Reporter | Zhang Yi
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In its latest annual report, By-Health (300146. SZ) announced the "New Eight Years" strategic plan - the initial completion of the transformation to a strong technology enterprise.
This can seem like a huge challenge for VDS (Dietary Supplement) companies. After all, compared with the downward consumer goods track, the upward route of strong technology and heavy functions is bound to mean higher standards, greater uncertainty in research and development, and correspondingly greater challenges.
Why did Tomson Bykin choose this narrow road? And how are you planning to lay it out? What challenges may be faced along the way? A few days ago, Liang Yunchao, chairman of By-Health, accepted an exclusive interview with Interface News. This is also the first time after proposing a new strategy that Liang Yunchao has publicly spoken out and explained the strategy in detail.
In the dietary supplement industry, By-Health has occupied a leading position and its advantages are expanding.
According to Euromonitor data, the total retail scale of China's vitamin and dietary supplement (VDS) industry in 2021 was 189.2 billion yuan, with a growth rate of about 6.6%. By-Health's share was 10.3%, ranking first. The second and third market shares were 6.0% and 5.0%, respectively.
However, Liang Yunchao, who has a sense of distress, is still uneasy, and in his eyes, the advantage of Tomson Byjian's "no one has me" has been left. Liang Yunchao was thinking: "Seeing that our unique advantages are imitated and caught up by our peers, where is the future of Tomson By-Health?" ”
Liang Yunchao wants to dig a new "moat" for Tomson By-Health.
Image source: By-Health By-Health "The disruptors are being subverted by the new disruptors"
Thinking of danger in times of peace, Liang Yunchao began to think about the transformation of Tomson By-Health a year ago. Liang Yunchao asked himself, how many more "only we have, others do not"? There's not much left. In his view, strong scientific and technological transformation is the only way for Tomson By-Health.
Interface News: By-Health's revenue compound growth rate in the past three years is about 20%, and its market share is often in the first place. Under favorable circumstances, what is the company's consideration for proposing the transformation at this time?
Liang Yunchao: The so-called favorable situation is actually in the narrow track of VDS, and our development does seem to be very smooth, but from a broader perspective, there is still a lot of room for development and obvious gaps.
Compared with consumer health outside the VDS (dietary supplement) industry, or more importantly, compared with the overall consumer product level, there will be many examples to follow, and you will see gaps.
In particular, in the past two years, the consumer goods industry has undergone many changes, the rise of new consumption in China, the epidemic has gradually normalized from the so-called emergency changes in the past, and the catalyst habits of the crowd have also changed. Some platforms that once existed as subversive images are being subverted by new disruptors. Everything is changing, and the ecology of the platform has changed a lot.
The thing I thought all day about last year was why By-Health was able to develop? I think By-Health is successful by differentiation. People do traditional health care products, we do VDS; people do direct sales, we do pharmacies; people use ordinary raw materials, we select high-quality raw materials in the world; people use ordinary factories, we use transparent factories, open to the whole industry to see; people specialize in channels, we do the market. These differences form a unique advantage of Tomson By-Health.
Today, when making new strategic planning, I ask myself, how many "only we have, others do not" have? There's not much left. Therefore, from 2021 to 2023, as the chairman of the board, in these three years, I not only have to complete the goal of revenue and profit, but more importantly, form a new core competitive element of "no one has me", so as to face the market after 2024.
When I imagined this new year, I drew a picture of the future Tomson By-Health - strong technology, which is a goal, and I hope that By-Health will become such a company. But the future is not something you can achieve if you want to, and what you do today determines what you will become in the future.
Interface News: There are many directions for enterprise transformation, and "strong technology transformation" seems to be the most difficult track. Why did you make that choice?
Liang Yunchao: We now have VDS as the core, and the VDS industry has two development directions in the future. The upper will involve over-the-counter drugs, which will go in a more professional direction; the lower will develop in a broader direction of the market, more material, fast consumption, and high frequency.
On this scale, I tilted my strategy towards the more professional end. There are several reasons for this judgment.
