and Tang Dynasties, but also the decline and backwardness of modern times. This change is especially obvious after the Industrial Revolution and the rise of the Western world. The sinking of the Eastern world, the modern history of China is a history of humiliation, Peking University people have made many attempts, after the founding of the People's Republic of China, our economy has gradually developed and has developed very well. Reform and opening up have brought great economic progress, with a GDP growth of 9.6%, but we still have a problem. In 1999, the per capita income was less than 800 US dollars, which was less than 1/40 of Japan's and 1/34 of that of the United States. As a Peking University student, We must see the achievements, and don't forget the gap. This is our historical mission.
The reappearance of the information industry provides new opportunities for development. In the 20th century, the British and American economies took the lead. After the 1980s, this economic advantage could not disappear due to the development of Japan. At that time, Japan relied on traditional industries, such as electronics, shipbuilding, and steel. At that time, many people believed that the era of the United States was over. , The era of Japan is coming. After the 1990s, although Japan also adopted a lot of fiscal, monetary and export policies to change the economic recession, this trend has become increasingly obvious. On the contrary, the US economy has once again shown strong momentum. Comparing the decline and the length, you will understand that the basis for this is the emergence of the information industry and the promotion effect it has on the economy. And put forward the concept of information revolution and knowledge economy. This kind of performance is all-round. It can be seen from the doubling of stock prices. In 1993, the Dow Jones index was about 4000 points. From 1994 to this year, it rose from 4000 points to 11,000 points. , and the technology stock Nasdaq broke through 2,000 points in 1998, and exceeded 2,000 points at the beginning of this year. There is also a stock famous for selling computers that has grown from $1.5 per share to a maximum of $73. Hong Kong and Japan in Asia also set off such a wave. Li Zekai’s Yingke Digital defeated Singapore Telecom’s competition to acquire Hongkong Telecom. In May 1999, Li Zekai bought a humble company, and Yingke Digital officially appeared. Money, Yingke Digital has increased more than 20 times on the day of its listing, reaching more than 5 Hong Kong dollars, up to 25 Hong Kong dollars, with total assets of 250 billion Hong Kong dollars. In just ten months, it became the third largest company in Hong Kong. Li Zekai's personal worth exceeded 150 billion. It took 30 years for his father Li Ka-shing's first 100 billion. The wave of the information industry has enabled the economies of East Asian countries to recover after the financial crisis. During the financial crisis, Hong Kong's stock index was hovering between 11,000 and 2,000 points. Driven by technology stocks, it rose to 18,000 points, exceeding the historical high of 1 7,000 points, the economies of Japan and South Korea have also been able to rebound.
Before the industrial revolution, China was ahead in science and technology and culture for more than a thousand years. In the era of information industry, many people saw that the gap between China and others was not that big, and it was 10 or 20 years at most. There are myths in the United States, such as Hong Kong, Japan has it, China will also have it, mobilize the whole country on average, surpass the information industry, and use this trend to achieve powerful goals.
In response to such optimism, I have always insisted on my point of view: the development of a country must be based on the country’s comparative advantages, and production has three elements, capital, labor and natural resources: Generally speaking, the comparative advantage of developed countries lies in capital, while The comparative advantage of developing China, especially China in East Asia, lies in natural resources: In the information industry, is the principle that China should focus on developing labor-intensive industries still applicable? I think so.
The traditional idea is that the value of a company is obtained through profit, but now there are such companies that have been losing money, but the value of the company has soared. For example, the value of dot.** company is more than 30 billion. It is easy to form a misunderstanding of the information industry, which is also proposed relative to the traditional industry.
In fact, it can be solved with a little analysis. The technology of the information industry is mainly about the processing, storage and exchange of information. Traditional industries have achieved great development through the convenience of using information technology. Mr. Jiang Jianzhong's company has more than 20,000 people. Women's fashion companies should be regarded as labor-intensive. The process is roughly as follows: concept proposal, color shape design, sample clothing, try-on, and mass production. This cycle, about 10 months, is now shortened to three months after the use of information technology. Any industry can be like this. We can see that every time the development of technology will drive new industries. , the invention of the airplane has driven the air transport industry, and the invention of the train has driven the railway transport industry. Similarly, the development of information technology has also led to the development of the information industry and the development of the Internet and e-commerce. In this regard, we should actively accept it. Just as we cannot reject trains and airplanes because of traditional sedan chairs, we should not reject the information industry. Although sedan chairs may be more suitable for labor-intensive industries, we should consider a The principle of cost is that the cost of railway transportation is low in a large area, but not in a small area. Therefore, it is suitable for carrying by shoulders and people. E-commerce improves the transaction speed and exchange surface, increases choices, and reduces choices and transaction costs. , the development of e-commerce is also difficult, first of all, the legal and financial environment, followed by venture capital, and another point is that the cost of entry is very low, but the generation of value is due to economies of scale, so there are many competitors when entering In the end only a handful remained.
