Financial website news After a century of industrial changes, we have leveraged the power of technological innovation and capital to explore the future industrial layout and development of listed companies amidst opportunities and challenges. On November 20, 2020, it was guided by the People's Government of Shanghai Hongqiao Business District and Minhang District, hosted by Siya Asset Management, and co-organized by 20 listed company associations in Shanghai, Guangdong, Hunan, Fujian, Shaanxi, Anhui, Henan, Shanxi, and Guangxi. China Merchants Bank strategic cooperation, Ernst & Young, King & Wood Mallesons, and the Chief Economist Research Institute are specially supporting the "Tao Dao Hongqiao Focus Hub·Leading the Economic Growth Pole-2020 Closed-door Meeting of 100 Listed Companies" It will be held in Shanghai, and the financial community will also participate in the conference as a strategic partner media of the conference.

Min Shilin, Party Secretary and Executive Deputy Director of the Shanghai Hongqiao Business District Management Committee, Jin Guojun, Deputy Director, Wu Bin, Member of the Standing Committee of the Minhang District Committee and Deputy District Governor, Zhang Landing, CEO of Siya Investment, and Yang Changcheng, Chief Economist of Shenwan Hongyuan Securities , Zhao Ju, chief investment officer of China Merchants Bank Head Office/CEO of CMB International Capital Corporation, Wei Molin, president of 3M China, Bi Shunjie, managing partner of Ernst & Young China, and chairman, general manager and senior executives of hundreds of listed companies gathered together. Discuss the strategies for listed companies to leapfrog the cycle and achieve high-quality growth in the new cycle.

Pictured: Yang Chengcheng, chief economist of Shenwan Hongyuan Securities

Yang Chengcheng, chief economist of Shenwan Hongyuan Securities, gave a speech entitled "Looking for business opportunities in the dual cycle development pattern, ten The keynote speech "Interpretation of the Fourth Five-Year Plan Recommendations" focuses on the focus issues in the current new environment: How can enterprises cope with major changes unseen in a century? How do companies respond to the new dual-cycle development pattern? etc. were interpreted. From the strategic environment where challenges and opportunities present new changes, the strategic goals that connect the long-term and current periods, the strategic deployment of seven major systemic measures, and the strategic focus of the new domestic and international dual-circulation development pattern, it progresses step by step.

Regarding how to implement dual circulation, he mentioned that “the supply-side circulation is actually about opening up the relationship between technology, finance and industry. While enterprises increase R&D investment and scientific and technological innovation, they must also Pay attention to the improvement of transformation capabilities, so that technological research and development can eventually be transformed into the core competitiveness of the enterprise, thereby developing into a technologically innovative enterprise. In addition, the enterprise must learn to use financial tools to lock in the risk of market fluctuations in the next few years." He also mentioned. "You must learn to lead and create demand in order to develop into a great enterprise." That is, based on innovation, a higher level of dynamic balance in which demand drives supply and supply creates demand can be achieved by Chinese enterprises during the "14th Five-Year Plan" period. High quality development.

The following is the full text of the speech:

I would like to focus on three issues. First, we still need to understand what the general secretary’s great changes unseen in a century mean to our company. Second, regarding the recommendations of the Chinese government or the Party Central Committee during the 14th Five-Year Plan period, what are the main countermeasures for us to deal with major changes unseen in a century. Third, everyone knows that we have proposed a new development pattern - dual cycle. In the dual cycle, what hurdles do we have to pass as an enterprise? I will mainly talk about these three things.

First of all, of course everyone will have different interpretations of what the great changes unseen in a century mean. I think it has three meanings for our company: First, it means the transformation from the second world to the Since the war, the United States has led the establishment of this set of global structures, systems and rules, including the trade and investment rules for our corporate investments. These are all undergoing positive changes. Regardless of whether you have never engaged in trade, all business operations are dependent on rules and regulations. Global exchange rate rules rely on trade rules and investment rules. We have to admit that these rules are mainly a set of global governance systems and governance rules established by the United States and Western countries as the main body. But they are changing now. Everyone When talking about whether the U.S. dollar can continue to be the global currency or long-term, as the main purpose of our trade and investment, commodity pricing is mainly based on the above. Our current commodities are jumping up and down. We adhere to multilateral trade rules, but the WTO The rules do need to be changed, including the RCPC we signed two days ago. Bilateral trade rules are constantly changing and evolving. So what does that mean? It shows that the governance system, governance structure and rules we rely on are changing. What does it mean for enterprises? This is the first meaning.

