I. Intangible assets. Intangible assets are assets that do not have physical form but can bring economic benefits to enterprises. The specific figures can be found in the annual reports of listed companies, generally referring to patents, trademarks and land use rights, which can show the brand value of a company. What is necessary is that only when the brand can make consumers pay the brand premium for a long time can the brand form a moat.

second, the conversion cost.

third, the network effect. The network effect is related to users. The more users, the wider the moat. Network effect usually plays a role in information industry, because the number of users in such enterprises is expanding rapidly. Another characteristic of network effect is that the value increase is greater than the node increase. When a node or a user is added, the overall value increases faster, which is an exponential image.

fourth, the cost advantage. The first three types of moats are mainly aimed at the pricing power of enterprises. For enterprises, low cost is a generous moat. There are three kinds of cost advantages: 1. Process advantages. When enterprises use process innovation to establish cost advantages, but new enterprises can't copy this process quickly, they will gain temporary advantages; 2, superior geographical location, this advantage is relatively lasting, and it is difficult for other enterprises to replicate; 3. Unique resource advantages, such as oil and natural gas, have strong advantages before resources are exhausted.

Several moats bring the core competitiveness-pricing power. When an enterprise has pricing power or bargaining power, it can cope with various changes in the market. When the cost rises, it can use the brand premium to raise the price, and competitors will be afraid to enter this market because of the high transfer cost.

Several misunderstandings:

First, high-quality products are not equal to moats, but those that are difficult to be replaced.

second, the absolute scale of an enterprise does not mean a moat, but the relative scale does. The enterprise is absolutely small in scale, but its relative scale is higher than that of its competitors. This enterprise also has a moat, such as a leading enterprise in a certain segment. Therefore, it is safer to catch the big fish in the small pond than to catch the big fish in the big pond.

Third, excellent management is not a moat, but an efficient management process.