Wild geese are migratory animals that fly in flocks from the cold north to the warmer south when winter arrives. Although the journey was long and challenging, the geese were able to fly the entire journey easily and happily through a flying stunt called a V-shaped queue.
What is a "V-shaped queue"? To put it simply, in a flock of geese, there is a wild goose that will fly first as the lead goose. This leader goose is very tired because to overcome air resistance and create airflow channels, the advantage is that the energy of the geese behind it can be saved. When the leader goose gets tired, it will retreat to the rear and let another wild goose take its place and lead the group forward. In this way, the flock of geese can not only fly farther, but also fly more passionately.
Isn't that wonderful? Some people will ask, if only the division of labor and cooperation in human society were so harmonious. Don't say it, there really is. There is an economic theory - the wild goose formation theory, and this is like this. The wild goose array theory was proposed by Japan economist Akamatsu and is mainly used to describe the process of international trade, industrial upgrading and economic development of developing countries. Especially for the phenomenon of "going to sea" that we want to talk about in this video, the wild goose array theory explains it quite thoroughly.
Especially at present, when "enterprises going to sea" once again stands on the stage of history, when what happened in Japan and Korea happens again in our country, we can't help but think about several questions: why do companies begin to re-mention "going to sea", and what is the difference between the current "going to sea" and the "export" 20 years ago? How to use the theory of wild geese array to explain the current going to sea? How to achieve industrial upgrading while avoiding foreign dependence?
After reading this article, you will have a deep understanding of everything about going to sea.
1. Why go to sea?
Speaking of going to sea, we have to mention the global "pacesetter" of going to sea - Japan.
Even now, Japan's overseas data is very explosive. Since the 80s, Japan's economic guidelines have shifted from being a trading country to an investment country. The economic structure has also shifted from export-driven to domestic demand + foreign investment. Especially after the bubble burst, domestic demand was insufficient, and Japan's companies mainly made money overseas, which is one of the reasons why Japan's economy did not decline too much.
In terms of data, the Nikkei 225 Index accounts for 60% of overseas revenue, which is very international, while the figure in mainland China is only 12.7%; Japan's GNI/GDP ratio is 1.06, compared to 0.99 on the mainland; in the current account, Japan's overseas investment income contributes almost to the entire surplus, but Japan's trade deficit has been in deficit for a long time.
If you don't understand this, remember this sentence: "Japan's economic data mostly reflects the economic situation of overseas investment, not Japan itself." "As a result, Japan's GDP per capita has grown at an average rate of less than 1% over the past 30 years, and there has been deflation from time to time, but Japan companies have been doing well, with strong earnings per share (EPS)."
In fact, Japan companies don't want to do that. Japan's foreign investment as a national strategy is more of a frustration.
In that era, from a macro point of view, Japan's internal industrialization and urbanization reached its peak, and the economy also entered a stage of high-quality development, with a large number of industries with overcapacity and urgent need to be upgraded; From a micro point of view, after the bursting of the bubble in the capital market and real estate market, Japan companies began to deleverage due to the "balance sheet recession", coupled with aging and environmental pollution, the people suffered unspeakably; From an external point of view, the trade friction between the United States and Japan continues, the yen appreciates sharply under the Plaza Accord, and exports are in jeopardy. For Japan, going to sea is a difficult choice to make.
And how similar is all this to us today? The problems that Japan faced back then are actually the same problems we face now.
Even so, there were many differences between the situation of the mainland and Japan.
First of all, we are very similar to Japan in terms of supply chain and technological advantages, and we are even much stronger in the completeness of the industrial chain and industrial clusters; In addition, we are the world's most populous country and the world's second-largest economy, and we have a larger domestic demand market, which are our advantages.
However, at present, especially under the new world order of the ebb tide of globalization, our geopolitical situation is obviously more challenging than that of Japan. And when Japan faced transformation, its per capita GDP had reached $40,000, and it was already very rich; Another point that may often be overlooked is that the yen has been appreciating during the heyday of going overseas, which has also made Japan's foreign investment handy, and our exchange rate has been under pressure against the background of high overseas interest rates.
All this makes it much less urgent for us to go to sea than Japan, but the difficulty has not become any less at all. However, none of this matters, and Japan's experience in going overseas still has a strong role to learn from.
Having said all this, the question is, how do Japanese companies go overseas? Perhaps history is the best teacher.
2. How to go to sea?
When it comes to going to sea, many people may think of exports.
