Suning’s Evolution: From Spreading Across China To Reshaping A City
摘要： Under what circumstances was Suning established? What changes and challenges have Suning gone through? What did Suning do to adapt to the internet era? What impact will Suning have on Nanjing?
Nanjing, together with Chongqing and Wuhan are known as three “furnaces” in China. Since the recorded history, Nanjing’s temperature hit the record high-41 Celsius degrees-in August, 1958.
Four years later, Sam Walton opened its first discount shop in Rogers, Arkansas. Thirty years later, Walmart became the most profitable retailer in the US.
In 1966, Richard M. Schulze and his partners opened a hi-fi instrument store called “Sound of Music” in Saint Paul, Minnesota and later changed the name into “Best Buy” in 1983.
The interesting thing about destiny is that you shall always find coincidence somewhere: Missouri is stuck in the middle of Arkansas and Minnesota, while Saint Louis of Minnesota happened to be the sister-city of Nanjing.
Zhang Jindong, founder and chairman of Suning Group, was born in Nanjing in 1963.
He grew up against the background of turmoil, reform and opening up, and the rapid development of Walmart and Best Buy. For the past two decades, Zhang and his company went through an unprecedented revolution in China’s history.
The revolution not only overthrew tradition and old forces, but also created a new empire and utopia. While the building of the old era came tumbling down, there is no end in sight on the way towards the new era.
Some people choose to sit on the sidelines, while others embrace changes and managed to play an active role; some people are too stubborn and conservative in face of the violent storm, while others are brave and bold enough to ride on the storm and even find the tricks underneath.
The internet revolution not only smashed and remolded this era, but also re-defined the rule of the business world and determined the rise and fall of different cities. Born in Nanjing in 1990, Suning managed to replenish the very city it was born two decades later.
Coincidently, the destiny of a 2,500-year-old city and a 27-year-old company are intertwined thanks to the internet era.
Venturing into business
At the age of 21, Zhang Jindong, majoring in Chinese, graduated from Nanjing Normal University and was assigned to a SOE. Along with tens of millions of other young graduates who’ve got “golden rice bowl jobs” in SOEs or central enterprises, he earned 55.7 yuan a month and led a steady life.
Back then, mainland China was still stuck in planned economy and remained to be exploited, or tainted. However, subtle changes were on the way.
That year, China's total social and industrial output volume was only 1.2835 trillion yuan and 701.5 billion yuan, respectively. Compared with the year-on-year growth rate of national ownership enterprises (11 per cent) and collective ownership enterprises (21.3 per cent) in the industrial sector, that of enterprises of other economic types reached a staggering 56.8 per cent. In addition, industrial output volume of four SEZs, including Shenzhen, Zhuhai, Shantou and Xiamen, increased by 51.5 per cent year-on-year.
That year, sales of washing machines increased by 58.1 per cent and reached 5.78 million units, while TV production reached 9.96 million. More specifically, color TV production increased by 1.4 times and reached 1.46 million. Besides, refrigerator production reached 537,300, an increase of 1.9 times.
That year, total retail volume of social goods reached 335.7 billion yuan, up by 17.8 percent over the previous year, while total retail sales of consumer goods increased by 18.7 percent. Sampling survey shows that average monthly living expense of urban citizens reached 608 yuan, up by 15.5 per cent over the previous year.
In the annual statistical bulletin of the National Bureau of Statistics, the government concluded that one of the main problems of the year was "excessive growth in consumer funds", which was never heard of for the Chinese people who had been stuck in a state of material scarcity for the past decade.
1984, the year attached to special meaning because of George Orwell's novel, witnessed the rising income and living standards for the Chinese people.
The wind of the times was slowly infiltrating all aspects of Chinese society that was gradually awakening from the balder tale. Some of the most courageous and keenest people, however, began to realize that this wind might change the fate of themselves and this country in the future.
In 1989, Zhang and his friends ordered a couple cups of coffee with over 100 yuan in a Shanghai cafe. The experience left as a complete shocked for him. Therefore, he came back and opened his own cafe "Carnation", the first in Nanjing after the reform and opening up.
To open a café, however, he had to install an air-conditioner.
At that time, air-conditioners were luxury goods for most ordinary consumers. “At that time, an ordinary 1 hp split air-conditioner cost five to six thousand yuan, while an ordinary 5 hp cabinet air-conditioner was priced at up to fifteen or six thousand yuan,” Zhu Jianghong, founder of Gree Group, recalled in his autobiography and memoir.