The second meaning of what the General Secretary said is that the relationship between big countries is changing, but we don’t know how the relationship between big countries will change. In the past, you might have been able to tell clearly. It would be difficult for you to explain the relationship between the United States, China, Russia, Europe, India, and Japan today. Therefore, we are now in the process of rapid changes in the relationship between major countries. We must also rely on the relationship between major countries when making investments and doing business. Therefore, the relationship between major powers is extremely important, and the most prominent one is the Sino-US relationship. We hold three views on Sino-US relations:

First of all, we do not replace the United States. We very much hope that the United States will play its role as a major country. , Secondly, the relationship between China and the United States cannot return to the relationship between the Cold War and the relationship between the former Soviet Union and the United States. Therefore, we firmly oppose the ideological and politicization of trade issues, financial issues, and investment issues. Trade and investment cooperation around the world The basis is one--the rules of market economy. Third, of course, we cannot keep a low profile on global trade rules. We will not participate. As a global economic power, China must actively participate in global governance. This is the second meaning, that is, the relationship between global major powers is now taking place. Change, but how to change and in what direction there is still great uncertainty. Of course, we have some directional principles.

For listed companies, there have been long-term trend changes in the external development of the enterprise. We know whether our company has used this as a guiding ideology in its operations. The external environment of your development has undergone long-term changes. Changes, although the challenges and opportunities of our company are all there, but these challenges and opportunities have undergone new changes compared to the past. This is what I think we must first realize. Our current cycle is not a product cycle, not a The economic cycle is not a financial cycle. It is a major change unseen in a century. We should not regard these current events as accidental events. For example, friction occurs between China and the United States, and the epidemic occurs at this stage. This event has passed everything. This kind of thinking is unacceptable. The occurrence of the epidemic is very accidental, but it is not accidental that the epidemic can spread simultaneously in more than 200 countries and economies in a few months. You can find an epidemic in history. The epidemic infected all countries and economies on the five continents of the world in such a short period of time. This is what is possible under our current circumstances. This is the first one I want to introduce to you.

Second, how to deal with the major changes unseen in a century? Here, I feel that the Fifth Plenary Session of the Central Committee of the Communist Party of China has actually put forward the overall guiding ideology for us to deal with major changes unseen in a century. This is what the General Secretary proposed, using dual circulation as a new development pattern. Why dual circulation?

First of all, the external environment is very uncertain, unstable and unpredictable. Many of our companies may depend on the international market and international energy and raw materials. What will be the price this year and what will it be next year? Prices, which you could predict in the past, are now difficult to predict and have great uncertainty.

So in this case, of course we have to give full play to our own advantages, rely on the domestic market, and rely on our own potential, so we must strengthen internal circulation. At the same time, we are definitely not pursuing a closed economy. We are opening up to a greater extent to achieve a positive interaction between internal and external circulation. , this is the strategic guiding ideology of dual circulation proposed by the General Secretary.

The strategic guiding ideology of dual circulation contains many changes proposed during the 13th Five-Year Plan period. We have proposed five major development concepts, proposed supply-side structural reforms, and proposed three major battles, etc., which have great impact on enterprises. Development is very important. What new ideas will be put forward during the 14th Five-Year Plan? Here I will just give a brief summary. I think first of all, from the supply side, we have proposed to drive the modernization of the industrial chain through independent technological innovation. This is the main line of our new stage of enterprise development. To achieve unification independently and independently, we must promote the high-end of the enterprise industrial chain. , modernization, so as to achieve the security of the industrial chain. This is the important guiding ideology of our supply side during the 14th Five-Year Plan period.