Indeed, after joining the WTO, the mainland's trade volume increased more than ten times, and most of it was due to exports. Exports not only create a large number of jobs, but also promote the mainland's industrial upgrading, create trillions of foreign exchange reserves, and make the mainland develop into one of the most important supply chains in the world.
However, exports are not exactly the same as going to sea, and going to sea is far more than exports, and exports alone are far from enough. After all, the so-called going to sea can be divided into product going to sea and production capacity going to sea, and Japan has become a strong country because of its production capacity going to sea.
What is capacity going overseas? In fact, the purpose of going overseas with production capacity is not different from that of products going overseas, both of which take demand as the first purpose to seek a larger market, but they perform differently at different stages.
Overseas sales of products are also known as overseas sales, which only sell goods overseas and only consider overseas needs. When a country produces more goods than it needs at home, you can't sell them domestically, so you can only find ways to sell them abroad, as David · Ricardo's theory of comparative advantage says. This is also the logic of the rapid growth of foreign trade in Japan before the 70s of the last century and in the mainland in the past 20 years.
Going overseas with production capacity is slightly more complicated than going overseas with products, and it is a promoted version of products going overseas, mainly to see the cost of going overseas. When the cost of labor and raw materials is too high or the tariffs and trade barriers are too large, the export gains outweigh the losses, and the entire production capacity can only be moved out to reduce costs. Japan in the 80s, and now China, are doing this.
In fact, whether the product goes overseas or the production capacity goes overseas, they are not so different. From Japan's experience, it is generally the first product and then the production capacity, and the overseas and upgrading go hand in hand.
In the early stage of the development of the industry, with the production of more and more products, only the domestic began to be unable to sell, so the products began to go to sea; Later, with the country's demographic dividend, raw materials are becoming more and more expensive, the cost of goods produced is also increasing, and the industry enters the Red Sea market.
Of course, in the face of different costs, the destination of going to sea will also be different. If the cost of trade friction is the largest, it should go directly to the terminal demand market or its subsidiary market, you collect tariffs and I will directly produce at your home, such as to United States and its subsidiary market Mexico, such as to Western Europe and its subsidiary market Eastern Europe, the destination of the mainland computer industry today has shifted from Viet Nam to Mexico; If raw material and labor costs are the largest, then cheaper emerging markets are the best choice, such as Viet Nam, India and other Southeast Asian countries, the mainland's textile industry has been running to Viet Nam since 2010, these are living examples.
In the end, the old production capacity will leave the domestic empty position to the new production capacity, and the new production capacity can be used to practice technology in China and pay higher wages, and prepare for the next round of going to sea, and finally form a closed loop in which advantageous industrial products go to sea first→ production capacity goes to sea after the industry matures→ domestic new industry upgrades → the next round of products go to sea. Such a positive cycle can not only digest domestic production capacity and solve the problem of insufficient domestic demand, but also achieve economic transformation and increase the income of the vast number of people.
Some people will ask, can we skip the product and go to the sea with production capacity? The answer is yes, for emerging markets, we can also directly produce overseas production capacity and exchange technology for the market.
Although emerging markets are small in size and have little demand today, the future growth potential is huge, and the competition is relatively low. In this less competitive market, you don't have to differentiate to win.
In addition, direct production capacity can not only drive the local industrialization process and consumption capacity, but also feed back to create local people's demand, drive local industrial progress and economic growth, and then make the destination dependent on your goods. Just like back then Japan during the trade friction with United States, it directly transferred the industrial chain of home appliances and automobiles to the mainland, and cultivated a huge automobile consumer market, making the former Japan automobiles and household appliances a household name.
Under such a large cycle, Japan's textile, steel, home appliances, automobiles, semiconductors and other industries have taken turns to go to sea, competing for the stream, and have become a model from products to production capacity.
Over the years, the main force of Japan's industry going overseas has begun to transition from manufacturing to service industry. In 2008, the share of Japan's non-manufacturing outbound investment surpassed that of manufacturing for the first time, and then began to lead the way, now exceeding two-thirds. Some non-manufacturing industries make more money because of high added value, and they can often make more money in going overseas.
Of course, the grand narrative of going overseas seems smooth, but macro is macro after all, and it cannot guide enterprises to go overseas at the micro level. In the process of going global, the problems and challenges faced by enterprises are also endless. Which companies can really go abroad and succeed? We can also find patterns in history.