The high price was only one of the stumbling blocks. Besides, business owners were supposed to ask for permission, arrange special lines and pay for the capacity increase fee, all of which were seldom known by the vast majority of readers today. In fact, the requirement, a product of planned economy, wasn’t abolished by the Development and Reform Commission until 2000.
Therefore, Zhang turned to Nanjing Office head of Chunlan Group, the largest air-conditioner manufacturer in China at that time. They came to know each other and got along quite well. Since then, Zhang began to purchase and re-sell air-conditioners to enterprises and public institutions that had a strong demand for air-conditioners and weren’t sensitive to the high price.
It was not until 1978 that Chinese enterprises began manufacture air-conditioners by themselves. That year, production of “Made-in-China” air-conditioners was only 233. By 1985, this figure increased to 120,000, like a drop in the bucket compared to the annual production of washing machines (8.83 million), TV sets (16.22 million, color TV production reached 4.1 million), domestic refrigerators (1.39 million).
At that time, Zhang believed that there remained huge consumption potential in Nanjing especially due to the hot weather. Based on his purchasing and re-selling experience, he concluded that although there wouldn’t be a huge general consumer market in a short time, public institutions and SOEs together already had adequate need for air-conditioners.
After visiting the five production lines at Chunlan Group’s Taizhou factory, Zhang made up his minds, decided to give up his “gold rice bowl job” and resigned from the SOE he was assigned to.
In 1990, ordinary Chinese consumers dared not to enjoy purchasing new goods at Christmas as people do today. At that time, this Western festival did not have any special meaning for the vast majority of Chinese consumers. Instead, it only meant that the year had come to an end.
However, Zhang rented a facade room at No.60, Ninghai Road, Nanjing, covering two hundred square meters, the day after Christmas, with an initial capital of 100,000 yuan he saved for the past few years. His gave the shop the named "Suning" and sold mainly air-conditioners. Even till today, nobody knew exactly if Suning means the combination of the first character of Suzhou Road and Ninghai Road, or that of Jiangsu and Nanjing.
Zhang did not have much time to care about the name of the store. Since the annual rent was as high as 70,000 yuan and the purchase price of an air-conditioner was five thousand yuan or so, 100,000 yuan was nothing but a drop in the bucket.
Therefore, Zhang Jindong, quite boldly, played a small trick. After receiving customers’ money, he would promise to install the air-conditioner door-to-door, during which time he would pick up the air-conditioner with customers’ money and pocket the difference. By doing so, he could earn about 1,000 yuan per order, while the average monthly living expense of Chinese urban residents was less than 1,600 yuan in 1991.
August was the month when air-conditioner manufacturers settle the accounts. Zhang earned more than 2000 million yuan by Agust and 40 million by the end of the year.
Fighting for the Nanjing market
At this point, everything went pretty well. However, a good story always has its turning point and ups and downs. Only exciting plots could arouse everyone's enthusiasm and vision. Only after experiencing seemingly insurmountable tests and trials can the hero of the story start a new adventure, the story be deemed as successful and outsiders get satisfied.
Time finally came when Zhang and his Suning 365 had to go through hardships. The villain of the story was the so-called “Eight Shopping Malls in Nanjing”.
By 1992, Suning’s sales had reached more than 100 million yuan, accounting for 70 per cent share of the entire Nanjing air-conditioner market. The city's original industry and interest pattern had been disrupted by this newcomer. Zhang was so excited about his achievement that he failed to notice the accumulating dissatisfaction and hostile sentiment from his rivals.
In October 1992, the 11th meeting of the GATT China Working Group was held in Geneva. Representative decided to put an end to the reviewing process of China's foreign trade system at the meeting and enter into the substantive negotiation stage about market access. At the same time, China and the United States reached a "Market Access Memorandum", in which the United States promised to "firmly support China's GATT party status".
At that time, China generally believed that China would soon resume the status as contracting party in "GATT". Therefore, foreign domestic appliance brands might be able to enter the Chinese market with preferential tariffs, ushering in unprecedented competitive pressure for the Chinese domestic appliance industry.
What was even more frightening for the air-conditioner market players in Nanjing was that high temperature period shortened in 1992 compared with previous years.
At that time, nobody knew exactly what the Nanjing air-conditioner market would look like next year.
