Li Qiang, Vice President of Tencent Group: The essence of globalization is localization

"Reshaping growth in the face of adversity is a must-answer question for every company today. Only new growth can help enterprises hedge against the decline of their original business and survive through the cycle," said Li Qiang, Vice President of Tencent Group and President of Government and Enterprise Affairs, at the 2024 Tencent Global Digital Ecosystem Conference on September 5.

At present, the global economy is weak and the industry is intensifying, and seeking a second growth point has become a general consensus of enterprises. According to a survey conducted by Gartner, an international authoritative research institution, among 416 current CEOs around the world, 79% of CEOs plan to formulate a new business strategy by the end of 2024 to meet future challenges. In 2024, global CEOs are focused on growth at their highest level in a decade.

The report also mentions that AI is a key task and tool for business transformation after digitalization. More and more enterprises are considering entering new national markets within three years, and actively promoting the global layout to get rid of the dependence on a single market.

"Today's growth is not simply to increase, but to work with customers and partners to find solutions to the current dilemma and find a path for future development," Li Qiang added.

How to seek growth in the face of adversity, Li Qiang shared four growth paths and customer stories on the spot.

First of all, it is digitally driven, and it is necessary to benefit from services. As a manufacturing enterprise with a history of half a century, when the sales of its main products declined, Shaangu fully embraced digitalization with the help of Tencent Cloud's technical capabilities, increased the proportion of service revenue, and realized the transformation and development from a "production-oriented" manufacturing enterprise to a "service-oriented" enterprise. In 2023, Shaangu's service business will become the company's main growth pillar, with the proportion of revenue rising from the initial 20% to 57%.

Second, cutting-edge technologies, represented by AI, are moving from "fashionable" to "really useful", going deep into front-line scenarios to help enterprises reduce costs and increase efficiency. CTG Energy has used the capabilities of Tencent Cloud's TI platform to replace the old method of manual inspection, and now the inspection time has been reduced from two weeks to only 5-6 hours through AI, and the inspection time has been reduced by 98%.

Globalization is undoubtedly the consensus of Chinese enterprises. Li Qiang believes that the essence of globalization is localization. Chinese enterprises have changed from the original "products going overseas" to the "platform going overseas" and "supply chain going overseas" model of production and service integration. Tencent Cloud CDC helped Midea build a digital infrastructure for smart factories in Brazil, helping Midea build services at low cost and quickly, realize flexible and flexible scheduling of resources, and meet the regulatory and compliance needs of data placement.

Finally, it is the users who dig deep and find increments from the stock. As a leading enterprise in the sportswear industry, Li Ning has built a "new brand official website" integrating content, services and transactions with the help of the capabilities of WeChat ecology, and has quickly accumulated 30 million global members. In the past year, the online and offline linkage operation through the WeChat ecosystem has increased the proportion of consumers who visit offline stores by 120%. Since the beginning of this year, the sales of new products in the WeChat ecosystem have accounted for more than 50%.

Li Qiang said that to reshape growth in the face of adversity, it is not only necessary to irrigate accurately, but also to cultivate deeply. In the search for growth, Tencent insists on back-to-back with customers and partners, and uses digitalization to help enterprises reduce costs and increase efficiency, transform their models, and deploy globally, breaking the ceiling of growth and tapping new revenue engines.

The following is the full text of Li Qiang's speech:

Ladies and gentlemen, good morning!

Just now, my colleagues introduced Tencent's strategic layout in the TOB field as a whole, as well as the recent layout of our technology and products. Next, I will share some of our observations and thoughts from the focus of entrepreneurs, combined with our joint practices with ecological partners and customers in the past year.

Let's take a look at an authoritative report. Gartner, an international authoritative organization, conducted a six-month survey of 416 working CEOs around the world, and the results show that the focus of current entrepreneurs is changing profoundly.

First, 79% of CEOs plan to have a new business strategy in place by the end of 2024 to address future challenges. Second, 62% of CEOs have made growth their top business priority in 2024, the highest percentage in the last 10 years (since 2014).

When it comes to digital transformation, 59% of CEOs agree that AI is a key task for business transformation after digitalization, and it is also the technology that has the greatest impact on their industry, and believes that AI can help greatly improve productivity.

The globalization process of enterprises is also changing under the influence of global emergencies, with 48% of CEOs saying they plan to enter a new country in the next three years to reduce their dependence on a single market.