3. Who can go to sea?
Which companies can successfully go global? It can be described in one word, and that is - "can fight".
What does it mean to be able to fight? It is nothing more than having a "comparative advantage", which can be summed up as being cheaper than others, easier to use than others, and more novel than others.
Being cheaper than others means having cost advantages in materials and labor, as well as obvious exchange rate advantages. For example, after World War II, because of low-priced products and low-cost yen, Japan's "one-dollar shirt" occupied the United States market.
Being easier to use than others means that the product is "far ahead" in terms of technology, process or content. For example, Japan industrial machinery company Komatsu has occupied the global market by increasing product research and development; For example, Toyota led the second automobile revolution, using lean manufacturing to improve production efficiency and reduce costs, and the Corolla produced once became a hit in North America.
Being more novel than others means that the product or service can create a unique experience that no one else has. For example, 100 yen stores in Japan, convenience stores such as FamilyMart, Lawson, and 711, and "unbranded" clothing stores such as Muji and Uniqlo. While these brands aren't disruptive on the surface, they're different enough, and "different" is the essence behind a great experience.
How do you find these industries and companies? Macroscopically, we can calculate the industries in which we have comparative advantages through export data, and refer to micro-financial indicators, such as profit margin, asset turnover, ROE and overseas revenue proportion, combined with cost advantages, product advantages and model innovation and other dimensions.
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The mid-end manufacturing industry with a certain scientific and technological content but does not involve core technology and has a complex industrial chain is the dominant industry of the mainland, such as new energy vehicles, 3C digital, intelligent hardware, smart home appliances, photovoltaics, heavy industry and other industries, which have both price advantages and product advantages. Especially in those industries where the production links and chains are extremely long, only we can do it in the world.
According to the data of the Ministry of Industry and Information Technology, the mainland has 41 major industrial categories, 207 medium industrial categories, and 666 industrial sub-categories, and is the only country in the world that has all the industrial categories in the United Nations Industrial Classification. These can allow us to exert the agglomeration effect and scale effect, and it is really good to be good for everyone.
In addition to mid-end manufacturing, our billion-dollar population has also incubated a lot of unique consumption scenarios and services, and greatly reduced costs, which makes our large consumption industry far ahead of overseas markets, and has three characteristics: price advantage, product advantage and model innovation, which is very cost-effective.
At present, the cost of living in Europe and the United States is soaring under high inflation, and the people are miserable. These industries are expected to enjoy the dividends of consumption downgrade in Europe and the United States. For example, the retail and catering industry represented by bubble tea shops, the media and entertainment industry represented by mobile games and 3C masterpieces, and the Internet industry represented by e-commerce and local life.
Chinese industry, to United States, to Viet Nam, to Germany, to Japan, to Mexico, to Thailand and Indonesia, the vast world is promising.
Epilogue: The New Age of Discovery
If you look back at the "wild goose array theory" I mentioned at the beginning, you will find that the core of the "wild goose array theory" is that the "leading geese" transfer marginal industries that have lost their comparative advantages to emerging countries where they have comparative advantages, so as to reduce operating costs.
At that time, the "leading geese" were Japan, and the economies with comparative advantages were the "Asian Tigers"; Later, the "leading geese" became the "Asian Tigers", and the comparative advantage economies became the mainland and ASEAN; Now, the "leading goose" has become China, which is not a helpless move in the face of insufficient domestic demand and changes in the external environment, but an inevitable way to conform to the law of global economic development.
This also means that mainland enterprises go overseas, not only to survive, but also with an important mission and driving force. Internally, this impetus can offset the pain caused by real estate adjustment, promote industrial upgrading, improve the efficiency and stability of global supply chains, and bring advanced technology and management experience to underdeveloped regions, while creating jobs. This is also a contemporary interpretation of the "wild goose formation theory".
Just like the Age of Discovery, the early global trade network was formed, which laid the foundation for modern globalization and promoted the prosperity of the European economy and the development of the financial system. Now, when history stands in a new era of navigation, where will Chinese companies go by going to sea? We look forward to the voyage of China's industry.
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Japan's Overseas Panorama Scanning: Successful Experience, Failure Lessons and Situation Comparison, Zhongtai Securities
Three clues to invest in the mainland's overseas opportunities, Guojin Securities
Chinese enterprises have opened the era of great exploration, and it is the right time for Tianfeng to go overseas to invest in the selected index, Tianfeng Securities
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