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After three months of intense preparations, patient collection of the two-month case, and one-month participation in the review and preliminary examination of the company, the first Linglingxuan Award 2016 was held in Shanghai for the final review and award ceremony. Under the high standards and strict requirements of the 12 professional judges of the Lingxuan Awards, the Linglingxuan Awards have ranked six categories: engine, chassis, body, electrical and electronic, new energy, and multinational components. In 17 awards, the generic parts and components awards were eventually vacant.
On November 29th, “The Road to Breakthrough - 2016 First Ling Xuan Award Presentation Ceremony and China Automotive Parts Innovation Forumâ€, Zhao Xuquan, Director of the Lingxuan Awards and Director of Automotive Industry and Technology Strategy Research Institute of Tsinghua University published “ Chinese enterprises catch up with the road" keynote speech. He believes that the parts and components companies have decided whether Chinese car companies can "go out." Compared to vehicle manufacturers, parts factories will have even greater challenges and opportunities. Chinese car companies should be bigger and stronger. Whether it is a car factory or a parts and components company, they must take the road of internationalization and build a global enterprise. 
The following is a record of Zhao Fuquan's speech.
Today is an awarding ceremony for China's parts and components companies. I would like to talk about my views on the theme of "Chinese companies catch up with the road."
Ten years ago, I mainly talked about the “Catch-up Path,†and I personally believe that after more than ten years of hard work, the Chinese automotive industry’s local companies have greatly improved, and they have also seized the blue ocean of the SUV, and core components are also improving. China not only has to “ To catch up, we must "super".
It mainly focuses on three aspects. First, it is the background of industrial catch-up, followed by the understanding of leapfrog development, and finally, the relationship between enterprise management, system construction, formalization, and internationalization. 
Not only "profitable companies",
To do more "valued enterprises"
Just now several leaders spoke in their speeches that there will be great opportunities for the Chinese auto industry in the future. More than ten years ago, we predicted that China's auto production and sales volume will reach 40 million by 2030, and everyone thinks it is unlikely.
At present, the country has already implemented 35 million vehicles in 2025 and 38 million vehicles in 2030, which has been written into the medium and long-term development plan. In addition, the market share of electric vehicles will reach 20% in 2020 and 40% in 2030.
The Chinese auto industry still has a good 10 to 15 years. At that time, we will be paralyzed at a scale of 40 million vehicles.
After more than ten years of hard work, the Chinese automobile industry has made remarkable progress. There have emerged outstanding enterprises such as Geely, Great Wall, and Chang'an. Beiqi, as an independent brand, has also received more attention.
In fact, the competition in the auto industry has become increasingly fierce, and the prices of joint venture brands are constantly dropping, involving the A-class vehicles and other fields. At the same time, the increase in the purchasing power of consumers and the increase in bargaining power of self-owned brands constitute a competitive environment that converges up and down.
As a traditional automotive company, it also has to meet the needs of low emissions while facing low costs. In 2019, China will formally introduce the national 6 emission standards, which is more stringent than the European 6 standard rules.
As a result, the automotive industry cannot simply think about becoming a "money-making enterprise", but also a "value-earning enterprise" - completely different.
We have always been accustomed to being a "money-making enterprise", but looking at the current emerging companies, they do not make money but are valuable. High capital efficiency has also become a huge challenge for traditional car companies. 
In this context, the Internet has used technology. The V2X interconnection technology brings great challenges and opportunities to the automotive industry in smart cars and smart driving. In the future, the automobile is far away from the traditional engine and gearbox, and the technical threshold is continuously declining. The emerging companies do not have the entry threshold for traditional internal combustion engines. There is no historical burden, and it has advantages in system, scale, service, and speed.
Under this background, traditional car companies, including parts and components companies, are facing enormous challenges. But pressure is also equal to power, and great companies are often born in trouble.
