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Chen Kaixuan, President of Liby Group,: Traditional Industries Are Never Outdated but Cannot Remain Unchanged
2018-06-13 15:16:55

 

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From building up from nothing to becoming a leading daily chemical enterprise with China’s first and world’s fourth sales volume of detergent, Chen Kaixuan, President of Guangzhou Liby Group Co., Ltd. (hereinafter referred to as “Liby Group”) , has always been a leader of Chinese daily chemical industry. Not only is he a typical example of Cantonese merchants and one of the first generation entrepreneurs growing with the reform and opening-up, but also he is “a seaman” in the consumption upgrading era. In his 60s, he emphasizes on starting up business forever. Liby Group is not content with being a leading daily chemical enterprise, but strives to be the largest platform of Chinese massive health industry.

Facing the menacing Internet economy, Chen Kaixuan said frankly that he was anxious, but he was driven to work harder and deal with fierce competition and pressure through innovation. Just as what he said, “Private enterprises depend on entrepreneur’s courage in the beginning. After securing a place, they suddenly realize that existing effective ways no longer make sense. To survive, they have to carry out continuous innovation, since innovation is an absolute principle.”

“These ideas are originated from difficulties”

From buying and selling to OEM (original equipment manufacturer) and building a factory and a daily chemical group with China’s first and world’s fourth sales volume of detergent, Chen Kaixuan’s entrepreneurship history is also a history of struggle of a Cantonese merchant.

Guangdong benefits from reform and opening-up policies first and Cantonese merchants eat crabs first, of whom Chen Kaixuan is one. Liby took the lead in achieving its goal with the help of others and making payment before delivery in the initial stage of pioneering. However, Chen Kaixuan said that these ideas were originated from difficulties.

He recalled that he had neither capital nor technology in the beginning, but he was quite clear about his advantage. That is, he knew the market very well. Then he practiced OEM (original equipment manufacturer). Cooperation between Liby and dealers was full of twists and turns.

In fact, “sales on account” was a common phenomenon in the domestic cleaning product industry, but it was unfeasible for Liby for lack of capital. Liby seemed to be at a dead end. Chen Kaixuan was not scared away but calmed down and found a way out. He carried out market survey and found that “sales on account” was based on price dumping and dealers must do other businesses using the payment for goods so as to earn money. Then, he came up with a new rule-“payment before delivery”. This idea overturned existing industry rules. At the very start, people turned their back on it and even thought he went mad.

Chen Kaixuan attempted to attract dealers. Finally, he came up with an idea: giving dealers the franchising right, “a dealer is responsible for an area. Liby is responsible for promotion and offers operational support. A box had a profit of 2 Yuan, which was an enormous figure at that time.” Some acquaintances gave it a try for kindness. Unexpectedly, business was getting better and better. This idea not only broke “the debt chain”, but also solved financial and technical problems of Liby.

Chen Kaixuan attempted to attract dealers. Finally, he came up with an idea: giving dealers the franchising right, “a dealer is responsible for an area. Liby is responsible for promotion and offers operational support. A box had a profit of 2 Yuan, which was an enormous figure at that time.” Some acquaintances gave it a try for kindness. Unexpectedly, business was getting better and better. This idea not only broke “the debt chain”, but also solved financial and technical problems of Liby.

“Innovation is the core competitiveness of enterprise”

今This year is the 40th anniversary of the reform and opening-up and China is stirring a new round of consumption upgrading. With continuous development and deepening of Chinese cleaning product industry, consumers are no longer satisfied with cleaning or care, they request more and more for green, healthy and sustainable products. 。

Consumption upgrading is both a challenge and a new opportunity for traditional enterprises. 2017 Chinese Shopper Report issued by Bain, a market research institution, and Kantar Worldpanel shows a 3% year-on-year growth rate of China’s urban FMCG market, the sales of Chinese brands increased by 8% and that of foreign brands just increased by 1.5%. Particularly, Chinese brands were chasing the personal care industry dominated by foreign capital and the market share of foreign-owned brands has decreased for two consecutive years.

Chen Kaixuan said that to deal with consumption upgrading, Liby Group “should develop more competitive products according to change of increasing consumer demand”.

Moms “after 60s and 70s” may remember that washing powder on wet hands will heat up and hands could become increasingly rough. For this reason, Chen Kaixuan came up with an idea, “I hope to develop washing powder which can remove stains and has no irritation to hands.” Whereupon, Liby washing powder “with no irritation to hands” was developed, which overturned user experience of powder preparations and solved the problem that washing power heated up in water. Innovations of Liby are too numerous to mention one by one.

