Text: Wang Huiying
Edit/Midnight
After nearly 40 years of struggle by the first generation of entrepreneurs in China, the inheritance story of the "second generation" of China's private economy has been staged one after another: Wahaha Zong Fuli, Heilan Group Zhou Lichen, New Hope Liu Chang...... Taking over the efforts of the fathers and continuing to keep the business is the choice of most of the "second generation".
At the time of succession, the risks and volatility faced by enterprises are enormous. The growth environment of the "second generation" and the "first generation" is very different, and the economic cycle is also different, so it is not easy to take over the baton smoothly.
According to the general rule, 30% of family businesses can be successfully passed on to the second generation, that is, 70% of enterprises will be eliminated in the process. This data is staggering, both globally and in China.
Therefore, the inheritance of enterprises and the transfer of power are the issues that every "century-old enterprise" must face. Among them, Fotile is often mentioned as a successful sample, and the process of power transfer between Mao Lixiang and Mao Zhongqun has even been written into the Harvard MBA curriculum.
Not only is there wisdom in inheritance, but in the Chinese manufacturing market, Fotile is also a maverick sample - no listing, no price war, no mergers and acquisitions.
Mao Zhongqun, chairman of Fangtai Group, source of Fangtai's official Weibo
This is not easy for an enterprise with an annual revenue of tens of billions.
If you don't go public, you won't have money, if you don't fight a price war, you won't have sales, and if you don't merge or acquire, you won't have scale. When the market was worried about Fang Tai, Fang Tai was not in a hurry, because behind Fang Tai stood a slow and methodical boss Mao Zhongqun.
"Why do you take so much money to go public?" Every time this question is asked, Mao Zhongqun's answer hardly changes.
Compared with going public, Mao Zhongqun is more concerned about exploring a "management model with Chinese characteristics that combines Chinese and Western styles" for Fotile. ”
At Fotile headquarters, Mao Zhongqun set up a Confucius Hall, and Fotile encouraged employees to read 15 minutes of Chinese classic books every morning after work, cultivate their self-cultivation, and then go to work. Mapping to the management of Fotile, "To become a great enterprise, if you only talk about 'wolf culture', it is definitely not the right direction." ”
Of course, not advocating wolf culture does not mean stagnation. Essentially, Fotile wants to grow endogenously, rather than being interfered with or stimulated by external forces.
In recent years, Fotile has adhered to the high-end category, constantly broadened its boundaries, and entered overseas markets. A very important question is that after the rapid development of the industry, how did Mao Zhongqun lead Fang Tai to find the antidote in the stock period, or even start a second business.
This "tough battle" is destined to be long, but Mao Zhongqun and Fang Tai should be ready.
1. After taking over the baton, how does Mao Zhongqun lead the transformation of the enterprise?
In 1994, Mao Zhongqun, who had just graduated from Shanghai Jiaotong University, like many graduates, was faced with the choice of staying in school and studying abroad.
Perhaps due to the environment of growing up since childhood, his father Mao Lixiang asked him to go back to start a business, and he gladly accepted it, on the condition that he would change to a new track to create a new brand, and he had absolute management rights.
In this way, Mao Zhongqun did not have the plot of "creating the second generation" to take over, but started a business together with his father. After research, Mao Zhongqun found that the musket market was small, the threshold was low, and the competition environment was harsh, so he persuaded his father to change careers; Although Mao Lixiang had doubts about his son's entrepreneurial direction, after some debate, he chose to believe in his son.
In 1996, one was the "World Ignition Gun King", and the other was a fledgling computer graduate, Mao's father and son co-founded the Chinese kitchen appliance brand Fotile.
Mao Zhongqun and his father Mao Lixiang, picture source Fangtai WeChat public account
Mao Lixiang believes that inheritance should not only awaken the common mission of the two generations, but also awaken the "entrepreneurial spirit". Under the inheritance model of Mao Lixiang's "three-three system", the succession of his son Mao Zhongqun was divided into three stages: 1996-1998 was "three years", 1999-2001 was "three years of help", 2002-2004 was "three years", and the handover was completed in 2004.
When the outside world envied Mao Lixiang for having a son who was willing to succeed him, and envied Mao Zhongqun for having an enlightened father, they ignored that Mao's father and son were well versed in the way of inheritance: "the first generation" should be more enlightened and open, and the "second generation" should be more active.
After nine years, Mao Zhongqun took over the banner of Fangtai, and Fangtai also carried out several rounds of transformation under the management of Mao Zhongqun.
In the first three years, Mao Lixiang was in charge of Fotile, Mao Zhongqun was in charge of technology and product research and development, and designed Fotile's products. When it comes to design, Mao Zhongqun is not from a professional class, he invited students majoring in industrial design from Zhejiang University to study new products with technicians in the factory, from sketching to opening molds, and he participated in the whole process.