That October, Chunlan Group held the dealer order fair for the next year. While most dealers dared not to place orders, Zhang signed on the spot a contract worth nearly 50 million yuan. By 1993, China did not return the GATT contracting party status as expected, and the RMB appreciated. Zhang’s gamble proved to be a great success, and managed to accumulate enough supply and price competitive edge.
The spring of 1993 was more lively than ever before.
Suning took the lead and set off a massive advertising campaign and a price war. Market player with invested interests could no longer stand the unscrupulous competition from a newcomver on the market.
Therefore, eight major state-owned shopping malls in Nanjing, including Nanjing Xinjiekou Department Store, Central Shopping Mall, Nanjing Jiaodian Group, Taiping Shopping Mall, Shanxi Road Department Store, Gulou Department Store, Nanjing Commercial Building and Domestic Appliances Shopping Mall, jointly set up "Nanjing Domestic Appliance Expansion Coordination Committee" and righteously issued a "Letter to the National Air-Conditioner Production Enterprises". In the letter, they accused Suning of unfair competition and announced that they would adopt any necessary means together to compete with Suning.
Eight shopping malls covered in total around 200,000 square meters, almost a thousand times larger tan Suning. Besides, their total turnover was more than 10 times bigger than that of Suning.
Although a war had been declared, Suning did not want to take up the fight. During a dealer order fair held by Sanyo Air Conditioner, Zhang took the initiative to invite representatives of the eight shopping malls in an attempt to ease the relationship between the two sides. However, when he was ready to deliver the speech, the delegates broke from the fair together. Zhang insisted on finishing the speech, though with embarrassment.
The fantasy over potential compromise had been shattered, and the two sides would begin to do everything they could to defeat each other.
While eight shopping malls launched an advertising price war in the newspaper, Suning quickly reacted: Suning not only reduced the price, but also ensured that Suning would make up the difference if consumers bought air-conditioners at eight major shopping malls at a price lower than Suning’s. During the first day of price war, Suning’s sales amountd to more than 10 million yuan. While rumors had it that eight shopping malls picked up products from Chunlan Group led by the police car, Zhang declared that it was because the eight major shopping malls didn’t have enough inventory.
In this war, the state-owned shopping malls had begun to realize that the game rule was no longer favorable to them. Compared to self-employed businessmen like Zhang Jindong, they had no much say as they’ve expected in the purchase price and supply of air-conditioners.
At that time, the concept “planned economy” has become synonymous with being “old-fashioned”, and people have long been disgusted with the work style of state-owned enterprises in the planned economy. Therefore, state-owned stores often faced unexpected criticism. For an increasing number of people, Zhang Jindong became a hero who dared to challenge the monopoly. With the sympathy and support of the outside world, Suning seemed to be at an advantage.
In the beginning of the contemporary China's market economy, although Suning’s competition with major state-owned shopping malls looked more like throwing an egg against a rock, Suning managed to finally win the war. Its annual sales increased by 178 per cent and reached more than 300 million yuan. At the same time, Suning became the biggest air-conditioner dealer, starting from one of China's hottest cities.
In a standard story, the protagonist has to go through all kinds of hardship, defeat the villain to ultimately please the audience. However, Suning’s story didn’t end here. Three years later, it would face a real climax and transition.
Waiting for the internet era
In 1996, the first year of the ninth Five-Year Plan, the momentum for the entire air-conditioner market was gathering.
Four years ago, air-conditioner manufacturers whose annual production capacity could reach over 200,000 included Chunlan, Huabao and Midea. By 1996, however, air-conditioner manufacturers whose annual production capacity could reach over 400,000 included not only the above three manufacturers but also Haier and Gree, etc. In 1992, total sales of air-conditioners reached more than 1 million, yet by 1996, this figure reached 6 million.
The continued growth of social economy and residents' income further stimulated the Chinese air conditioner market by leaps and bounds. That was the golden age of China's air-conditioner industry. As the leading Chinese air-conditioner dealer, Suning could have safely enjoyed a steady growth.
In the face of vigorous market growth, manufacturers were no longer satisfied with sharing the interests with dealers. Instead, they were eager to get involved in the sales channel, face consumers directly and win back dealers’ profits.
The trend also spread to the air conditioner industry.