First, in recent years, By-Health's competitors have all started from the level of light function, more fast consumption and young people's circle. This approach is correct, because the threshold of this sector is relatively low, including the threshold of research and development, the threshold of channel resources, etc. are not high.
We also have to deal with the competition in the light functional sector, but from the perspective of corporate strategy, I am more inclined to the direction of heavy function. I will definitely stick to our core strengths, Tomson By-Health started from a heavy function, and the share in this field is very high. We must not give up our strategic advantage, we must strengthen it.
Second, society is facing an aging population. The trend of social aging is obvious, and then there will be a gold market opportunity that lasts for N years, and the overall market demand will definitely be more functional, which is a new area of competition.
Third, the threshold in the field of consumer goods itself is not high, the fight is marketing, more brand, VDS is more functional, and the threshold requirements for research and development are very high. VDS to the direction of heavy functions, mainly in the high-tech to compete and focus, fight is your research and development strength and your accumulation, so the future resources must be more and more concentrated.
Over time, I've raised the whole study of heavy functionality to a level that others can't reach. That's the competitive position I want to achieve and continue to strengthen in my core markets.
From a two- or three-year perspective, many projects are full of competitors, but the time is extended to five to seven years, there are fewer opponents, and after eight years, there will be fewer.
Being able to take the initiative to win a certain time difference can have more "opportunities" than others in the "crisis", and it is possible to block a greater crisis before a greater opportunity comes.
"To create something that it does not have"
If the past eight-year strategy has laid a good foundation for Tomson By-Health's current strong scientific and technological transformation, then the eight-year new strategy that is being opened, Liang Yunchao once again stands in an advanced perspective.
Image source: By-Health Personalized vitamins
Interface News: So how does Tomson By-Health's transformation land specifically, and what are the directions?
Liang Yunchao: The first direction is the research and development of its own patented raw materials and formulas. It turned out to be the research of raw materials and formulas with its own patents, invention patents, and self-developed technologies, and this time it was limited to invention patents.
The second direction is the development and registration of new and heavy functional products. In 2014, we clearly proposed to go in the direction of function, and required functional research and development of our own patents and intellectual property rights, which is the core. This is also our first transformation, and it has been exactly 8 years since the transformation in 2014 that we have the current functional new products.
What is a new feature? For example, gout, we want to alleviate this problem in a non-pharmaceutical situation, or the problem of Alzheimer's disease, etc., this is a new function product, to create something that it does not have, that is, the health care function that the existing functional system does not have for the time being.
The technology and technology content of such products is very high, and it is difficult to develop. Actually we laid out maybe 8 to 10 tracks, but only one or two of them really made substantial progress at the national level, and there were a lot of products that were eliminated, and it took a long time, so we had to have enough time to accumulate.
It took eight years to have today's series of phased scientific research achievements such as PCC1 basic research, which also created a scientific research system foundation for the next eight years.
The third direction is the forward-looking cutting-edge research and development of anti-aging and precision nutrition. The signature move was the announcement of last year's PCC1 collaboration with the world. In December 2021, By-Health collaborated with a team of experts from a number of global institutions, including the Shanghai Institute of Nutrition and Health of the Chinese Academy of Sciences and the Mayo Clinic, to extract the anti-aging substance PCC1 from specific grape seeds, which can remove senescent cells.
Over the past many years, we have done a lot of experiments with a large number of third-party institutions around the world on anti-aging factors.
Interface News: The annual report said that Tomson By-Health's breakthrough and opportunity in the "silver economy" golden N year. How do you view this market space?
Liang Yunchao: Why is the silver hair strategy so important? The progress of medical technology has greatly extended the life expectancy of modern people, and it is more important to ensure the quality of life when the life is extended. Now light functionality can still be satisfied to a certain extent, but the more you have to solve the problem later, the more you have to solve it comfortably. Tomson By-Health has more responsibilities and enough room to play. To do this in the case of non-medicine, Tomson By-Health must invest heavily in the perspective of strong science and technology and concentrate on investment.
