A comparative study of "specialized and special new" small giant, manufacturing individual champion and invisible champion

In July 2011, Zhu Hongren, then the chief engineer of the Ministry of Industry and Information Technology, made the first statement at the press conference of China's Industrial Development and Industrial Policy Report (2011). He proposed that the "Twelfth Five-Year Plan" period will vigorously promote the development of small and medium-sized enterprises in the direction of "specialized and special", that is, professional, fine management, characteristics and innovation. In September of the same year, the Ministry of Industry and Information Technology issued the "Twelfth Five-Year Plan" for the growth of small and medium-sized enterprises in the "Twelfth Five-Year Plan" period to adhere to the "specialized special new" as one of the basic principles to promote the growth of small and medium-sized enterprises. In April 2012, the Opinions of The State Council on Further Supporting the Healthy Development of small and micro Enterprises proposed that we should support the development of innovative, entrepreneurial and labor-intensive small and micro enterprises, encourage small and micro enterprises to take the road of "specialized and innovative" and cooperate with large enterprises to develop, and accelerate the transformation from factor driven to innovation-driven. In July 2013, the Ministry of Industry and Information Technology issued the Guiding Opinions on Promoting the development of "Specialized, specialized and Innovative" for small and medium-sized enterprises, further enriching and standardizing the connotation of "specialized, refined, characteristic and novel" (Table 1). "Specialized and special new" enterprises refer to the industrial small and medium-sized enterprises with the characteristics of "specialization, refinement, peculiarity and novelty".

Table 1 The connotation explanation of "specialized and special new" enterprises

In 2016, the Ministry of Industry and Information Technology took the lead in formulating and issuing the "Guidelines for the Implementation of Industrial Strong Base Projects (2016-2020)" and the "Plan for Promoting the Development of Small and medium-sized Enterprises (2016-2020)", which clearly proposed to promote the development of small and medium-sized enterprises "specialized and specialized and new" and cultivate a number of specialized and new "small giant" enterprises. In November 2018, the Notice of the General Office of the Ministry of Industry and Information Technology on the Cultivation of specialized and special new "small giant" enterprises clarified the concept of specialized and special new "small giant" enterprises, that is, the leader of "specialized and special new" small and medium-sized enterprises. It is a leading enterprise focusing on market segmentation, strong innovation ability, high market share, mastering key core technologies, and excellent quality and efficiency. The Ministry of Industry and Information Technology put forward four special indicators for selection (Table 2), and plans to use three years (2018-2020) to cultivate about 600 specialized and special "little giant" enterprises, and promote their improvement and development in innovation ability, international market development, operation and management level, and intelligent transformation.

The single champion enterprise in manufacturing industry is the cornerstone of the innovation and development of manufacturing industry and an important embodiment of the competitiveness of manufacturing industry. The implementation of the special action to cultivate and enhance the single champion enterprises in the manufacturing industry is conducive to guiding enterprises to establish the spirit of "grinding a sword in ten years", leading and driving more enterprises to take the development path of "special and excellent"; It is conducive to the implementation of the "Made in China 2025", breaking through the key areas of the manufacturing industry, promoting the manufacturing industry to the medium and high-end, and providing strong support for the realization of the strategic goal of manufacturing power; It is conducive to the integration of resources on a global scale, occupy the leading position of the global industrial chain, and enhance the international competitiveness of the manufacturing industry.



(3) Hidden champion enterprises



The concept of Hidden Champions was first proposed by the famous German management thinker Hermann Simon, who is also known as the "father of hidden champions". By studying a large number of outstanding German SME cases, he believes that hidden champions are those small and medium-sized enterprises that are absolutely at the top of a market segment but are little known.



In 1986, Simon, then the director of the European Marketing Institute, was asked by Professor Sidor Levitt of the Harvard Business School in the United States: "Why is the economy of the Federal Republic of Germany only a quarter of that of the United States, but its exports rank first in the world?" Which companies are contributing the most to this?" Simon's hunch is that the answer won't be the well-known big companies, because they don't have a particular advantage over international competitors. Through in-depth investigation and research, he proves that the answer is the small and medium-sized enterprises (smes) that are quietly working in their respective market segments and becoming global industry leaders, whose role is even more important in the process of globalization and international competition. In 1990, he creatively came up with the "Hidden Champion."



The hidden champion, as defined by Simon, needs to meet three criteria: (1) the top three companies in the world's peer market or at least the number one company on a continent; (2) Annual turnover of less than 5 billion euros; (3) Not known to the outside world, the public visibility is relatively low. From this, he collected data on nearly 3,000 hidden champions around the world and found at least 92 hidden champions in China (Figure 3), distributed in 19 provinces (autonomous regions and municipalities) and special administrative regions. This figure may not be entirely accurate, and as the world market continues to change, the number continues to grow.