By1997, air-conditioner manufacturers finally took action. For example, Chunlan Group announced an investment of one billion yuan to build a network of 3000 chain stores and opened 500 chain stores within that year. Haier shifted its focus to "individual dealers, while Midea came up with the "restricting large-scale dealers, supporting mid-sized ones and supporing small-sized ones" policy. By the end of this year, Gree had set up the industry's first sales company in Hubei.
As manufacturers had become aware of the great potential of the retailing and would not hesitate to meete former partners on battlegrounds. The reallocation of channel resources and the formation of a new competition and cooperation pattern had formed an irreverseable trend. However, the subversion of the sales channel would inevitably lead to changes in business models. Sometimes, even before the former, occurred, the latter would have appeared and started to change in order to adapt to market trends.
Suning was one of the first ones to become aware of danger. In the beginning of 1996, Zhang announced that Suning would shift its focus from wholesale to retailing. Shortly after that, Suning opened its first chain store in Yangzhou. By 1997, the trend had spread throughout the market, while Suning had already opened more than 30 air-conditioner chain stores.
The pattern of the entire Chinese air-conditioner market entered into a new historical stage in 1997. However, the high-spirited Chunlan Group then gradually paled into insignificance, Suning is grasp the trend of the direction.
On the turn of the century, everybody seemed to be affected by certain moods. Everything was rapidly changing, and every minute and second witnessed business miracles that could hardly be expected and explained. At that time, business development could not be completely explained with common sense or logic. In an age when corporate system and practice remained crude, the entrepreneurial spirit became the the sole totem and rule in the business world. At the same time, entrepreneurs who started their own business also began to take action along with the rapidly-changing era.
On the turn of the millennium, Suning once again shifted its course, went beyond air-conditioner retailing and turned to comprehensive domestic appliances. Besides, Suning decided to open chain stores across China. After developing in the most prosperous region in China, Suning decided to go beyond Nanjing and Jiangsu. In 2000, Zhang proposed that Suning would open 1,500 chain stores across China within three years.
However, Zhang failed to notice that 230 kilometers away, Jack Ma, along with 18 founding partners, founded Alibaba in a narrow apartment in Hangzhou. From 1999 to 2000, Alibaba received a total investment of 25 million yuan from two partners. In 2001, however, Suning's net profit just reached more than 25 million yuan.
In 2000, Wal-Mart's revenue exceeded $ 180.7 billion, while Amazon's revenue was only $ 2.76 billion, with a record-high loss of $ 1.41 billion. While the latter’s market valuation was only $ 16.6 billion, the former’s market valuation had reached nearly $ 240 billion. However, Amazon's revenue grew by more than 68 per cent this year, while Wal-Mart’s revenue growth rate was less than 20 per cent.
A new era was on the rise. The game rule of the retailing industry was quietly changing. With the launch of Taobao and Alipay in 2003, internet shopping began to violently challenge the inherent pattern of the traditional Chinese retailing market. In a market of rapid urbanization and huge consumption potential, this trend was revealed in a more profound and clearer manner.
By 2009, Taobao's turnover had reached 208.8 billion yuan. CNNIC’s survey shows that by the end of the first half of the year, China’s online shopping users had increased to 87.88 million, an increase of nearly 29 per cent year on year. Besides, internet users who turned to online shopping for 1 to 2 times accounted for 32.3 per cent, while internet users who conducted online shopping for 5 to 10 times reached 30.5 per cent. Sampling survey shows that average online shopping consumption volume reached 1360 yuan, higher than the average level in Shanghai in the previous year.
This year meant a great deal for Suning. As Huang Guangyu was eventually thrown into jail, Gome began to be in a disadvantage in the competition with Suning. People began to realize that Suning, with a total transaction volume of 58.3 billion yuan of the chain of retailers online 3C retail market, had become the dominant player in the offline Chinese 3C retailing market.
Also in this year, the ripples of the financial crisis began to intensify and affect all aspects of China's economy. China’s national consumer price fell for the first time since 2003, which was of course not a good sign for offline retailing entities.
Although the proportion of online shopping in total retailing sales remained less than 2 per cent, internet users who purchased communication and digital devices, computers and domestic appliances had accounted for nearly 1/4 of the entire online shopping group, a bitter figure for Suning.
Signs, whether obvious or subtle, suggested that people were getting increasingly accustomed to purchase products online instead of offline. As online shopping had become an irreversible trend, it was rather difficult for them to turn back to offline stores.
