Internet Business Thinking

Chapter 1 Internet finance is not in the future, but in the present! (1)
(Section [-]) Will the Banking Era End?

In the era of Internet finance, there will be two forces competing for financial territory. Whether it is a new species evolved from the Internet of traditional finance or a new force in emerging Internet finance, they will coexist in the same arena for a long time, and promote financial development in the game and fight. innovation, returning to the essence of finance.

In the era of Internet finance, there are two factions in one river and lake.

Ma Yun, who claims to be a spoiler, believes: "There are two major opportunities in the future of finance. One is the financial Internet, and the financial industry is moving towards the Internet; the second is Internet finance, which is purely led by laymen."

The protagonists of the two opportunities that Ma Yun mentioned are the two factions competing for financial territory in the Internet financial era in the future.

Nowadays, Internet finance is becoming one of the most fashionable and hot topics.Ali Finance is even more menacing. It seems that there is a posture of "if the bank does not revolutionize, then the bank will die" as Jack Ma said. From attracting money from Yu'ebao to testing the waters of asset securitization, all of them have stabbed the nerves of the traditional banking industry and made banks Ye shouted "Wolf is coming".

What is Internet Finance?Some people think that as long as it is a combination of the Internet and finance, it can be called "Internet finance"; Call it "Financial Internetization".

Professor Liao Li, executive deputy dean of Tsinghua University PBC School of Finance, pays more attention to the actual development of Internet finance. He believes that it is too early to make a comprehensive definition of Internet finance or financial Internet.

Professor Teng Binsheng, deputy dean of Cheung Kong Graduate School of Business, used a big mountain and a small tree to describe the volume between traditional finance and Internet finance. He believes that although the latter has a strong growth potential, within three to five years, this ratio will not change. What a big change.Internet finance's subversion of traditional banks is bound to happen, but not now.At present, the most realistic and important significance of Internet finance is to promote the innovation and reform of traditional finance through the "catfish effect".

How does "Utopia" return to reality?
In the hearts of many Internet finance advocates, there is an idealized Internet financial "utopia". For a while, "disintermediation" and "self-finance" became hot words.In the ideal world in their minds, financial transactions can be completely "disintermediated" without any intermediaries by using the Internet as a tool; everyone is "self-financed" and can borrow their own funds to anyone on the Internet.Of course, this person must have a credit rating certified by Internet technology.The Internet can also optimize personal credit and loan funds through big data analysis.During the transaction, the money in the accounts of both the borrower and the lender does not need to be deposited or withdrawn, and the seamless transaction is realized by the mobile terminal.The account balance will be automatically purchased by the mobile terminal for financial management.

People's longing for the Internet financial world is reflected in reality, which is the disgust of the extreme greed of the existing monopoly financial system.Among the newly announced Fortune 500 companies, the 9 Chinese commercial banks on the list accounted for 89% of the total profits of all 55.2 Chinese companies.The financial system, which was supposed to provide blood transfusion to the real economy, has become a veritable vampire.

Internet finance has depicted an equal financial world for us, which has subverted the survival foundation of bank spreads in theory.So, how far is this ideal world from us?

Professor Teng Binsheng poured cold water on the overly idealized Internet finance. He believes that, at least in three to five years, Internet finance and traditional finance will basically not interfere with each other, and there will be no real intersection.With the passage of time, some businesses such as credit cards and wealth management of banks will gradually be replaced by Internet finance, and banks themselves will also carry out their original businesses online.Compared with Internet finance, traditional banks have inherent disadvantages. Therefore, Internet finance has the opportunity to subvert traditional banks, but it needs a long process.

How to break out from the monopoly market?

Finance is a monopoly industry. As long as the country's financial management system does not undergo major changes, the existing financial system cannot be completely subverted by Internet finance.At least judging from the current reality, the impact of Internet finance on traditional finance is more of an ideological and spiritual impact. From a realistic perspective, it is far from subverting traditional finance.