What is the important guiding ideology on the demand side? During the 13th Five-Year Plan period, we seldom talked about demand. We felt that the demand was very big. As long as our company produced various products, we would not worry about being able to sell them. However, this is not the actual situation. Therefore, it is particularly important for us to put forward the strategic basis of expanding domestic demand. China has a huge potential for domestic demand. It has 1.4 billion people, 400 million middle class, per capita GDP of 10,000, per capita income of 30,000, and per capita consumption of 20,000. The absolute levels are very low, so the space potential is very large, but potential is potential. Some children will spend their entire lives. Only potential can never be achieved, so you have to face the actual demand. When we face China's domestic demand, it is not rising but declining. So in this case, we have to propose double-digit policies during the 13th Five-Year Plan period. The concept of circulation is how to stimulate domestic demand, so expanding domestic demand is the strategic basis. This is the demand side of the dual circulation.

What does the space cycle above mainly rely on? A previous expert mentioned hubs, and we agree, but the larger scope is urban agglomerations. We are not a concept like 34 provinces now. We are 19 urban agglomerations, including central cities, core cities, and small cities, forming a The organizational structure of spatial circulation, so the joint point of our new urbanization and rural revitalization strategy is the development of urban agglomerations. Why is the Yangtze River Delta good now, Shanghai is good, Suzhou and Hangzhou are better, because everyone feels that the Yangtze River Delta is too convenient and is just one city. The size of the cluster is constantly accelerating the integration, and the flow of people, logistics, information, and capital are accelerating. Such urban agglomerations are very dynamic, so they have developed very well in recent years because of the radiating power, influence, introduction power, and attraction of urban agglomerations. These added places, Zhengzhou urban agglomeration, Hefei metropolitan area, and Wuhan metropolitan area have all developed very well, so this urban agglomeration has formed an important spatial unit in the entire internal circulation.

Externally, we must open to the outside world at a higher level. Opening to the outside world can also be added with a noun. The General Secretary specifically talked about institutional opening up on the 30th anniversary of Pudong’s opening up. How to do a good job in institutional opening up is a big article. , how to understand what institutional opening up is? Originally, our free trade zone was an integration reform of trade, investment, and finance. Now we have proposed a higher standard of opening up, which is system opening up and rule opening up. What is system openness? It is a combination of systems and rules. Of course, this big article has more content, so I won’t go into details.

In addition, during the 14th Five-Year Plan period, we must grasp two bottom lines. One bottom line is safety. From a national perspective, of course we know that we are facing great uncertainty now. In addition to what the General Secretary said, In terms of national security in several aspects, we have security issues in the industrial chain, life security issues, and technology security issues. These are all security issues that have become prominent in the past two years. In addition to traditional information security and social security, etc. etc. So safety is the bottom line.

During the 13th Five-Year Plan period, we proposed that risk is the bottom line, and safety is higher than risk. We have solidly promoted the issue of social equality and prosperity. This seems to be highly relevant to our company. We understand that the Chinese people say What is the way of doing business? What is the way of doing business? For the benefit of the world, a selfish enterprise will never be successful, so in this regard, we should say that corporate strategy is important to us. Of course, the outline of the 14th Five-Year Plan will not be released until the two sessions next year. Here are some things I have extracted for you based on the central government’s suggestions.

The third part, I think is related to the implementation of the dual-cycle strategy. This dual-cycle strategy contains many sub-cycles. Don’t we have to go through the century-old cycle safely? The key is these How do you develop the circulation chain? Our supply-side circulation is actually to open up the relationship between the three: the relationship between technology, finance and industry. The reason why our Greater Hongqiao has become a hot spot is that it has played an important role in the integration of technology, finance, and industry. Therefore, for our company, it is very important to pass three hurdles:

First, we must increase investment in R&D and scientific and technological innovation, but we must not be blind. It does not mean that companies will survive as soon as they invest in large-scale R&D. , the risk is also very high, and some people die faster, so if you don't innovate, you will die, and if you innovate, you may not live. So I think everyone must realize that technological innovation is the most important investment of an enterprise, not what we used to think in the past. When it comes to R&D expenses, I think this concept is still quite prominent in the financial development of our domestic listed companies at the beginning of R&D. The most important investment is technology R&D investment and innovation investment, so I think our company has to go through this. One level.