At this point, Suning chose to carry out its own e-commerce business "Suning EasyBuy". According to Suning’s financial report, by 2014, Suning EasyBuy's revenue had jumped from 2 billion yuan to nearly 25.8 billion yuan within five years. Over the same period, Suning's revenue had risen from 75.5 billion yuan to 108.9 billion yuan. In 2013, Zhang put online retailing to the priority and began to promote the importance of comprehensive O2O channel and the integration of offline and online open platforms. This was the so-called "one body, two wings" strategy, and Suning Cloud Business finally surfaced.
While the market had undergone enormous changes, Suning, the retailing giant transformed from a traditional domestic appliance giant to an internet retailing giant, also experienced unprecedented pain in the history of China's business circle. Never in history had a company experienced such thorough business transformation. In the past, Suning played a key role as a challenger; at present, however, it must strike its own way out of the struggle between online and offline retailing. There was no experience Suning could learn from, and no case Sunign could refer to.
It’s difficult to start one’s own business, but even more difficult to transform one’s business.
Data from China National Business Information Center shows that retailing sales of 100 Chinese major retailing enterprises only increased by 0.4 per cent year on year. More specifically, retailing sales of domestic appliances fell by 1.6 per cent. Although Suning’s revenue once registered an unprecedented 100 billion yuan, its net profit for the first time went into red. The 2014 financial results show that sales of offline stores fell 3.96 per cent year on year, regardless of the type or market grade of stores. Suning’s offline comparable revenue in the mainland China market also fell that year.
However, there's no making without breaking. A secret but bold plan was gradually developed among Zhang Jindong and three other senior executives.
Therefore, the execution of the plan was rather mysterious.
One night in late summer of 2015, a manager of the company's Branding Department received an emergency call at nine o'clock. However, his boss didn't appear until midnight. Therefore, he and his colleagues had no choice but to have some night snack outside Suning’s headquarters.
However, they were once again called back to the office for a paper confidentiality agreement. For the next week, they were assigned to carry out a secret task together with twenty more colleagues from Hangzhou.
It was not until Jack Ma suddenly appeared in Suning’s press conference that the secret plan was finally revealed to the public. On August 10th, 2015, Alibaba announced a strategic investment of about 28.3 billion yuan into Suning, thus becoming the second largest shareholder of Suning. In exchange, Suning subscribed no more than 27.8 million new shares with 14 billion yuan.
People who witnessed the moment could hardly realize the historical significance of this moment. They never realized that they’d witnessed one of the most business-minded deals in the history of Chinese business world.
Just two years ago, Zhang submitted his proposal over e-commerce tax during the two sessions. For the past few years, Taobao and Tmall had continued to squeeze the survival and development space of other online and offline rivals. However, these two rivals finally decided to make peace in order to achieve mutual complementarity and common development.
shortly before the two companies reached the strategic partnership agreement, Amazon's market value also surpassed that of Wal-Mart. As of the first ten days of April 2017, Amazon’s market valuation had doubled than Wal-Mart.
Finally, we ushered in an era of internet retailing.
At this point, a quarter of a century had passed since the establishment of Suning. However, in the past 25 years, the relationship between Nanjing and the internet remained mismatched, and Nanjing never managed to catch up with the development of internet.
Maxmizing the radiative effect
In Nanjing, despite the convenience brought by the internet, including online ride-sharing, online shopping and mobile payment, Nanjing residents still hold certain stereotypes towards the internet. A local told me that different from young people in other cities, young Nanjing residents worked not as hard as their peers in other places, and starting one’s own business was never among their first choices. In Nanjing’s dialect, there was even a special term for these young people who led a steady life.
While Beijing and Shanghai had evolved into a fanatical super-entrepreneurial kingdom under the catalysis of capital and power, Guangzhou and Shenzhen had a unique advantage for entrepreneurs because of the large number of migrants and the baptism of the market economy. In Hangzhou, the value chain and ecological system derived from Alibaba’s empire were attracting tens of thousands of of entrepreneurs.
In the noisy Chinese internet and entrepreneurial world, Nanjing is like a secret city that has been annihilated in the past. To a degree, no matter how hard it explores and tries, it seems that the outside world never pays proper attention to the city.
People are accustomed to referring to Nanjing people as "big radish" since they are known as being honest but loose. It is clear that in an era of rapid changes in the Internet era, Nanjing, a city with rich historical heritage, cope with changes in a manner that’s neither too fast nor too slow.