At present, the global economy is weak, market confidence is low, and industry involution is still intensifying, growth has become difficult, and even many companies are facing challenges to survive. But only new growth, even in subdivisions, can help us hedge against the decline of our original business, so that we can survive through the cycle.

There is no doubt that how to reshape growth in the face of adversity has become a must-answer question for every business. Seeking new growth against the trend is to find a solution to the dilemma and find a path for development.

First of all, when the sales of main products decline, how to increase the proportion of service revenue requires enterprises to have the courage to break the inherent ceiling and think about change from the level of strategy and business model.

Secondly, reducing costs and increasing efficiency is a problem faced by all enterprises, in addition to reducing staff and reducing costs, we also need to think about whether technology can play a greater role.

At present, going overseas is the consensus of Chinese enterprises, and how to quickly build a localized and complete production and supply chain system and operation management platform overseas has become an inevitable requirement of globalization.

Finally, in the era of stock, customer acquisition is becoming more and more difficult and costly, and how to tap the potential value from existing customers is a powerful means to achieve sustainable business development.

Next, I would like to share with you four stories about growth.

The first one I'd like to share is the Shaanxi drum.

Shaangu is a manufacturing enterprise with a history of half a century, the core product axial compressor is the world's first sales, axial compressor is a typical big country, an axial compressor from dozens of tons to hundreds of tons, is the power heart of nuclear power plants, metallurgy, steel plants.

For a long time in the past, Shaangu's main business was the sale of large-scale equipment, which once contributed 80% of Shaangu's revenue. With the weak market demand in the equipment manufacturing industry and the promotion of the dual carbon strategy, the sales of large-scale equipment have encountered a ceiling. More importantly, the equipment sales model is a one-time transaction, which has poor resistance to market volatility and is difficult to continue to contribute to the company's performance. With multiple factors superimposed, Shaanxi and Gu urgently need to find a new growth model.

Aware of the changes in the general environment, Shaangu quickly carried out structural transformation of its main business, transforming from a single equipment supplier to a solution provider and service provider, and opened up two major business lines of industrial services and energy infrastructure operations while consolidating its main business.

The first step in Shaangu's transformation is full digitalization. In the past, after Shaangu sold large equipment to customers, each equipment operated independently, which was expensive to maintain and inflexible, forming data silos. When it comes to platform and feature upgrades, minor tweaks require a thorough testing of the entire system.

Now, Shaangu connects these devices through sensors, cameras and other IoT devices, and based on Tencent Cloud TCS, Qinglian, Raydata and other technologies and products, the original scattered system data is connected, unified management and operation and maintenance are carried out, and the interconnection and interoperability of fault diagnosis system data are realized. At present, Shaangu has completed the remote monitoring of more than 1,000 sets of power equipment around the world, and the cloud migration rate of the entire energy equipment system represented by axial compressors has reached 40%.

Seeing the value brought by digitalization, Shaangu has accelerated the pace of transformation in recent years, and together with Tencent Cloud, it has upgraded its innovative "Energy Interconnection Island" technology and system solution based on its past digital experience, which can unify the management of various energy sources such as heating and cooling supply, hot water, electricity, and waste heat recovery.

Shaanxi Gu first implemented this plan in its own Lintong Industrial Park, making Shaanxi Drum Group's Lintong Industrial Park one of the world's intelligent manufacturing bases with the lowest energy consumption and lowest emissions. At present, Shaangu has opened this solution to external services, and on the basis of the equipment sold in the past, it has brought new infrastructure operation and industrial services to more downstream customers.

In 2021, for the first time, industrial services and energy infrastructure operations generated more than 50% of the revenue generated by hardware equipment. According to Shaangu's 2023 financial report, thanks to the continuous implementation of distributed energy operation projects such as energy interconnection islands, energy infrastructure operations and industrial services have gradually become the company's main growth pillars, with the proportion of revenue rising from the initial 20% to 57%. Among them, the average annual growth rate of Shaangu service business has reached more than 20%.

The asset-light business model has also brought cost savings to Shaangu, reducing the company's comprehensive operating costs by 23% per year. It is worth mentioning that in 2023, in the main business of Shaanxi Gu, traditional hardware equipment will decline year-on-year, and energy infrastructure operating income will increase by 15% year-on-year. This makes Shaanxi Gu's revenue stable at 10 billion yuan in recent years, even in the case of a sluggish equipment manufacturing environment.

