Speaking of "Made in Germany", when most people give a thumbs up, the logos of Siemens, BMW and Mercedes-Benz will appear in their minds.
But what is not known is that the tools for making the cigarettes you smoke, the finished fish you buy, and the stage curtains you watch when watching performances are all made by German companies.
Hauni is the only company in the world that can provide a complete cigarette production system, occupying more than 90% of the high-speed cigarette machinery market.
Gerriets - the world's only large-scale stage curtain manufacturer, with a market share of 100%.
Flexi - manufacturer of retractable dog leashes, accounting for 80% of the global market.
There are many German companies that dominate the global market, such as Bada, a manufacturer of fish processing tools, Wanzl, a manufacturer of airport luggage trolleys, and so on. Although they have different names, they have the same title - "Invisible Champion" company.
This is because most of their products are not end-consumer products and are generally unknown to the public. They are so-called "invisible", but they occupy the global market and become real "champions".
What is a "hidden champion" company?
“‘Hidden Champion’ companies refer to companies that are absolutely leading in a certain market segment and become one of the top three in the world in their own fields, but their annual sales do not exceed US$5 billion and their public visibility is relatively low. Enterprise." Theoretician and world-famous management scholar Hermann Simon concluded at the first Hidden Champions session held in Taicang, Jiangsu Province on November 10.
According to Simon research statistics, there are more than 3,000 "hidden champion" companies in the world, of which Germany alone has more than 1,300, followed by Japan, while China has only 68.
We can’t help but ask, are “hidden champion” companies important? What kind of companies are they?
This also starts with the national economic characteristics of China and Germany. In most countries in the world, exports are completed by large companies, but there are two exceptions. These two exceptions are China and Germany. In China, 68% of companies have less than 2,000 employees, and in Germany the figure is more than 90%.
In other words, small and medium-sized enterprises have become the backbone and backbone of the export trade between China and Germany. Therefore, the number of “hidden champion” companies is particularly important.
“These ‘hidden champions’ are actually the backbone of the German economy. Although Germany has good large companies, Germany’s real strength is small and medium-sized enterprises.” Ms. Claudia Schbarr, Deputy Consul General of the German Consulate in Shanghai Spahl told China News Service China Express reporter that these companies maintain Germany's production capacity and Germany's production base, and are the bayonet of the German economy.
Several characteristics of "hidden champion" companies contribute to their importance to the national economy.
“Hidden champion” companies focus on a certain segment of the industry. Just like the dog leash manufacturer Flexi mentioned at the beginning of this article, it focuses on the R&D and production of retractable dog leashes. Focusing energy will inevitably lead to excellence. "Hidden champion" companies improve product quality and customer satisfaction through continuous innovation and market demand, and develop global markets.
“Hidden Champion” companies have the courage to invest in innovation. Their expenditure on R&D is twice as much as that of ordinary companies, reaching 6% of operating income; the number of patents they have obtained per capita is 30, which is 5 times that of large enterprises.
The courage to innovate and invest allows the "hidden champion" companies to possess unique products and technologies, and then control market pricing power. Therefore, their products are also very profitable, more than twice that of ordinary companies.
In addition, these companies are high-performance organizations that are willing to invest heavily in training employees. Therefore, the turnover rate is as low as only 2.7% on average per year. The average tenure of corporate leaders reaches 20 years, which is three times that of large companies. .
Founder Simon believes that "hidden champion" companies can become strategic role models for medium-sized enterprises around the world, especially in countries such as China and Germany where small and medium-sized enterprises account for an overwhelming proportion, efforts should be made to cultivate such businesses, which provide all companies with valuable lessons on how to grow, how to create jobs and how to innovate.
Cultivation of China’s “hidden champions”
Looking at the development paths of European and American manufacturing countries, the performance of large multinational companies is enviable, but countless small and medium-sized enterprises are their constant international The core of competitiveness and continuous economic power.
As far as Made in China is concerned, it is currently constantly troubled by production technology bottlenecks, rising labor costs, energy and environmental conflicts, overseas trade barriers and other issues. How to realize Made in China, especially the many small and medium-sized enterprises that are the cornerstone of the manufacturing industry? Transformation and upgrading?
The cultivation and growth experience of Germany’s “hidden champion” companies may be worth learning from. Simon told reporters that to cultivate China's "hidden champions", both enterprises and the government must participate.
For Chinese companies, Simon has four strategies at the business level:
Ambitious goals. Enterprises must have grand goals and extreme ambitions, focus on profit growth and take a leading position in the market;
Focus on key points. Only by focusing on a narrow market and one link of the value chain and becoming an expert in this field can we build a first-class enterprise;
Global marketing. Under market segmentation, only by expanding the market to the world and combining product focus with global sales can the company become stronger and bigger;
Continuous innovation and continuous closeness to the market and customers. The tradition of Made in China is to win at low prices, but with the rising costs of various production factors such as human resources, and the competition from lower-cost countries such as Vietnam and India, the future competitiveness of Made in China lies in its willingness to invest in research and development, improve Products and services, building brands;
In addition, if China wants to produce more "hidden champion" companies and win in global trade, the government must also do a good job in two aspects.
Protect intellectual property. The degree of internationalization of China's innovation and R&D capabilities is still low. Chinese companies should increase investment in research and development and use innovative products to increase corporate profits; at the same time, the Chinese government should also strengthen intellectual property protection to safeguard innovation.
Develop manufacturing industry. "Hidden champion" companies are inevitably born in countries with very strong manufacturing foundations. Countries such as the United Kingdom and the United States have always had many service-oriented companies, so they were severely hit by the financial crisis. After US President Trump came to power, although he was determined to revive the country's manufacturing industry, it was too late.
Simon suggested that China’s future development should focus on protecting its manufacturing industry and should not give up.
In fact, there is a place like this in China, where nearly 40 global “hidden champion” companies in their respective industries gather.
This city is Taicang, Jiangsu. Without special attention, it would be hard to imagine that there could be so many competitive German “hidden champion” companies in this comfortable and cozy Jiangnan county-level city.
From 1993, when the first German company Kern-Liebers settled in Taicang, by 2017 there were more than 280 German companies in Taicang. As a result, Taicang is also known as the “Hometown of Chinese German Enterprises”.
"The gathering of German 'hidden champion' companies not only brings explicit benefits such as employment and tax revenue to Taicang, but also profoundly affects local companies in terms of development models and business philosophy, boosting industrial transformation and upgrading." , Taicang Municipal Party Committee Secretary Shen Mi told.