Books such as Simon's "Hidden Champions: The Vanguard of Future Globalization" are authoritative studies on hidden champions, describing the common characteristics of hidden champions in terms of market leadership, strategic focus, deep value creation, global marketing, closeness to customers, products and services, continuous innovation, competitive strategy, financing strategy, organizational structure, corporate culture, effective management, etc. The concept of "hidden champions" was first introduced to China in 2003 and has received increasing attention from entrepreneurs, academics, the government and the media. The hidden champion contains high added value, low energy consumption, total factor productivity, and lasting market share, reflecting the new development concept of innovation, coordination, green, open, and sharing, reflecting the transformation of the development mode, the optimization of the economic structure, and the transformation of growth drivers, which is the inherent requirement of high-quality development. In the key stage of quality change, efficiency change and power change to promote high-quality development, it is more important and urgent than ever to advocate the idea of invisible champions and constantly develop and grow more invisible champions in China. The selection of individual manufacturing champions launched by the Ministry of Industry and Information Technology is inspired by the concept of invisible champions and draws on its experience. In addition, niche companies in the United States, international niche leaders in Japan, and mid-sized companies in Korea are synonymous with hidden champions.



Second, the similarities and differences of "three types of enterprises"



The three types of enterprises are an important part of the excellent enterprise gradient cultivation system, and are often confused or mentioned together. The formulation of several concepts has the same essence, but there are also differences.



(1) Similarities



These enterprises have created a good ecological environment for enterprise development in their respective fields, promoted the reasonable flow of production factors and efficiency concentration, promoted the sustainable development of China's various sub-sectors in the global competition, and become an important support force for the high-quality and sustainable development of China's economy, and is an important part of the modernization of the industrial chain. Taken together, they have several things in common.



1. Focus. The reason why these types of enterprises become the first market area and target customers, highly professional is the core. Firm goal, long-term focus on core products, focus on the main business, painstaking research, intensive cultivation, fine workmanship. It has established a strong brand influence in its own segments and niche markets, has an absolute say in the industrial chain, and has a good symbiotic relationship with target customers.



2. Quality first. High-quality products and services are the life and distinctive characteristics of these types of enterprises. These enterprises firmly establish a strong sense of quality first and efficiency first, adhere to the quality as the main competitive advantage, the improvement of quality as the internal driving force and the main direction of attack, generally attach importance to the quality of infrastructure, product reliability, functionality and stability, the overall level of product service life is high, and there are obvious quality advantages in similar products.



3. Craftsman spirit. These types of enterprises are the leaders of small and medium-sized enterprises, absorbing a large number of high-quality management talents and technical talents, and are the pursuers of quality awareness, practitioners of the spirit of craftsmanship, and the birthplace of entrepreneurship. Honesty and people-oriented corporate culture is an intrinsic quality strategy. Its focused and deep management mode is conducive to stimulating employees' creativity and enthusiasm, and the per capita productivity is high.



4. Keep innovating. Innovation is one of the pillars for these types of enterprises to be at the forefront, including R&D innovation and market innovation. They balance the relationship between adherence and innovation, ensure R&D investment, improve product added value and total factor productivity with quality innovation, and increase profits. For example, the average research and development intensity of the single champion in the manufacturing industry is 5%, and the ownership rate of research and development institutions is 97%, which is 5 times and 7 times the average level of industrial enterprises above the national scale. International Hidden Champions invest more than twice as much in research and development as the average industrial company and have five times as many patents per employee as large companies. At the same time, they carry out market innovation through open development. The focus strategy makes the market smaller, these types of enterprises because of the focus on an industry, a class of business, the product is single, the customer group is limited, so must expand the market space, is the pioneer to participate in globalization.



(2) Differences



1. Different identification conditions



"Specialized and special new" small giant enterprises have four types of special indicators, such as economic efficiency, specialization, innovation ability, and management, and each type of indicator has a number of specific conditions. Among them, there are clear requirements on the number of operating income in the special indicators of economic benefits, that is, the business income of the previous year is between 100 million and 400 million yuan.



The single champion of the manufacturing industry has the target market, market share, innovation ability, business performance, main products, development direction, brand cultivation, environmental protection energy consumption, management system and other nine aspects of the requirements, each aspect has a number of specific conditions. Among them, in terms of market share, it is clearly required that the market share of the segment ranks among the top 3 in the world.