Professor Zhou Xinwang, Director of the Research Department of the Internet Finance Laboratory of Tsinghua University PBC School of Finance, has long been engaged in the research of Internet finance. He believes that Internet finance can make the traditional financial system more efficient, flexible, more transparent, and risk more controllable.For the current entrepreneurs, a better opportunity is to start with the new financial service industry, choose a subdivision of the traditional financial field that needs to be solved urgently but has not been solved well for in-depth development, and seize the opportunity in the industrial chain. A part of this process, we should thoroughly do related services well, instead of always thinking about subverting traditional finance.

As a young Internet finance entrepreneur, Zhang Shishi, chairman of Renrendai Business Consultant (Beijing) Co., Ltd., believes that both traditional finance and Internet finance have advantages in their respective fields of expertise.For example, the financial needs of mortgages are still the domain of large financial institutions, while the emerging Internet finance has advantages in addressing the small credit needs of individuals.At present, the survival mode of traditional banks is mainly based on interest rate spreads. Even in the process of Internetization of traditional finance, they only use the Internet as a tool without genetic changes; while Internet finance relies heavily on social network information and big data to generate additional value. This is unmatched by traditional financial institutions.

How can foreign models survive in localization?
Internet finance exists in a traditional financial-dominated system. Even if it is a mature model abroad, after being transplanted to China, it will mutate in the process of localization, and may even go crazy like group buying.

P2P是目前国内最火的互联网金融模式，虽然创业企业已达2000多家，但似乎很少有人考虑过：P2P的本质是什么？什么是P2P在中国成功的关键因素？P2P在中国和在美国有什么不同？
In the rivers and lakes without rules, a large number of entrepreneurs who do not have a deep understanding of the Internet and finance flock in. On April 2013, 4, Zhongdai.com, a P3P online lending company that had been online for just one month, went bankrupt, reflecting the chaos of the entire industry. VC (venture capital, venture capital) avoided P2P even more.

Except for a few high-threshold companies such as Renrendai and Paipaidai, most P2P companies are mixed.Some P2P entrepreneurs broke the news that some P2P companies outsource their websites to technology companies, and risk control and credit security are completely out of control. In order to attract users to open second bids, some websites lend money to users for only one day and pay high interest rates. For financial managers, the highest interest rate reaches 28%. The final result of this unscrupulous way to attract funds will inevitably lead to making ends meet, and thus many "running loans" are born.Therefore, the P2P industry will soon undergo a large-scale reshuffle.

At present, operational risks and policy risks are squeezing the living space of P2P.Renrendai has achieved rapid development through the combination of O2O online and offline.CreditEase, which started as a P2P lender and then gradually moved to offline lending platforms, has lower operational risks than ordinary P2P online lending platforms because of its large interest rate spread and strong ability to resist risk fluctuations.Analysys International Internet Finance Analyst Zhang Meng pointed out that CreditEase’s business center is shifting to offline. Although it is under the banner of P2P, it has deviated from the P2P attribute.Offline business is better than online business, which has something to do with China's credit environment. Foreign credit systems are relatively complete, and there are companies that specialize in credit evaluation.China's entire credit system is imperfect, and it is very difficult for P2P companies to be evaluated completely online, which is easier to achieve offline.

Why subvert traditional finance?
For traditional finance, the impact of Internet financial spirit will be very terrible, and the tide of Internetization of traditional finance triggered by it will be even more irreversible.

At present, the banking industry is still subject to the 20-80 law—80% of customers contribute [-]% of profits, and it is very difficult to serve the remaining [-]% of customers and make money from them.

In one case, the owner of a five-crown Taobao store had monthly sales of 200 million yuan, and online sales accounted for more than 90%.He tried to get a bank loan to develop faster, but the bank refused to grant the loan because there was no collateral.He later successfully applied for Ali Micro Loan, and it only takes a few seconds from the application to the approval of the loan, without any guarantee, and can be borrowed and repaid at any time.Because the funds are used efficiently, the overall interest generated is not high.

The same Taobao store owner, in the traditional financial industry, is only a customer that banks cannot accept; in Internet finance, he can become a high-quality customer of Ali Micro Loan.