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The provision of information technology includes hardware technology and software technology. Hardware technology mainly refers to computers and networks. There are three links: development and research, production of core chips, and assembly of various components. The development and research are concentrated in developed countries, and the production of chips is relatively large. Some are in developed countries, and some are in some upper-middle developed countries, such as Taiwan, Malaysia, and Singapore, and the assembly of various components is concentrated in countries with cheap labor. From this distribution, we can see the comparative advantage. Developed countries have a comparative advantage in funds, and the funding requirements for research and development are particularly large. In 1998, for example, IBM invested 5.6 billion US dollars, Japanese yen 4.53 billion US dollars, Nokia 4.52 billion US dollars, NEC 3.4 billion US dollars, and Motorola 3.1 billion US dollars. After the technology is developed, a production line roughly costs more than a billion dollars.
Both Taiwan and South Korea are economies with relatively successful industrial transformation. Through the comparison of Taiji Power and Samsung, we can also see the rationality of the comparative advantage. When it first developed, Taiji Power was positioned as core chip production, while Samsung was Studying dynamic memory chips, its technical level is higher than that of Taiji Electric, but comparing with a set of statistical data in 1997, we can know the deeper situation. billion US dollars, while Samsung's 1997 turnover of 13 billion US dollars profit margin was 15%, with an investment of 5 billion US dollars and more than 1 billion US dollars invested in development and research. In comparison, Taiwan's base power accumulation is more than Samsung's, which also reflects There are two models. The former uses the comparative advantage of labor and capital to gradually accumulate funds, so as to be competitive in international competition. Therefore, it has its own funds for industrial technology upgrades. In addition, in the financial crisis, Taiwan’s damage is very small. South Korea’s model It is a large company model. Due to high technological upgrades, large scale, large capital needs, and high capital liabilities, it suffered setbacks in the financial crisis.
As China's development, it should use its own comparative advantages and use information technology to transform the competitiveness of traditional industries. This must not be controversial, but how should we position ourselves in the hardware industry? There is an impatient view that the gap is not big, It is possible to mobilize national power to develop high-tech development and research, but the following comparison shows that this is very unrealistic. In 1998, large and medium-sized enterprises accounted for 47.8 billion yuan of investment in development and research, and universities accounted for 5.2 billion yuan. The renminbi is only equivalent to two large American companies, and the 480 billion renminbi poured out of the Chinese government can compete with at most 20 large American companies, but the probability of success is much smaller. Although the gap is only a decade or two, according to our Comparative advantages cannot overcome this gap. In the choice of hardware industry, we should still choose labor-intensive assembly links. Only by making money can we be invincible.
Will this cause us to fall behind forever? This question should be looked at dynamically. The industrial choices of developed countries are capital-intensive, which is their comparative advantage. Our choice should be to use comparative advantages and take advantage of the large share of production factors. Factors, to carry out production, so as to obtain profit accumulation funds, so as to re-improve the level of factor structure, in order to have new industrial advantages, developed countries carry out research and development, only 5% of the technology is qualified and can apply for patents, but has commercial value only 10% to 20% of it. They must develop, because they are already the highest technology, and they must develop and research if they want to update. Developing countries can improve productivity by introducing technology, as long as it is better than the existing domestic technology, and the cost of introduction is lower than the cost of development of. China's capital accumulation is 30-40%. The United States is 20%, and the capital owned by per capita income is calculated, and China is 1/35 of the United States. Within a few decades, China's capital holdings can surpass that of the United States, and Japan's development is based on its own advantages and achieved through the introduction of technology.
The provision of software technology is a human-capital-intensive industry, mainly program design. From this point of view, as long as you have the education level of developed countries, you can design software as good as them. The main difference lies in whether the designed software can To adapt to the market, the solution to this gap should be that foreign software vendors improve product concepts, and domestic designers can produce them. The basic development of India, Chile, Ireland, and Israel is better. We can do the same.
Chilling~
In the high-tech industry of microelectronics, especially semiconductor chips, the capital investment required for research and development is amazing! The gap between our country and large foreign companies is really... I hope that Zhang Ke can take this opportunity to accumulate a sum of money, increase investment, take the lead in developing a series of new products, and then quickly occupy the market, gain profits, and continue to invest in research and development. Profit - a virtuous cycle of... Although the actual operation is far from easy to say, it is our common wish, or dream, after all, and I hope it can be realized in the book...
In addition to mp3 and mp4, I don't know the specific market prospects and entry difficulties of mobile phones, digital cameras, flat-panel TVs and other products. The most important thing is the core chip, but it is not so easy to independently develop competitive products quickly! After all, there is no technology accumulation. Maybe only by acquisition.