With the help of digital upgrading, Shaangu has broken the inherent idea of relying on a single product to sell in the past, realized the transformation and development from a "production-oriented" manufacturing enterprise to a "service-oriented" enterprise, found a diversified business model, and gradually became a smart green energy enterprise with an international level.

The second thing I shared is the story of Three Gorges Energy's use of AI to reduce costs and increase efficiency.

CTG Energy is the main body of the strategic implementation of the new energy business of CTG, and has accelerated the construction of large-scale wind power and photovoltaic power generation bases in recent years. By the end of 2023, CTG's energy business has covered 30 provinces, autonomous regions and municipalities directly under the central government, with a total installed capacity of more than 40 million kilowatts and total assets of more than 310 billion yuan.

Wind power, photovoltaic energy facilities, often far away from the city at sea, desert, Gobi, high altitude area, located in remote areas. Power generation equipment is a matter of great importance and needs to be inspected regularly. In the past, maintenance personnel needed to hold the testing equipment, climb to the top of the 80-meter-high fan, and go to the height of the tuyere, which brought great difficulties to the maintenance and repair of the fan, with low efficiency and high risk coefficient.

In order to solve the above problems, Tencent Cloud and Goldwind Huineng, relying on the full-stack AI development platform Tencent Cloud TI platform, have created a cloud-edge collaborative AI architecture for Three Gorges Energy, integrating more than 30 algorithms such as infrared perception recognition, wind turbine blade anomaly recognition, and voiceprint fault recognition. Realize the transformation from manual inspection to automatic inspection, from fault maintenance to state maintenance, so as to effectively reduce the work burden of on-site personnel, significantly improve the safety and security level of the station, and improve the safety guarantee and operation efficiency of the station.

Taking the Three Gorges Energy Gansu Wuwei Smart Photovoltaic Station with an area of about 2,600 acres as an example, it used to take 15 days to manually inspect and bear the power generation loss caused by equipment shutdown. Today, it only takes 5-6 hours to complete the AI inspection, which is 98% shortened. On the one hand, maintenance personnel do not have to brave the cold and heat to go out, they can focus more on innovative work, reducing the overall labor cost by 30%, and on the other hand, through AI monitoring and training of data, the past passive equipment fault handling is transformed into active prediction, avoiding unplanned failure losses, and is expected to reduce power generation losses caused by shutdowns by 20%.

Not only in inspection, but also in the production of 3C electronics, automobiles and spare parts, semiconductors, new energy and other vertical fields. To meet the intelligent needs of enterprises, we insist on building practical-level AI capabilities close to the industry.

At last year's ecological conference, we released Tencent's hybrid model, and now the number of parameters of the hybrid model has reached one trillion yuan, ranking in the first echelon of domestic large models, and is in a leading position in terms of foundation and scenario application. We have also built Tencent Cloud's MaaS and industry model solutions, and have honed more than 50 solutions in more than 20 industries such as finance, mobility, healthcare, and education.

The story of Three Gorges Energy tells us that some people are anxious when faced with large models, but some people have used AI to reap real benefits. I believe that more companies will quickly apply AI large model capabilities to R&D, production, marketing, and service.

The third is a story about a company going overseas.

Entering the international market, participating in the global market competition, and finding increments by going overseas has become the general consensus of current enterprises. Today, Chinese enterprises have changed from the original "products going overseas" to the "platform going overseas" and "supply chain going overseas" model of production and service integration. Especially in recent years, Chinese enterprises have accumulated rich experience in intelligent manufacturing, industrial chain, lean management, etc., and how to quickly migrate and replicate these advantages to overseas markets has become the primary concern of many enterprises going overseas.

Midea Group is a leading enterprise in the domestic home appliance industry, with about 200 subsidiaries and 190,000 employees around the world, including 30,000 overseas employees, and Midea's overseas market revenue has accounted for more than 40% of the company's total annual revenue in the past two years. In order to expand the broader global market, this year Midea began to build a super smart factory in Brazil, producing smart refrigerators, washing machines and other products, the new factory covers an area of more than 70,000 square meters, and is expected to have an annual production capacity of 1.3 million units, in addition to supplying Brazil, the products will also be sold to other markets in South America.