Internet Finance Development Roadmap
Professor Zhou Xinwang has his own understanding of this.He believes that the impact of Internet finance on the traditional financial industry is from the inside out, from the concept to the change of performance.A financial company that uses big data and cloud computing is not necessarily an Internet financial company. The key is the change of concept.The emergence of Internet finance will completely change the original situation where banks rely on system bonuses to eat interest rate differentials.Looking ahead, those financial institutions that can meet people's financial needs and provide the best services will earn higher returns.

How does traditional finance fight back?

In June 2013, China's financial system fell into an unprecedented "money shortage" storm.The interbank business, which was once regarded as a financial innovation, contains huge systemic risks because it is a self-circulation of the financial field, especially when it is combined with shadow banking and local financing platforms, the systemic risks are even greater.However, in the minds of bank bosses, the biggest entanglement is not the immediate "money shortage", but how they should face the long-term impact of Internet finance.Some people even predict that Internet finance will end the era of bank dinosaurs.

Hong Zhenghua, director of the Information Technology Bureau of the China Development Bank, who specializes in traditional bank informatization research, pointed out that the core of future finance is data. The development of the IT industry has changed the financial rules of specific business areas and innovated financial business models, such as micro-finance.Online transactions and microfinance have not only changed the transaction channels and behavior of customers, but also changed the genes of financial institutions.

Regarding the future pattern of traditional finance, Zhang Meng analyzed that the Internet and big data have broken information asymmetry and physical regional barriers. Traditional banks will definitely show a trend of differentiation in the future, and the market will be further segmented. Some focus on offline outlets, some focus on high-end, and some mainly serve small and medium-sized customers.

Facing the impact of Internet finance, traditional finance has to accelerate the pace of innovation.In a relatively short period of time, the fund industry has realized a series of functions from the establishment of an online direct sales system, the introduction of currency cash management accounts, to the quick redemption of money fund T+0, and online consumption with money fund payment.According to the annual fixed asset investment budget arrangements of the four banks of Industry, Construction, Agriculture, and China, the four major banks invested 2013 billion yuan in informatization in 250.Agricultural Bank of China established an Internet financial technology innovation laboratory in June 2013; China Construction Bank launched Shanrong e-commerce platform; China Merchants Bank launched a mobile payment product mobile wallet; Launched mobile near-field payment service.

(Section [-]) Don’t think the Internet is too mysterious

When it comes to the Internet, everyone thinks that the traditional manufacturing industry will be integrated and eliminated by the Internet. I would like to say to my colleagues in the manufacturing industry, don’t think the Internet is too mysterious. Our relationship with the Internet is not serious enough to kill me. On the contrary , it is only the thinking, mode and channel that can be used for the transformation and upgrading of our manufacturing industry.

The manufacturing industry needs to integrate the Internet
Many people now talk about Internet thinking from the perspective of manufacturing companies. I don’t know if they have thought about two questions first: Why is the so-called Internet thinking related to us?What exactly did it change?
Give an example of the combination of physical industries and the Internet.

There is a cake shop in Shenzhen called "Yidian Yike", which was opened by a few young people who rented a factory.What they are doing is not the traditional store model, but building a website and selling cakes through the website.It is said that the sales in 2013 reached [-] million.In contrast, those cake shops that hold on to the traditional store model are getting sadder every day.The essence of Yidianyike Cake Shop is still an entity, but it uses Internet thinking, models, and channels to become an entity.In fact, this approach can be learned by other traditional cake shops.

Physical enterprises, especially home appliance manufacturing enterprises, must first continue to cultivate in the industry, and secondly, they can use Internet thinking to supplement the development mode of enterprises.These two strategies are complementary to each other. Without good products and creative products that meet the needs of users, even if they are grafted with Internet thinking, they are just following the trend and cannot really make enterprises produce modern competitiveness.

Next, let's take Skyworth, a home appliance manufacturer, as an example.