After countless R&D and experiments, the first Fotile deep range hood was finally launched in 1996 and soon put into the market; In 1997, Fotile launched an improved version - Q-type machine, that is, an intelligent deep range hood, with greater suction power and more fashionable shape, with annual sales exceeding 400,000 units.
From beginning to end, Mao Zhongqun has rejected the lower-cost "OEM" model, but based on innovation. Mao Zhongqun insists on a product positioning: Fotile range hood is "European appearance of Chinese core". Under this idea, Fotile changed the traditional range hood filter from a flat type to a conical shape, which not only had to look good, but also took into account the practicality of the Chinese cooking environment.
After three years of rapid growth, in the second three years, China's kitchen appliance industry ushered in the first market competition. As kitchen appliances have become the standard in homes, consumers have begun to pursue cost-effectiveness, and many brands have begun to reduce prices to seize market share.
In 1999, more than 30 range hood factories in eastern Zhejiang jointly engaged in a price war, the price of each range hood on the market was reduced by more than 200 yuan, Mao Zhongqun insisted on not fighting a price war, so that Fotile product sales did not grow for 5 consecutive months, so that the front-line sales manager of Fotile called in the middle of the night to "ask for war".
This did not shake Mao Zhongqun's insistence on price. Of course, insisting on not fighting a price war is not an easy way, and it requires more capable product power. Mao Zhongqun immersed himself in research and development, and in 2001 launched a "European-style appearance of Chinese core" range hood, this product is even 10% higher than the price of the previous product, which is tantamount to an adventure.
Mao Zhongqun took a completely different path, "this may be our only choice", Mao Zhongqun said bluntly in an interview with the media. Later market feedback proved that because of the precedent of creating a European machine, Fotile, which did not fight a price war, also gained market recognition.
In the third three years, with its product strength to stand firm in the market, Fotile's achievements are obvious to all, and Mao Zhongqun has also completed the transformation from "successor" to "entrepreneur". Due to the expansion of Fotile's personnel and the inability of management to keep up with the scale, Fotile has fallen into a bottleneck, and how to lead the team is a problem for Mao Zhongqun to consider.
At first, Mao Zhongqun advocated Western-style management and wanted to realize the de-familialization of Fangtai, but Mao Lixiang supported Mao Zhongqun under pressure from his family. Through practice, Mao Zhongqun found that it is difficult to apply Western management theories to handle interpersonal relationships in China, and Mao Zhongqun explored a new path.
Since the beginning of 2004, Mao Zhongqun has enrolled in Chinese studies classes at Tsinghua University and Peking University, and since 2008, Fotile has comprehensively introduced Chinese culture including Confucian culture, and clarified the general outline of "Ming Tao in middle school, excellent Western learning, Chinese and Western integration, and Taoism and imperial art".
Mao Zhongqun once explained that "Dao" is the Confucianism and Taoism management thought of the East, and "Shu" is the management methods of the West. It is necessary to use the Tao of Chinese culture to control, transform and optimize the modern management methods of the West.
In addition, due to its insistence on not going public, Fotile began to explore a medium- and long-term incentive mechanism suitable for employees of non-listed companies since 2008.
In 2010, Fotile began to implement the "full body share system". As long as the employee has been employed for two years, the company will give a certain amount of equity dividends twice a year according to the position and contribution of each employee, ranging from tens of thousands to hundreds of thousands.
Looking back at Fotile's business for more than 20 years, it seems that it has been taking a different path. Under the leadership of Mao Zhongqun, Fotile does not OEM, does not fight price wars, and does not go public, but it can still achieve contrarian growth through the industry cycle, becoming a model sample of "Chinese-style management".
2. High-end, Mao Zhongqun is firmly investing and exploring
No OEM, no price war, in the face of fluctuations in the industry cycle, Mao Zhongqun led Fang Tai to do a lot of right things. The most rare thing is that Fotile has always focused on an origin and has clearly positioned and adhered to its positioning in continuous adjustment.
The origin of this is premiumization.
As early as the beginning of the business, Mao Zhongqun found that the high-end market of China's home appliance industry at that time was almost dominated by foreign brands. If you want to break through successfully, you must create a high-end brand of your own.
Mao Zhongqun has always emphasized that Fotile wants to build a brand. A truly high-end brand should stand the test of time, not be determined by the profits of scale.
When the price war was fought, Mao Lixiang also wrote an article on "Only Fighting a Value War, Not a Price War", which elaborated in depth Fangtai's business philosophy and competition ideas: "The price war in China's home appliance market seems to have formed a climate, and color TVs and air conditioners are all 'you sing and I will appear', and even some small household appliances are ready to move." ”
In the face of rounds of market competition, Fotile remained unmoved. In addition to Mao Zhongqun's leadership, what is more important is Fotile's R&D and innovation.