However, Nanjing didn’t just sit around in terms of industrial upgrading and internet innovation. Only in the last year, it added 27 more co-working spaces and owned a total of 162 co-working spaces. In fact, Nanjing is one of the only 12 cities in China with more than one trillion yuan of GDP. As a regional core city with natural advantages, it should have nurtured an atmosphere of internet and innovation as strong as that in other cities such as Beijing, Shanghai and Guangzhou.
However, this is hardly the truth.
Back in 1988, Shenzhen's GDP was only 8.69 billion yuan, while that of Nanjing had reached 13.03 billion yuan.
In 2000, Shenzhen’s GDP rose to 1665.24 billion yuan, while Nanjing’s GDP only increased to 1021.29 billion yuan. By 2016, Shenzhen's GDP had reached to 1949.26 billion yuan, while that of Nanjing was only 10503.02 billion yuan.
Over the past decade or so, the gap between Shenzhen and Nanjing has widened from 1.63 times to 1.85 times. However, it is worth noticing that the gap in the level of internet economic development has played a vital role. Besides policy guidance, the demonstration and ecological radiation effects of internet giants such as Tencent and Huawei also played a key role.
During the first 11 months of 2016, revenue of Nanjing’s internet and related services reached 22.553 billion yuan, an increase of 108 per cent year on year. Internet business drove the growth of the service industry by 3.6 per cent and contributed 23.7 per cent to the annual growth rate. In comparison, revenue of Shenzhen’s internet and related services reached 90.864 billion yuan, an increase of 50.7 per cent. More specifically, revenue of the software and information technology services registered 81.481 billion yuan, an increase of 9.6 per cent, while that of the internet industry reached 76.75 billion yuan, an increase of 15.3 per cent.
"Nanjing's potential is equivalent of an iceberg. There remains a huge bulk underneath, but we still need some star enterprises so that its potential can surface. To a degree, I think Suning played such role. I have always thought that it’s not that Nanjing is not well-grounded in technological innovation, but that many people work in the bottom level," Sun Weimin, vice chairman of Suning Cloud Business Group, explained. After graduating over twenty years ago, he gave up his assigned job in Beijing and went back to Nanjing alone. He personally experienced the changes of Suning and the city over these years.
How far is Nanjing in terms of internet and innovation? Perhaps, it’s just the distance from Suning’s headquarters to its Youth Innovation Park.
Within the past seven years, Suning had evolved from a chain retailer to an internet company centered around the concept "one body, two wing". There had always been two buildings near Suning’s headquarters, though nobody had ever expected that they could make use of these two buildings. After all, Suning itself had been busy going through its own internet transformation.
It was Ren Jun, vice president of Suning Cloud Business Group, who first proposed to transform these two buildings into garage coffee park. However, relevant personnel misunderstood his idea and simply opened a café. If there was no further transformation, then this cafe would have become just another canteen for Suning, along with its 13 other canteens.
It took Suning nine years to go beyond its birth place and spread across China, but it took Suning nineteen years to carry out its own internet revolution and stumbled into the online internet world. In fact, as early as the late nineties, Suning had turned to two consulting firms to discuss the possibility of conducting e-commerce business. However, the final conclusion was that at that time, the development level of the internet in China was not enough to promote Suning’s business growth.
Nanjing is eager to catch up with the internet era. Suppose it’s like a long marathon. Although Nanjing had finished forty-two kilometers, it needed a leader to complete the last 195 meters. At this point, Suning transformed the buildings near its headquarters into Youth Innovation Park, which also became the first innovation park in Nanjing’s TMT sector.
"In the past, when we talked about big enterprises, we might compare them to a monster that’s anxious to merger every other rival. Today, however, big enterprises prefer to build platforms for small and mid-sized enterprises. For us, we prefer to spend more money in such platforms," Sun Weimin, vice chairman of Suning YCloud Business Group , explained. For him, Youth Innovation Park was a venture capital service Platform where Suning could make full use of its own advantages and resources to serve the large number of entrepreneurs.
A video ads provider targeting streaming platforms was the first startup project that entered the Youth Innovation Park. Its founders included former hosts from Nanjing Radio and Television Station and former producers of Taiwan's Eastern TV Station. One of the founders to opened Taobao and Suning’s App and showed me the bottom menu entry for streaming platform. For her, streaming might surpass texts and pictures and became the dominant promotional medium for online shopping. Their startup focused exactly on this sector by producing video ads for different streaming platforms.