The hidden champion defined by Simon defines the criteria in three aspects: the leader in the segment, the upper limit of annual turnover, and the visibility, which requires meeting the top three in the world's industrial market or ranking first in a certain continent, with an annual turnover of less than 5 billion euros. The turnover ceiling standard of the invisible champion is constantly improved with the process of globalization, scientific and technological progress and the performance growth of enterprises, this standard was 1 billion euros in 1995, 3 billion euros in 2005, and increased to 5 billion euros in 2014, which is also the latest ceiling standard.



2. Different development modes



The invisible champion defined by Simon emphasizes "invisible", mainly reflecting that the products of many invisible industry champions are often in the middle and upper reaches of the industrial chain, mainly to do intermediate products, providing parts, machines, software or supporting production and services for the middle and lower reaches, and their products are not seen by consumers in the final products and services, low-key and pragmatic, and hidden in the market. This is the market strategy that determines their so-called "invisibility", which is the result of long-term focus on market segments and serving specific customers. Simon's research found that 69 percent of hidden champions are active in industrial sectors, including machine building, electronics, and metal processing, with one in five working in consumer goods and one in nine in services. Moreover, invisible champions often need to accumulate for a long time, nearly 2/3 of the invisible champions are family businesses, established for a long time, experienced the ups and downs of the market and stood, and passed on the spirit of "ghost art and crafter gas" from generation to generation. The average age of the hidden champions is 66 years old, 38% of the companies are more than 100 years old, and the average market leader has been 22 years.



The single champion emphasizes "single item", which refers to the high market share of the enterprise, and the purpose is to guide the enterprise to establish the spirit of "grinding a sword for ten years", long-term focus on the field that the enterprise is good at, and take the "special and excellent" development road. Although the manufacturing individual champion as an important measure to promote the high-quality development of the manufacturing industry and promote the construction of a manufacturing power, mainly in the manufacturing industry segmentation field, but do not emphasize "invisible", but also to guide enterprises to establish brand awareness, while not limiting the product field to the field of intermediate products. In fact, there is no contradiction between the "invisibility" of the invisible champion and branding. Invisible champions and products are well-known and prestigious in the industry, and are not "invisible" to their target customer base, but are very strong brands. In the era of digital economy, with the increasingly fierce market competition, smes must strengthen the dissemination of brand value, start their own brand awareness and reputation, promote their influence to penetrate the entire industrial chain, supply chain and even end consumers, and become known to more markets and users.



Specialization, "new" little giant enterprises emphasis on specialization, "new", specialization, "new" model can be thought of as a kind of enterprise development, is the enterprise to realize individual champions and stealth development path of the market status. Our government encourages and supports this development model, especially the hope that small and medium-sized enterprises through the "specialized and special new" development road, constantly improve the quality and level of development, enhance the core competitiveness, and eventually grow into more individual champions and hidden champions. Invisible champions and individual champions in the manufacturing industry to seize the initiative in the market segment, win the right to speak, to obtain the forefront of the global industry, will inevitably embark on the road of "specialization and special new".



3. Different stages of development



The "Three-year Action Plan to Promote the Integrated development of large, small and medium-sized enterprises" clearly points out that in the "specialized and special new" small and medium-sized enterprises identified by various localities, cultivate those with outstanding main business, strong competitiveness, good growth, focus on market segments, and have certain innovation ability, and sustainably develop into specialized and special new "small giant" enterprises, leading to the growth of a single manufacturing champion. It can be seen that the growth path planned for small and medium-sized enterprises in China is to form an innovative development and cultivation system from specialized and special new "little giant" enterprises, individual champions in manufacturing industries to leading enterprises (outstanding main industry, strong comprehensive strength, and global competitiveness). The manufacturing individual champion is defined as the global forefront in the subdivision field, and the specialized and special new "little giant" business community is defined as the domestic forefront. In a sense, the "specialized and special new" small giant enterprises are the previous stage of the single champion and the invisible champion of the manufacturing industry, and the single champion and the invisible champion of the manufacturing industry can be said to be the upgraded and strengthened version of the specialized and special new "small giant" enterprises under the background of economic globalization, industrial structure transformation and upgrading, and supply-side reform.



Among the individual champions and hidden champions in manufacturing, some enterprises can meet both criteria, such as some small and medium-sized enterprises with low visibility in the manufacturing industry (Figure 4). In fact, the hidden champion is small and medium-sized enterprises, manufacturing individual champion does not specifically refer to small and medium-sized enterprises, from the scale of the assessed enterprises, large enterprises are the main body, accounting for about 60%, a large part of listed enterprises, playing the role of leading enterprises, medium-sized and small enterprises only account for 30% of the total number of manufacturing individual champions, about 10%.