According to Mao Zhongqun, every year, Fotile invests no less than 5% of its revenue in scientific research, and there is no cap on some key projects. As of the end of 2023, Fotile has nearly 12,000 authorized patents, including more than 2,800 invention patents.
Fotile patent wall, source Fotile WeChat public account
Whenever a new product is launched, what is important is whether the user experience is really taken into account?
In order to really think about the user, Fotile spent three years and fried nearly 1,000 catties of chili peppers, and gave birth to the range hood "Wind Cube" that realizes "stir-frying without smelling smoke".
In order to allow consumers to drink healthy and good water, Fotile spent 8 years to develop water purification membrane technology, and finally successfully developed NSP selective filtration technology, breaking the monopoly of foreign water purification membrane technology, which is also the product that Fotile takes the longest time to develop.
It is the shortcomings and deficiencies of the products on the market that give Fotile the opportunity to devote itself to the study of technology and adhere to the high-end. This also explains the reason why Fotile does not fight a price war, "If you launch an ordinary product, no matter how fast you develop it, it is useless, there is no competitiveness in the market, there is no differentiation, and in the end you can only rely on price to gain customers and fall into the whirlpool of price war," Mao Zhongqun said.
It is worth noting that insisting on high-end has improved Fotile's risk resistance in the face of special periods to a certain extent. The data shows that in the three years of the epidemic, Fangtai's revenue not only did not decline, but also increased by 48%. Among them, the revenue in 2020 will be as high as 12 billion yuan, a year-on-year increase of 10%; In 2021, it will achieve revenue of 15.5 billion yuan, a year-on-year increase of 29%; The sales revenue in 2022 will reach 16.243 billion yuan, a year-on-year increase of 4.86%.
During this period, Fotile announced that it had invested more than 900 million yuan in research and development, all focusing on the intelligence of products. Last year, on the basis of FOTILE FIKS, the "kitchen intelligent ecosystem" FOTILE FIKS launched a newly developed FIKS OS operating system.
A big background is that with the maturity of the domestic kitchen appliance market, it has entered a new cycle of incremental transfer, and the kitchen appliance industry will record the lowest sales performance in the past seven years in 2022. In the stock market, it is important to find new growth points, GFK data shows that integrated kitchen appliances have become an important driver of consumption upgrading, of which 35% of consumers believe that "functionally integrated household appliances are the type of household appliances that meet the needs of a better life".
In other words, if you want to adhere to the high-end positioning, integration and intelligence have become the new development direction of China's kitchen appliance industry.
In October last year, Fotile Group released a new brand strategic positioning of "high-end full-scene kitchen appliances", covering three centers of cooking, washing and storage. Among them, the integrated cooking center Y series realizes the two-stage lifting of the smoke machine, and the steam oven realizes dual control of temperature and humidity; In June this year, Fotile launched FotileStyle, a high-end custom brand for smart whole houses, and brought its first flagship product, "Muztag Series".
Focusing on high-end, Mao Zhongqun has always been firmly invested and explored. If you want to say how fast Fangtai innovates, it is not, three years to develop a range hood, eight years to develop a water purification membrane technology. After all, Mao Zhongqun cares more about quality than speed, and it is precisely the importance of quality that "slow research and development" promotes the "rapid development" of Fotile.
3. Mao Zhongqun, how to lead Fangtai to expand its scale?
Anyone who has met Mao Zhongqun has such a feeling, he speaks very slowly, and he will think for more than ten seconds before giving a definite answer before answering a question.
Mao Zhongqun, picture source Fangtai WeChat public account
This kind of calm personality makes Mao Zhongqun like a "reassuring pill". When he argued with his father Mao Lixiang about whether the name of the new company was "Feixiang" or "Fangtai", Mao Zhongqun would list a lot of market research results to persuade Mao Lixiang, and finally Mao Lixiang chose to believe Mao Zhongqun and gave Fangtai to him with confidence.
When he first started his business, Mao Zhongqun wanted to retire after reaching a scale of 5 billion. Unexpectedly, in 2017, Fotile's revenue crossed the 10 billion mark, and it was the first enterprise in China's kitchen appliance industry to sell more than 10 billion yuan. From 5 billion yuan to 10 billion yuan, it took only 3 years.
This not only showed the outside world the results of Fotile's non-listing, non-merger and acquisition, and no price war, but also changed Mao Zhongqun's mind. Mao Zhongqun rarely set a goal for Fang Tai - to become a great enterprise of 100 billion yuan.
"Only by achieving 100 billion yuan can we prove that the excellent Chinese culture can be applied well in modern enterprises," Mao Zhongqun said.