Second, if you only invest in R&D and innovate in science and technology, it will not work if you cannot transform it into high-quality products and services or the development of high-tech industries. The problem we are facing now is that there are a lot of patents. Can trademarks and patents finally be transformed into the core driving force of industrial development? A very important point for enterprises is how to transform technological research and development into the core competitiveness of our enterprises. To become a scientific and technological innovation enterprise, we are currently very few enterprises, especially private enterprises. The example you can cite is Huawei. This problem is still very prominent. Why can't a large number of innovations transform productivity? Woolen cloth? You can't transform enterprises and you don't dare to innovate technologically, so 80% of our technological innovations are design and promotion fees for new products, rather than original investment, key technologies, key equipment, and major projects. This is where the problem becomes more prominent. .

The reason is very simple. As I just said, investment in technological innovation is extremely risky. Why are our domestic companies willing to invest in APP, digital economy, and the Internet? The United States invests heavily in biomedicine, In life sciences, we all know that because the drug research and development cycle can be as short as a dozen years or as long as 30 years, a new drug requires an investment of at least 1.5 billion U.S. dollars before it can produce results. Companies cannot afford such a long investment and uncertainty, then How to solve it? It depends on finance.

So our finance is not to help you raise funds. Many companies hope that companies can issue bonds and build a board. Once you issue bonds or build a board, the risks will be on your head, so we see Recently, many good companies have failed due to credit loan problems, so the core of finance is movable finance and risk finance. Finance that helps you control the risk diversification management of the entire investment innovation. This is good finance, not just giving you funds. In finance, I am talking about the circulation of science and technology, industry and finance.

On the second demand side, our company must learn to create demand rather than meet demand. The demand you want to meet is saturated. A large amount of our current demand is created demand. Without bilibili, you would not be able to meet demand. Go see it. With bilibili, many people go to see it every day. This creates demand. Rigid demand is getting less and less, and there is more and more demand for innovations such as novel changes. Therefore, as a company, you must learn to lead in creating demand and use it to create demand. High-end supply leads, creates and stimulates demand, rather than satisfying demand. How many of our companies can become great companies? It is because he leads and creates demand, but the demand you create is very unstable. Just like when you drink liquor, Moutai is so stable because it is a basic demand.

So I think everyone should pay attention to this on the demand side. In the spatial cycle, companies must learn to carry out business layout according to the layout of urban agglomerations. You don’t want to have branches in each province, but one in each city. You have to rationally arrange your outlets according to the development model and urban agglomeration structure. You have to make reasonable judgments about each city. In the Chengdu-Chongqing metropolitan area, which was particularly praised by the central government, the two urban agglomerations generally fight with each other, but the two urban agglomerations usually fight each other. When a city circle cooperates, it will develop very well, so it is very important that the spatial layout can be adjusted as soon as possible.

The international cycle emphasizes two points. First, whether you can cope with the sharp changes in the market prices of various factors such as global energy raw materials in the next few years, you should not judge what will happen in four or five years from today's perspective. The global situation in one or two years is very uncertain and unpredictable, so our companies are required to learn to use financial tools to lock in the risks of market fluctuations in the next few years. Now the whole country is running out of poverty In Ningxia, Gansu, many farmers have talked about how the insurance + futures we launched in recent years has been of great help to them. Farmers all know that insurance + futures are useful to them, but I don’t know how many of our listed companies use these tools.

Well, the global vertical division of labor in this industry chain cannot be changed. Everyone is talking about how we are stuck with high technologies such as chips. There are still many industries. Of course, we say that we will go from beginning to end. It is impossible to do this. The vertical division of labor in the industrial chain is the key to the efficiency of global economic integration, global division of labor, and global trade and investment. If you have done it yourself, what kind of industrial chain do you need? So from this perspective, we need to evaluate it and improve the advancement, self-service and safety of our industrial chain. Therefore, I feel that all enterprises should bring new perspectives and ideas, so can we well understand the General Secretary’s statement about the future of the century? It is very important for us to judge the big changes and study the ecology and situation of the company carefully. Thank you!