Author: Zhang Youhai
In the first half of 2022, there is widespread anxiety among China’s private entrepreneurs. Pressure on performance and a changing competitive landscape put entrepreneurs to the test. Short-term difficulties are no longer a survival test for most companies as the macro economy has begun to recover steadily. But for companies in pursuit of excellence, seeking breakthrough in adversity to sustain growth is a challenge they must overcome.
Amid the crisis, some hold back, pinning their hopes on favorable policies and positive news. Others are determined to turn the crisis into an opportunity to gain a competitive advantage in the midst of the chaos. “There are no bad markets, only bad businesses.” Great entrepreneurs are invincible and motivated, ready to pull chestnuts out of the fire. What they really need is a solution to the problem.
At the end of June, a group of founders and executives from prominent Chinese brands, including FIRMUS Chairman Leng Youbin, Bosideng Chairman Gao Dekang, and Gongniu Chairman Ruan Liping, sat down together in a workshop in search of the path to growth amid adversity. For them, the three-day strategy workshop run by Kmind Strategy Consulting will help them find a solution to navigate through cycles. There is no shortage of entrepreneurship courses in the Chinese business market, so what exactly is unique about the courses and services offered by this local strategy consulting firm? With that in mind, The Economic Observer sets out to find out in an exclusive interview with Hugo Xie, Mentor of the 10-Billion Strategy Workshop and Partner at Kmind.
As a course instructor and content designer, Hugo Xie has been Kmind’s principal lecturer of business courses since 2017, serving FIRMUS, Yadea, Xibei Catering, and other companies. He is one of the country’s first strategy experts. With more than a decade of experience in strategic practice, he excels in providing strategic support to multi-industry companies.
The interview with Kmind Partner Hugo Xie, The Economic Observer, Page 19, Issue 1078, published on July 11, 2022
1. Finding the path to growth through strategy
The Economic Observer: What is driving the influx of entrepreneurs to Kmind’s 10-Billion Strategy Workshop?
Hugo Xie: Their practical needs. Facing short-term difficulties caused by the recurrent outbreaks of COVID-19 and sudden changes in the international environment, entrepreneurs want to find the right path to growth. In the past, when the focus of the economy was on increasing new resources and demand outstripped supply in the market, companies were able to seek growth through corporate management, operations, internal cost control, and performance improvement. But as the focus shifts to existing resources, companies are taking market share from their rivals. At this point, the key to growth for them is to gain insight into customer psychology, proactively create demand, and outperform competitors while finding their own path of long-term sustainability.
How do we find a growth path that increases both volume and profit? Existing business courses on the market are relatively lacking in methodology, hands-on experience, and detailed case studies, which happen to be Kmind’s areas of expertise. With our unique methodology and real-world experience, we have helped five companies surpass 10 billion yuan in revenue. This workshop is focused on content like this, so the entrepreneurs are showing a lot of passion and interest.
TEO: What are some of the unique advantages of Kmind’s workshop over other business courses?
Hugo Xie: To begin with, we have a different system of theoretical knowledge. While most business courses revolve around operations and management, we focus more on strategy, involving insight into customer perception, strategies and practices in business competition, adaptation to future trends, and innovation.
Moreover, our cases are different.
1. They are unique. We have been deeply involved in all the cases we have shared in the workshop, and each is a unique story. In 2015, FIRMUS, a company with great products and a strong team, was held back due to trust issues. Over the past seven years, the company’s revenue has grown from over 3 billion yuan to more than 20 billion yuan in 2021, outperforming all foreign competitors. But I think this is only the beginning of its epic story. Today, in addition to infant formula, FIRMUS has launched Zhuoran children’s formula and Aiben high-end milk powder for adults. There are even more exciting cases to come.
2. They are multi-level. We are involved in the whole process of every major decision our clients make, promoting strategy implementation, following up on the results, and making optimizations and improvements. We can recreate the multi-level thought process of each story. Take Bloks, a Chinese brand of toy bricks, as an example. From selecting a name for the brand, choosing the toy brick segment, and defining the first strategy at the very beginning, to helping with fundamentals including product mix, product pricing, and strategy to bring in investment, and to identifying a key opportunity and achieving 200 percent year-on-year growth after the company achieved scale, we were there every step of the way. We assisted with business fundamentals and the rapid implementation of major moves; there was thought given to product technology, selling points, and creativity, as well as innovation in channels and communication strategies.