At the beginning of the design, the factory was designed with a large number of digital production technologies and innovative technologies, which required a high level of digital infrastructure construction. Overseas factories are not only about efficiency, but also about meeting local regulatory, compliance, and data security requirements. In order to support the rapid operation of the business, it is necessary to quickly build a digital foundation to meet the demand for underlying resources of the production business system.

After integrating a variety of solutions, Midea realized the construction of local digital infrastructure with the help of Tencent Cloud CDC local professional clusters, and deployed localized computing power in the form of software and hardware integration to meet the regulatory and compliance needs of data placement locally. In the initial stage, a minimum of eight servers can be deployed and launched, helping Midea to build services at a low cost and quickly. At the same time, CDC implements unified management of resources in nearby public cloud regions, with a connection delay of less than 1 millisecond, and implements flexible and elastic scheduling of resources.

It is worth mentioning that CDC adopts a unified public cloud architecture, and various resources support horizontal online expansion to meet the needs of Midea's business growth.

Not only that, in the process of Midea's globalization, Tencent Meeting has supported the global collaboration of Midea's 190,000 employees and 200+ subsidiaries around the world. Not long ago, Tencent Meeting also upgraded its translation capabilities in 17 languages, becoming an efficient collaboration tool for Chinese enterprises to communicate across borders.

The essence of globalization is localization. As a cloud computing vendor, Tencent Cloud has global service capabilities, with infrastructure covering 21 regions on five continents, operating 58 availability zones, and more than 3,200 global acceleration nodes. In terms of global layout, on the one hand, we have accelerated the expansion of self-developed technologies and products such as Tencent Cloud and AI, and on the other hand, we have also pooled our technological and ecological advantages to provide one-stop services such as security and compliance for Chinese enterprises going overseas.

The fourth story is the story of how to find growth from the stock market.

As a leading enterprise in the sportswear industry, Li Ning has 7,600 offline stores, and in the face of market fluctuations, Li Ning chose to focus on a multi-channel strategy, while strengthening the efficiency of channel retail, and opening up a path of growth with the help of the capabilities of the WeChat ecosystem.

By continuously strengthening the construction of official accounts, mini programs, enterprise micro and other positions, Li Ning has built a "new brand official website" integrating content, services and transactions, and continues to dig into a variety of ways to play through the form of multi-touch points to achieve efficient conversion and precipitation of users. At present, Li Ning has accumulated more than 30 million global users.

Relying on the underlying capability support of Tencent Cloud Mall, Li Ning has also launched innovative marketing methods such as new product pre-sale sales, top-notch goods sales, and one-to-one lottery in stores, and put star products such as limited-edition sneakers on the mini program for the first time, so that consumers can make an appointment on the mini program and then purchase through the mini program or stores, promoting the fission and diffusion of brand reputation and further activating users to spend in offline stores.

In the past year, the online and offline linkage operation through the WeChat ecosystem has increased the proportion of consumers who visit offline stores by 120%. Since the beginning of this year, the sales of new products in the WeChat ecosystem have accounted for more than 50%, exploring a new path for e-commerce on the brand's official website, driving the growth of Li Ning's global business.

In addition, Tencent Cloud Mall provides technical support to Li Ning, providing users with a convenient, efficient and stable online shopping environment, and escorting quotations for each top-notch product sale event. Based on its own member data and Tencent's massive data and tags, Li Ning has also built a recommendation algorithm for thousands of people and thousands of faces, accurately located the product selection and recommendation scenarios suitable for access to the Mini Program, accurately pushed product and activity information, effectively improved the conversion of the Mini Program, and promoted the conversion rate of online product purchase by 50%.

The success of Li Ning demonstrates the significant advantages of the WeChat ecosystem in terms of user connection, social fission, and private domain operation. Through digital tools such as mini programs and WeChat Work, more and more enterprise customers are able to attract and activate users more effectively, enhance brand loyalty, and convert private domain traffic into tangible sales performance. Today, the WeChat ecosystem is helping more enterprise customers build a second curve of growth and achieve overtaking in the digital era.

Today, we face a lot of challenges, the market is full of pessimism, and we have a lot of reasons to lie flat. But in the past year, I have seen many customers and partners, and what I have seen more is the entrepreneurial spirit of being positive and optimistic, and never giving up. In closing, I would like to say that pessimists may be right, and only optimists can move forward.

Thank you! (This article is the author's independent view and does not represent the position of this site)