Interface News: Every two or three years to the market to launch a self-developed high-tech content of heavy function products, which is bound to have greater investment in research and development. What are your plans for R&D in the future?
Liang Yunchao: Starting from this year, the R&D expenditure will gradually increase, and the proportion of R&D will continue to increase.
On the one hand, in the original R & D costs to remove the false and true, more focus on the three directions mentioned earlier, on the other hand, the total R & D investment slowly increased.
Our R&D is of higher quality than the original investment, and some R&D projects are abandoned and focused on a higher standard strategy. Those who are scattered and do not want to work the face.
It is necessary to seize the opportunity of the "golden N year", combined with the situation of Tomson By-Health, to achieve a far leading competitive advantage in this area. Go from VDS to a higher space, leaving a technical channel.
There are also different opinions within these three goals, saying that I have set it high. But I think that aiming at the moon, even if it fails, can at least fall on the clouds.
After indicating the direction, break down the target layer by layer. In order to achieve this goal, in February this year, the company passed the "2030 Core Goals and Action Platform for the Transformation of Strong Technology Enterprises" to decompose the goals. With eight years of precipitation, I am confident that in the next eight years, By-Health will be able to go to a bigger level.
"Don't sacrifice the future for the sake of solving the pain of the moment"
The transformation may bring about a period of performance pain, but Liang Yunchao said that losing competitive advantage is an unbearable pain. Don't sacrifice the future for the sake of understanding the pain of the moment.
Interface News: In the process of transformation, do you foresee what risks and challenges By-Health may face? Trial and error costs?
Liang Yunchao: Since it is a strategic choice, there must be pains during the transformation period, not a big pain, not an unbearable pain. From a business point of view, it is the most painful thing that your competitive advantage is gone.
Last year, I was thinking about the problem of "quality" and "quantity", "quality" requirements are much higher, "quantity" will be smaller, and the challenge must be much higher.
First of all, the research and development of new functions is difficult, and the industry is surviving in the cracks, and it is useless to scream and be tired, depending on whether you can grow with resilience.
Second, the requirements for the R&D team are very high. For example, the self-owned invention patents of raw materials and formulas must be stuck, including cooperation with third parties, which are not in my goal. In the world's most cutting-edge and health-related raw material invention discoveries, we will do applied research and form invention patents. We're going to benchmark those pharmaceutical companies today.
Interface News: From the perspective of investors, strong technology transformation is a long-term, continuous investment process, how to balance the short-term and long-term interests of investors?
Liang Yunchao: At this stage of By-Health, profit does not represent the quality of operation. In my opinion, when short-term interests and long-term interests contradict each other, we must choose the long-term. The idea of not sacrificing the future because of the pain of the moment is in my blood.
From the perspective of the strategy of enterprise competition, it is either leading in terms of total cost, or centralized strategy, or differentiation strategy. The most important gene of Tomson By-Health that I lead is innovation and change, which is the core gene.
Business is a living interest, and business is a constant idea. The era of winning the world with one move is long gone, and you have to keep innovating. "With the old map, you can't find the new continent."
Differentiated competitive strategy, two or three years to see the opponent, and then pull for a long time will not have an opponent, for me, to have a long-term status is more important.
I bring new people to the new project team internally. The most important thing is not to gamble with the future on the present, quite simply, not to sacrifice the future for the sake of understanding the pain of the moment.
The enterprise must go from one fork in the road to another, and each fork must be selected. At this point, I always have to choose long-term interests, which is my very core thinking.
From an investment point of view, investing in a strong technology company should pay more attention to its research and development report, not just the performance report.
Let's do it first. By-Health does its own thing and continues to reflect your value. The capital market is the smartest, how you do it, what you do, the market will naturally have its correct response.
Interface News: When talking about "danger" and "opportunity", you mentioned "the difficulty of normalization". What is the "normalization difficulty" of By-Health, and how do we deal with it?
Liang Yunchao: For example, technical problems, changes in the population, because of the impact of the epidemic, including the contact of information, the arrival of channels, these are all changes, and the original model of contact with consumers is changing.