Sun Weimin told me that in an era of internet retailing, integration of different channels was the key, so Suning had put high priority to it in its transformation. Traffic distribution was another key, and Suning had been constantly exploring different possibilities in this sector. Up till now, they’ve accumulated their own methodology and got their own answers.
"Suning is too large a company. In the future, it can not only build a lot of surrounding industrial chains, but also support a lot of small and mid-sized companies. This is actually the guiding principle of what we are doing right now," Mi Xin, COO of Suning Culture Innovation Business Group, told me.
He believed that video and e-commerce were the most time-consuming behavior of internet users. Therefore, attracting users through content portals and stiumalting actual consumption behavior through refined content flow management represent not only the expansion and upgrading of internet content consumption, but also one of the major trends in future internet consumption. In fact, content is increasingly becoming a hub of traffic and consumption transformation.
The feasibility of such consumption and business model has already been proved by Amazon and Netflix's success. Suning has already listed Cultural Innovation and Sport as one of the six major six businesses after its internet transformation, while culture and entertainment has also been one of the major area of the Youth Innovation Park.
While Suning's diversified business system and scenario provide an exit for users, startup projects derived from Suning's retailing ecology can better promote its development in internet retailing experience and content. Besides the Youth Innovation Park, Suning has also set up a 300 million yuan Youth Innovation Fund. The fund was designed to participate mainly in the series A round financing and help entrepreneurs together with incubators and funds outside of Suning.
Some of the major investment areas of the fund included intelligent manufacturing, culture and entertainment, e-sports and ACG. Based on relevant principles, the fund would invest no more than 15 million yuan in total into a single project.
"At present, these projects are chosen based on the general development path of the entire group. Although we invest not much money in these projects, they may have huge impact on our society. Since we attach higher importance to social impact, we pay less attention to return on investment," Sun Weimin explained. For him, the Youth Innovation Park not only complemented Suning, but also contributed to the nurturing of entrepreneurial and innovation atmosphere in Nanjing.
For Nanjing, the Youth Innovation Park was more like a benchmark for internet and entrepreneurship.
On the way to the Youth Innovation Park, you can see other innovation parks such as Nanjing University Science and Technology Park and the Maqun Science and Technology Park. In fact, Nanjing had established the 1865 Park, which was even larger than the 798 Park in Beijing, long ago. However, the 1865 Park was filled with real estate enterprises and gold & silver handicraft shops.
In fact, the reason why internet and entrepreneurship failed to take root in Nanjing for a long time is that these entrepreneurial parks were not supported by major tech enterprises and couldn’t sense the need of the market, and that parks established through administrative orders often fought by themselves and failed to achieve cluster effect. More importantly, without market-oriented and standardized investment fund management and counseling, startup projects often found it rather difficult to enter the market and participate in the competition.
"In fact, when I talked to some entrepreneurs that day, I asked them what products they had. For them, it could be too hard a task to hold road shows at ten cities; for us, however, there’s nothing easier than that," Sun Weimin explained.
In his opinion, the Youth Innovation Park was more like a platform of endless possibility. With the help of Suning’s resources, it’s easier for startups to develop mature and marketable products and even establish well-known brands.
Thans to Suning, internet and entrepreneurship began to come to the spotlight in Nanjing and the city's advantages in resources started to be fully made use of. I have confidence to believe that Suning’s open platform and Youth Innovation Park will help nurture the innovation and entrepreneurial atmosphere in Nanjing, pool more talents and attract more capital and startups to come to Nanjing.
This kind of movement is not only the real driving force to stimulate the rapid development of the internet and innovation, but also the biggest driving force to promote the internet transformation of a city. Therefore, the concept "mass entrepreneurship, innovation" will truly lead to business practices instead of simply capital and administrative games.
The past twenty-seven years ago witnessed the birth and transformation of Suning from a air-conditioner dealers in the pre-internet era to a comprehensive O2O retailers in the internet era. At this point, how much can a company reshape a city and contribute to the regeneration of a city in the internet era?
This is not only a story of revolution, but also of endless hope and expectation into the future.
[The article is published and edited with authorization from the author @Hu Yong please note source and hyperlink when reproduce.]
Translated by Levin Feng (Senior Translator at PAGE TO PAGE), working for TMTpost.