During the Double Eleven Shopping Festival in 2013, Skyworth launched a new brand "Coocaa" high-definition all-in-one machine in the field of e-commerce, and the sales volume reached 24 units within 56272 hours, creating a Guinness record for LED smart TV sales on e-commerce websites .Why does this product create such performance?It is mainly due to two factors: the first is manufacturing. Skyworth defines this product as the "Internet + TV" model, and behind this model, it actually contains Skyworth's expertise in display technology, chip technology, appearance design and the Internet. The manufacturing foundation of application technology and other aspects; the second is the e-commerce channel. Skyworth and Alibaba have in-depth cooperation to conduct Internet channel sales through the Taobao platform. The success of "Coocaa" proves that "manufacturing" is still the foundation of manufacturing enterprises, and the introduction of Internet development mode can make "manufacturing" keep pace with the times.

Dare to experiment with the Internet
In addition to affecting "manufacturing", after the introduction of the Internet development method, the management method of the traditional manufacturing industry has also changed.In my opinion, the changes mainly focus on three points: price management, inventory management and supply chain system transformation.

The most worrying thing for home appliance manufacturers is the price war.Although the technologies mastered by each enterprise are different, as long as the products are put on the market, no matter how advanced the technology is, it will be quickly learned by the opponents and may be surpassed at any time.what to do?It can only rely on cost management, either by controlling upstream resources or engaging in internal cost control.In the Internet age, online shopping is the first choice of most consumers, so all enterprises have to open e-commerce channels.But the problem is that moving offline products to online, which is more price-sensitive, not only has to face online price wars, but it is also difficult to balance the interests of offline dealers.

If you want to have a good development on the Internet, you must avoid price conflicts. The best way is to create a new brand for the Internet channel. Skyworth's "Coocaa" was born in this way.This new brand has nothing to do with the company's offline channels, nor does it compare with traditional competitors. It competes with emerging Internet upstarts such as LeTV and Xiaomi. Whether "Coocaa" is good or not, the performance of Double Eleven in 2013 has already been proved.

In addition, the Internet also optimizes inventory management and brings unprecedented challenges to the supply chain system.In the past offline competition, although Skyworth had sales forecasts, they could not make accurate statistics.But on the Internet, there is no such thing as "destocking", because online data analysis can be used to direct production responses.It is precisely because of the Internetization of channels that Skyworth's production model has changed from an internal planned production to a ready-to-call model.

One of the characteristics of online sales is that there may be a sudden explosive demand at a certain point in time. In 2013, in response to Double Eleven, Skyworth actually prepared 6 units of "Coocaa". Because it knew through online data analysis that this sales volume might be reached, it stepped up its supply chain management in advance.After this round of Double Eleven activities ended, Skyworth deeply felt that Internet thinking has changed the company's usual planning and production habits.Next, Skyworth will study new strategies on the emergency capacity and resource allocation of the supply chain system.

In short, manufacturing companies should not be afraid because they have never been in contact with the Internet. In fact, the Internet is not mysterious, it is just a tool for traditional manufacturing companies.We must boldly experiment with the Internet and establish new industrial models and channels through Internet thinking. (Section [-]) E-commerce Rush!What are you fighting for?By what?

In 2014, the competition in the e-commerce industry entered a new stage. First, Suning announced the integration of its own online and offline channels, then Yihaodian and Dangdang.com announced the mutual presence on each other’s platforms, and then Tencent invested US$1 million in JD.com... It seems that a wave of new industrial development trends has emerged in the e-commerce industry: from the past competition model of going it alone, it has evolved into the current competition and cooperation model of resource integration.Why produce such a result?Will the competition and cooperation model really produce the effect of "2.14+1>1"?
Customer experience is the core of competition

From the perspective of the level of competition in the e-commerce industry, the first round is price competition, and the second round is competition for supply chain capabilities. As for the current competition, everyone has seen that the competition and cooperation model has become a new trend.Some analysts may think that "Yihaodian + Dangdang" will compete with "Tencent + JD", or "Tencent + JD" will compete with Taobao.But no matter what kind of competition, it is ultimately inseparable from the competition in customer experience.

(End of this chapter)