Future parts:
What consumers should, on what made <br> <br> everyone in the debate a question, why the Chinese auto industry "big but not strong." Some people say that it is a technical problem. Others say that it is a problem of management, and some say that there is a problem with the strategy. One of the most important reasons, I think, is that parts and components companies are not strong.
The capacity of parts and components companies determines the core competitiveness of the Chinese automobile industry in the future.
First, nearly 70% of parts and components of automakers are purchased. The supply chain capabilities and technical content determine the competitiveness of the automakers. Second, 90% of quality problems are related to parts and components. Not 90% of the problems are caused by them. It is a problem of system integration. Third, the cost and the competitiveness of the vehicle also have a greater relationship, and the cost of high-quality components is still relatively high.
In the future development of the automotive industry, modularization and platformization are one of the competitiveness factors, and the popularization of modular production methods will ultimately depend on the competitiveness of component companies.
The future OEM will no longer do a lot of parts, but it does not like to buy tires and wheels. It buys the entire drive and transmission system – it needs modules and systems. The popularity of modular production methods will determine the future competitiveness of OEMs. Naturally, OEMs are also demanding a modular supply.
At the same time, under a new round of scientific and technological revolution, industries are becoming more and more unbounded, but there is a borderline for business operations. After the industry has no borders, new parts and components companies are forming.
Everyone knows that the engine and gearbox are the core of the vehicle factory, but the battery manufacturer does not necessarily own it in the future. This is also the emerging manufacturers believe that: "You buy a battery, I also buy a battery, why should I lose to you (traditional car prices)?" Now whether the battery is the entire vehicle factory or parts factory control everyone is tangled.
At the same time AI (artificial intelligence), you say that it is parts or software or the supplier has been unclear. Internet-based smart network-linked cars need data. What are data providers? The new supply chain system is taking shape.
One of the characteristics of Industry 4.0 is the use of tools based on the interaction of the Internet of Things. It is outdated that the B2C model decided by consumers for the products purchased by the automaker is out of date. In the C2B business model, parts systems can be customized on a large scale, and the supplier system will undergo drastic changes.
Technology, technology, and modules will all be mastered by suppliers. Personally, I believe that the innovation of the automotive industry in the future will not be in the whole plant. In the parts and components industry, parts and components companies have become one of the major driving forces for innovation in the future.
Because of the remodeling and zeroing relationship, the future parts companies will not simply supply the general public and GM. As long as I build a factory through the Industry 4.0 Internet of Things, we can supply it to all automakers. This is not simply what you want me to give you. I interact with consumers.
Some time ago, I interviewed SAIC Vice President Lan Qingsong. They are pushing C2B. What consumers need can interact directly with the vehicle factory. With the cooperation of parts and components companies, "What do I want you to do for you?" - This is the future of the automotive industry changes.
More and more opportunities than challenges <br> <br> vehicle parts manufacturers decide whether Chinese car enterprises can "go out", both Japanese, Korean, German, including car prices, they were able to occupy the Chinese market, is Thanks to the powerful components. As a result, I think suppliers will have more challenges and opportunities than OEMs.
How to create a new round of capabilities? I think that there are many opportunities for our parts and components companies. It looks very exciting and sounds sexy. The core issue is where are your competencies? If not, it will definitely go out. I believe that suppliers have much to offer. How to improve themselves, control technology and accumulate experience are the future directions.
Compared with vehicle manufacturers, I think that the parts factory is more challenging and has more opportunities. 
Although the parts and components companies are complex, they are relatively simple in terms of technology compared to the vehicle manufacturers. They are relatively simple; they are more flexible and faster than foreign companies; in addition, they are more dependent on brands than their entire counterparts. Not strong. This is an opportunity.
But the challenge is even greater. Future cost competition is part of the core. But competition will not be misunderstood, and the cheap result cannot be the last thing to do with quality, and the brand will do it. The automaker will surely disintegrate all the costs and pass them on to the parts companies.