Innovation is the core competitiveness of Liby Group.” It is “a truth” that Chen Kaixuan realized over the years. Even though he lives a plain life and is careless about food and clothing at ordinary times, he is willing to spend money on innovation. In order to maintain sustainable development and encourage innovation, Liby Group invests 3% of sales revenue in R&D every year. Therefore, most product formulas are upgraded every two years. He introduces to reporters proudly that Liby Group has more than 500 patents, including 140 patents for invention, beyond the total of those obtained by top 2-5 peers in China.

Strive to be the largest platform of Chinese massive health industry

Liby Group stands the temptation of “quick-money industry” and treats listing with caution. Although Liby has been a pioneer of Chinese cleaning product industry, it has not been listed. Chen Kaixuan makes an explanation in an exclusive interview.

He pointed out that the daily chemical industry is a meager-profit industry. Once an enterprise is listed, they will suffer from pressure from shareholders, investors and China Securities Regulatory Commission and endeavor to make more profits. Some even enlarge market shares at the cost of damaging brand image. “Liby Group may be listed with no main businesses but other businesses”. 。

Liby Group, which builds up a fortune with detergents, starts layout of the massive health industry in the wake of large daily chemical strategy.

In 2016, Liby Group became the dominator of Guangzhou International Medicine Port through transferring stock rights and put forward “one port and one base” strategic layout of the massive health industry. “One port” is Guangzhou International Medicine Port Project and “one base” is Conghua International Medicine Port Bio-pharmaceutical Base and Southern China Innovative and Intelligent Production Base.

According to “Healthy China 2030” Layout Plan, the gross product of Chinese health industry will reach over 8 trillion Yuan by 2020 and 16 trillion Yuan by 2030. Chen Kaixuan said that Liby Group makes overall arrangement of the massive health industry just because it thinks highly of its development prospects.

“Cleaning is external health and the massive health industry is internal health.” Chen Kaixuan said that Liby Group hopes to provide consumers with better healthy products and services through massive health platform. Chen Kaixuan is ambitious about the future of Guangzhou International Medicine Port and hopes to build a hundred billion level massive health industry cluster and the largest platform of Chinese massive health industry.

Face-to-face

New Express: As an enterprise developing and growing in Guangzhou, how do you think of the business environment?

Chen Kaixuan: Guangzhou is a livable and business-friendly city. It is not exclusive and strongly inclusive. I feel quite satisfied with the business environment. I like Guangzhou very much and I return to Guangzhou immediately after going on a business trip.

New Express: Many enterprises gain inspirations from other successful enterprises. Do you have any idol enterprise which you appreciate or want to learn from?

Chen Kaixuan: All successful enterprises are worth learning. Whereas successful enterprises are working hard, we dare not to stop but maintain our competitive edges through continuous innovation

New Express: People say that Cantonese merchants are low-pitched and pragmatic, but they are “content with a little fortune”. How do you think?

Chen Kaixuan: I agree that Cantonese merchants are low-pitched and pragmatic, but they are not “content with a little fortune”. Most Cantonese merchants dare to think and do, are never satisfied and always start up a business. The same is true of Liby Group.

New Express: Since the government upholds popular entrepreneurship and innovation. What’s your advice for young people?

Chen Kaixuan: Young people should dare to think and do. They can start up a business again even though they fail.

Chen Kaixuan: Young people should dare to think and do. They can start up a business again even though they fail.

Pearl River Delta is a place of strategic importance for China's manufacturing industry and the strongest battlefield for China’s daily chemical industry. In Chen Kaixuan’s point of view, rapid growth of daily chemical industry, home appliance industry and other industries cannot be separated from the low-pitched, pragmatic and excellent craftsmanship spirit of Cantonese merchants.

As Internet and high-tech industries developed in recent years, an “anti-industry” wave was stirred up across the country. Relative to Internet, finance and real estate, traditional industries proceed steadily and cannot attain leapfrog development. As a result, hot money is earned by emerging industries. Many industrial enterprises shift the focus to hot industries.

“If enterprises are optimistic at real estate and speculate in building land and real estate, what should industries and local brands do?” Chen Kaixuan signed with emotion. Industries earn every penny from “hard work” and industries rejuvenate a country. “Liby Group has engaged in industries for more than two decades and strong determination and willpower is needed to resist temptations.”

Many traditional enterprises suffer from pressure from the menacing Internet. Chen Kaixuan said frankly, in the Internet era, he is also anxious and has the sense of crisis, which urges him to spend more time and energy on work every day. In his mind, traditional enterprises will never be outmoded, but they cannot remain unchanged. They must advance with the times and maintain the leading industry position through continuous innovation.

 

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