In 2023, Fotile's sales revenue will be 17.6 billion yuan, and it is undoubtedly a very challenging thing to achieve this goal. In Mao Zhongqun's business philosophy, manufacturing companies need to adhere to four words - change with the trend, which is also the core of Fotile's sprint to the goal.
As mentioned above, while the kitchen appliance industry has experienced rapid growth along with the real estate, it has also entered a downward cycle with the real estate industry. According to the "First Quarter Report of China's Home Appliance Industry in 2023" released by the National Household Appliance Industry Information Center, the retail sales of kitchen and bathroom appliances were 37.1 billion yuan, down 2.5% year-on-year. Among them, water heaters, water appliances, range hoods, gas stoves, and disinfection cabinets have all fallen all the way, continuing the decline in the past five years.
This means that blindly binding with the real estate industry is no longer the way to work, and going out of its own way and directly reaching consumers is the key to the kitchen appliance industry through the cycle.
Facing consumers directly and understanding what consumers think is what Fotile is doing.
With the changes and development of the times, socio-economic development and lifestyle changes, consumers' needs for kitchens have changed. In Fotile's view, the kitchen is no longer only suitable for a single cooking scene, parent-child interaction, friend parties, family dinners, etc. are all new imagination spaces in the kitchen.
Reflected in the kitchen appliance industry, high-end, integrated, healthy, intelligent, and scenario-based have become the mainstream of upgrading. For example, Fotile's "high-end full-scene kitchen appliances" have realized the full-link coverage of three centers: cooking, cleaning, and storage, and realized intelligent linkage based on FOTILE FIKS.
On the other hand, for younger consumer groups, Fotile is committed to upgrading its products to be intelligent, younger and lighter.
Fotile high-end full-scene kitchen appliances, picture source: Fotile's official Weibo
In 2020, Fotile officially released its first light kitchen brand "Mibo" and the brand's first flagship product, Mibo multi-function cooking machine. This brand, which is positioned as the "leader of the light kitchen lifestyle", is a new attempt of Fotile for the light kitchen lifestyle of contemporary young people, and more importantly, a relaxed and happy attitude to life.
Another action of Fotile is also worth paying attention to. Also affected by the downward cycle, home appliance companies and kitchen appliance companies are facing the problem of the second curve, when Midea Haier and other white power companies began to extend the product matrix to kitchen appliances, Fotile took advantage of the trend to expand the product layout to the field of white electricity.
In October 2022, Fotile officially launched the first flush-embedded high-end refrigerator, officially announcing its entry into the refrigerator field. ”
As early as 2015, Fotile turned its attention to the field of dishwashers. According to data from Fotile Group, from January to June 2023, the sales revenue of Fotile dishwashers increased by 13.1% year-on-year, and the offline market accounted for 20.3%. Only two months after the launch of the new series of Fotile sink dishwashers, the sales volume exceeded 10,000 units, a year-on-year increase of 43.3%.
In 2022, avoiding the involution of traditional rolling cloth floor scrubbers, Mibo opened up a new track of "non-rolling cloth floor scrubbers", and upgraded its brand positioning to "high-end cleaning electrical appliance experts". It is reported that the research and development of Mibo's first non-rolling cloth scrubber lasted 5 years of polishing, with more than 200 technical engineers participating, 150 technical patents, and only more than 100 million yuan in research and development costs.
For more than 20 years, starting from range hoods, Fotile's product line has continued to expand, becoming a representative of multi-legged walking in the home furnishing track.
Not only that, while catching up with foreign brands in the core technology of products, Fotile has been laying out overseas markets for ten years. As of 2016, Fangtai brand has successfully entered the high-end kitchen appliance market in more than ten countries and regions such as North America, Canada, Australia, Malaysia, Pakistan and Singapore.
In 2023, Fangtai will begin to lay out refrigerators in Malaysia, and some products are currently in the sampling stage. Regarding the future development in Malaysia, Fotile focuses on both online and offline, such as Fotile products can be seen in some popular local online platforms. In addition, relying on the previous layout and first-mover advantage, Fotile has opened many offline stores in the Malaysia market.
It can be seen that overseas is a market that Fotile attaches more importance to, and it is also the key to Fotile's expansion.
In the past 20 years, Fotile has stood at the top of the pyramid of the kitchen appliance industry with a leading attitude, but the current competition in the kitchen appliance industry has become complicated, and if you want to become a 100-billion-level enterprise, market fluctuations, channel changes, and enterprise management, every competition Fotile cannot relax.
Fang Tai is moving towards the road of tens of billions, and Mao Zhongqun has his own "technique". How to lead the enterprise to a larger scale is still waiting for Mao Zhongqun to give an answer.
(The header image of this article comes from Fotile's official website.) ）