Another example is the dependence on technology. The automaker can't afford so many technologies. Then for those technologies like smart and big data, "Whoever has this technology, I'll just play with him." - The quality is good, the cost is good, and the technology is advanced. The supplier is the most ideal state. . In addition, parts and components companies do not have the protection ratio of joint ventures.
Many companies asked me: "How to break into the general supply system?"
I said: "If there is no capacity, nothing else needs to be said."
You can only sell 200,000, 300,000 sets of money by relying on the cheap. Does anyone say that you can afford 3 million sets? You have to afford people before they can place orders. Now that chicken and egg problems have occurred, there is no single investment and no investment risk. Without strong local companies, support for OEMs is also a big problem.
I personally believe that although the opportunities for parts and components companies are large, the challenges are even greater. If a parts and components company is not prepared for peace, I think there is no future. Now it should even be said that it is "risk in crisis," not only for parts and components companies, but also for OEMs.
From 1.0 to 2.0,
To formalize and international <br> <br> how to overcome difficulties, I propose - three steps should companies. The development of enterprises is similar to that of people, but there are also early childhood periods and adult periods. I look at the development of the company's three sections from the perspective of business management. 
In the initial stage, we must seize market dividends and work through the opportunities of reform and opening up. However, these companies lack management and lack of experience, there is no method and no goal, this kind of company is now difficult, to a certain extent, there will be pressure against risk, the scale is difficult to grow.
How to go down to the next peak? I think that in order to enter the stage of modern management, we must take the road of normalization and internationalization, control the core technologies, and use the formal methods to increase the competitiveness of enterprises—that is, the second stage.
The highest realm of the enterprise is the diversification and global management stage. “The east is not bright and the west is brightâ€. After the financial crisis, the Chinese market prospered and many American companies were established. This is the benefit of global operations. Personally think that Chinese companies are transforming from the first stage to the second stage.
Chinese companies have entered the 2.0 era. In the era of 1.0, extensive management, reverse development, plagiarism and imitation, and the local market; in the 2.0 era, formal management, positive development, and innovation and overseas expansion; while in the 3.0 era, it is a first-rate foreign company, lean management, positive development, and innovation. Global development.
No matter which stage, we must not forget the heart and soul, and we must meet the needs of consumers with the lowest cost, the highest efficiency, and the best quality. There is no speculation in the future. Only real talent is shown. Among them, the most important is normalization.
What is normalization? My understanding is that there is no need to use too complicated a word - that is, the standardization, standardization, and process of enterprise operations. What is its opposite? It is changeless and principleless. Businesses without this sentence are doing things in an unprincipled, speculative way.
How do we do this? It is necessary to formalize the decision-making mechanism, normalize the execution mechanism, and normalize the feedback mechanism. The connotation is to conscientiously do a good job in everything, and everything can be followed and laws must be followed.
What is the value of this sentence? It is the upstream and downstream, clear and responsible responsibility, rational division of labor, and tacit cooperation, avoiding ambiguity, eliminating wrangling, the automotive industry is the ultimate application of formalization, research and management do not study the car, management is only to the level of 0.8.
What is normalization? Simply put, it is to make people who have a level of ability not to do it, but I also allow people who do not have the level to do it. This is the normalization, system, and methods.
The same results have been done by the Toyota Corporation for ten years and two years. This is normalization. I think that normalization is the inevitable demand of small enterprises to gradually transform into large enterprises, and it is a precondition for the accumulation of small businesses, and it is also the process by which enterprises can realize their own system.
Entrepreneurs ask themselves - do you do this, do not say you do not say I am talking about the truth.
Some entrepreneurs said to me: "I know everything Zhao knows about you." I said, "How did you not do it?" He said: "I did it." I said, "What's the effect?" - The effect is not good . It still did not do a good job, really understand what you want to do to the extreme. Toyota is doing its best.