I think enterprises should have more strategic determination, there is no particularly difficult year, every year is the same difficult, every year is the same key, the difference is only that the "difficulty" and "key" of each year are different, nothing more.
We're good compared to other industries. In the future, China's silver economic market is very large, and I am very convinced.
On the contrary, I think this year is a good opportunity for companies to think more about "quality" rather than "quantity". This is also my personal advice to Chinese consumer goods companies.
The core competitiveness of consumer goods companies in the future is the ability to make friends with users, which is the ultimate ability, but this was before that the ability of brands.
The core competitiveness of consumer goods is branding. From a thousand people to a thousand faces to a thousand faces, consumer goods brands are experiencing a change from variety brands to category brands to corporate brands, that is, from commodity brands to corporate brands. Doing branding is the same as being a person, people must have a bottom line, people must have values, which is the most important.
By-Health is "an industry on the tip of the tongue, an enterprise on the tip of the knife". Tomson By-Health has two red lines, one red line is the law, absolutely can not be touched, and the other red line is the bottom line, the moral bottom line. The entire "crew" must be able to do it, so that the enterprise has a long-term foundation.
Integrity is more important than intelligence, and that's my most important point. I teach my children the same way.
We must continue to create incremental value
More often, Liang Yunchao imagines the future of the VDS industry. Establish the standards and concepts of VDS, and use technology to empower the VDS industry to bring greater increments. "When the day comes when everyone is not called a health supplement, that is, the spring of China's dietary nutritional supplements has come."
Interface News: By-Health has been reinforcing the VDS concept rather than the traditional concept of health supplements. You have been in the VDS industry for several years, what are your expectations for the development of the industry?
Liang Yunchao: VDS is a very difficult industry, and I summarize it as surviving in the cracks, but growing with resilience.
For practitioners, it is necessary to remember the basic positioning of dietary nutritional supplements: raw materials are vitamins, minerals, animal and plant extracts, etc.; for specific groups of people, they have balanced nutritional intake and regulate human body functions; they cannot replace normal diets and cannot replace drugs to treat diseases.
For new industrial investors, do not repeat the mistakes of the past, do not fish in the water. At all times, we must tighten the red line and bottom line awareness, and jointly care for the young Chinese dietary nutrition supplement industry.
For consumers, it is necessary to correctly guide consumer expectations and guide them to the basic positioning of dietary nutritional supplements.
We hope to unite more enterprises, promote the national level to pay more attention to scientific nutrition, promote the improvement and establishment of industry regulations, we hope to lead the industry to establish VDS standards and concepts, and promote the healthier and longer-term development of the industry.
Tomson By-Health in the prospectus for the first time to introduce the concept of dietary nutritional supplements, so many years, we have been moving towards this goal, in the continuous promotion of the concept of dietary nutritional supplements, but the B-end, C-end mostly called health products.
It has slowly improved over the years. When the day comes, everyone will not call health care products, that is, the spring of Chinese dietary nutritional supplements has come.
Interface News: By-Health is already the number one brand in VDS market share, is there any goal in this position? What is Tomson's positioning for himself?
Liang Yunchao: I often ask myself, is there any value in Tomson By-Health? First, continue to create incremental value for consumer health. Second, continue to create incremental value for other industry partners in the ecosystem. If these two points cannot be done, there is no value in existence.
At the heart of it is the consumer. The core strategy of Tomson By-Health is "all the way to C", and C is the consumer.
Tomson By-Health should continue to bring hard technology products, bring incremental value to his health, this product may only have us, others do not. Whether it is weight management, bone health, heart and brain health management, or liver health, dietary nutritional supplements are needed for nutritional balance.
Value to ecosystem partners. For example, in the past two years, China's ammonia sugar market has been made, the "cake" has become bigger, and many people can get a piece in it in various ways.
When I think of By-Health, it should be the first company to use non-drug ideas to solve health problems for consumers. In the field of VDS, By-Health is committed to becoming one of the most technologically and innovative VDS companies in the world.