3. They span a long period of time. In a large number of cases, we have provided strategic support for more than three years, up to seven years. Our knowledge and cases are constantly updated and iterated as we further our partnerships with more and more clients.
2. Strategy consulting firms as coaches to companies
TEO: As a strategic consulting firm, what role does Kmind play when working with clients? How do you understand Kmind’s relationship with clients?
Hugo Xie: We see our clients as “athletes” competing on the field, and we are the “coaches” that accompany them throughout the process. We provide them with a tailor-made development plan, help them improve their strength over the long term, and assist them in performing effectively in the critical “game” to surpass their competitors and win the “gold medal”. Kmind is also a player in the field of strategy consulting and we win our “gold medals” by helping more clients succeed.
For example, Yadea began to enhance product performance in 2015 as it set the goal to develop “higher-end two-wheel electric vehicles”. By working with motorcycle parts suppliers, they have made the vehicles more durable with reliable brakes and shock absorption. They later incorporated the Beckers coating paint from Sweden and Bayer’s headlight cover into their vehicles so that they would remain as good as new after three years of use. Today, Yadea’s electric vehicles feature graphene batteries and a self-developed electric motor, giving them a range and power far beyond their competitors. At the same time, as its profits have grown, Yadea has been able to open more stores and offer better after-sales services, making itself a preferred choice among customers.
Today, Yadea is already a “gold medalist” in the field of two-wheel electric vehicles in China and even around the world.
TEO: Market competition changes with the environment and industry. Has Kmind ever reversed its strategy and made major adjustments to its solution?
Hugo Xie: This generally falls into two categories, the first being the flexibility of strategy itself. Just as water retains no constant shape, so in war there are no constant conditions. An important part of our plan is to remain flexible and shape our strategy to match the competition, which is the key campaign. In general, each year there will be key campaigns where we make special strategic deployments based on moves made by competitors, changes in the competitive landscape, or sudden events in the macro environment. It’s all about timing and speed.
The second is the review and iteration of strategy. Here, we have applied the unique wisdom of China, which is practical and rational. We seek rationality in logic and thinking, and, more importantly, practicality in results, which shows a mastery of direction and aptness. We review each major strategic move, identify effective moves, and discard ineffective factors to ensure the accuracy and effectiveness of our next strategic move.
TEO: You serve a wide range of clients in different industries with very different environments and “styles of play”. How do you cope with that?
Hugo Xie: First of all, our strategy revolves around the feelings of customers; we want to help companies understand and guide customer perception. In this regard, we have a unique methodology and rich experience.
Second, there is an element of preference in our division of labor at Kmind. For example, some teams focus on the apparel industry while others focus on durable goods. Over time, they will build up their knowledge and experience in their chosen area of expertise.
3. The unique strengths of local strategy consulting services
TEO: China’s strategy consulting industry is still relatively young, so there used to be a lot of blind faith in foreign consulting firms. As a leader in local consulting, does Kmind have its own unique methodology?
Hugo Xie: First of all, our theory is unique. We have combined the classical business theories of the West with the ideas of the East on war. And with a better understanding of the Chinese people, we can build Chinese brands based on popular perceptions among the Chinese people and their ways of thinking.
Second, our service model is unique. Many consulting firms simply teach a course or hand in a report to their clients without actually achieving the results they want. Our relationship with our clients is similar to that between a coach and an athlete. Our team will help our clients grow and ultimately win “gold medals”.
Finally, we have extensive real-world case experience. Unlike most consulting firms, which report on a project-by-project basis spanning one or two years, we work with clients on a multi-year or even 10-year basis. Given our long-standing relationship with them, we can offer more insightful observations.
TEO: Many consulting firms focus more on corporate management, products, and so on, but you value the feelings of customers. Why?
Hugo Xie: In the past, companies focused more on performance and cost control when demand outstripped supply.
Today, however, we see a fundamental change in the relationship between supply and demand. As human civilization thrives like never before, vigorous productivity has kept supply far in excess of demand for a long time. With the information “dust” and explosive growth of products, the only way for companies to grow is to increase customer awareness and convince them to choose their brand, so as to outperform competitors and lead the industry.
How do we make that happen?
Much like in sports, athletes are at a loss when the rules change so dramatically that they render traditional coaching ineffective. We have seen this great change. And by combining theoretical upgrades with years of real-world experience, we have come up with a methodology to help Chinese “athletes” win “gold medals” under the new rules of the era.