Let's talk about internationalization. Internationalization refers to the smooth deployment and effective role of corporate resources in the international community, and is also a process in which corporate products leave a particular region. Internationalization is not only a technology, but also a market. It is the internationalization of all the elements of a company's brand, product, marketing, management, manufacturing, and supply.
Everyone may feel a bit "virtual." Its true connotation is to follow the general rules of the game, to do things in accordance with international standards, participate in the division of labor, and make enterprises competitive.
Do not think that English can be called international talent. Many big bosses can't speak English, but they can still buy foreign companies. It is an international thinking and know how to operate internationally.
Someone said: Well done in China. China has a market of 27 million units. Why is it still international?
I tell you: China is the largest international market. In addition, a company that occupies only China is not enough, can not become a global enterprise, the company can not go far. Sometimes the East does not shine. At that time, the West may light up.
This is a market perspective. In addition, from the national strategy, the economy must be transformed to create a strong country. The biggest goal is to export high-end manufacturing to foreign countries, and automobiles are the most typical and competitive high-end manufacturing industry.
I personally think that Chinese car companies should be bigger and stronger. Whether they are car makers or parts and components companies, they must unswervingly follow the path of internationalization and build a global enterprise. Otherwise it will be difficult to compete in China.
What is the relationship between internationalization and formalization and globalization?
Formalization is the premise, and it is the basis for internationalization. Internationalization is a formalization on a global scale. Together, they form the cornerstone for companies to become bigger and stronger.
The difference between internationalization and globalization lies in the different stages of corporate development. Internationalization is the primary stage and is the necessary international support for local companies to participate in competition. Globalization is the highest level of internationalization. It is not only about building cars, but also about brands. It can be deployed in many fields and regions in the world.
Some people say that now that we are talking about Internet thinking, people wear slippers and slippers to work. Are you not contradicting when you talk about formalization?
Formalization and internet thinking are not contradictory. Formalization is well-planned and does not lead to chaos, but it is not stereotyped and immutable; the Internet is not liberalism or anarchy. Internet thinking does not deny normalization, but emphasizes flexible, differentiated, and higher-level operations under the premise of formalization.
How to achieve normalization and internationalization, I think there are three major elements.
The first is strategy, a clear, scientific and sustainable program. Second, we must have culture, and we must have positive, solidarity, and innovative corporate connotation. Third, we must have a system. This is to ensure that companies have laws and can There is a basic guarantee that the law must be based, grows, and improves. The system means all aspects of the enterprise. It must be normative, stable, systematic, and accumulative. This is the core of ensuring management.
The system is the basic guarantee for the continuous formation and improvement of the culture. The system is the foundation for management and the system is the core of the company.
In the end, I think that in the new round of normalization of Chinese companies, when the automotive industry has undergone drastic changes, it is necessary to “transform and upgrade†rather than “upgrade and transformâ€. Transformation is the means and upgrading is the goal. First, we must change our thinking. Second, we must seek change. Third, we must change quickly. Now it is no longer "big fish to eat fish," and it is even more "fast fish to eat slow fish." Ultimately, it requires real change and efficient change.
I personally think that the first thing to break is that foreign-funded enterprises also have anxiety. They are not the development trend of new energy technologies, but rather the rapid changes in business models, such as car sharing.
Secondly, China's parts entrepreneurs must have a pattern, they are interested in achieving great enterprises, and the big pattern determines the big ideas that will bring about big ideas, and finally promote the great development of enterprises.
In the end, the journey of a thousand miles begins with a single step. Enterprises should increase their layout, realise the real mobilization of resources at home and abroad, and adjust the ratio of R&D procurement talents, thus redefining the brand.
For the future, all of you here are shouldering enormous tasks and must innovate. This is not a simple technological advancement, but also an innovation in the business model, thinking model, and management model. No enterprise can own all resources. It must integrate platform advantages and maximize resource utilization.
Under the influence of internet thinking, the craftsman spirit is the most important. The operating company must score 100 points. Like today, it is not necessarily correct, but it is very hard. Thank you!
