Summary of Key Points
The article addresses the common challenges faced by Chinese companies in exploring their "second growth curve," which include incorrect direction, missed timing, and insufficient capabilities. Based on numerous research cases, it outlines six practical approaches: innovation through capability transfer, collaborative partnerships for complementary strengths, proactive internal development, capital acquisitions, premium product upgrades, and diversified explorations. It uses specific examples such as Jiangmen Shipbuilding and Huadian Inner Mongolia to illustrate the conditions, methods, and actual outcomes of each approach, emphasizing that companies must choose the path that suits their unique circumstances in order to overcome these challenges and achieve growth.
I. Understanding the "Second Growth Curve Dilemma": What Pitfalls Do Companies Often Fall Into?
The "second growth curve" refers to a new business venture aimed at sustaining growth when the traditional business is slowing down. However, many Chinese companies make mistakes in this process, falling into three main pitfalls:
1. Incorrect Direction: Failing to identify a genuine new growth opportunity, such as blindly pursuing popular sectors (like AI or renewable energy) that do not align with their core capabilities.
2. Missed Timing: Starting too early (when the market is not yet ready) or too late (after the window of opportunity has passed), leading to excessive investment or intense competition.
3. Insufficient Capabilities: Even if the right direction is chosen, lack of technology, funding, talent, or industry support can prevent the new business from succeeding, while also dragging down the traditional business, resulting in a lose-lose situation.
II. The Six Approaches: Which One Is Right for Your Company? (Illustrated with Cases)
The six approaches suggested focus on leveraging internal potential, seeking external partners, making small-scale experiments, quickly addressing weaknesses, upgrading within the existing domain, and diversifying. Here are some typical examples:
#### 1. Capability Transfer: Applying Existing Skills to New Areas (Jiangmen Shipbuilding Case)
Logic: Instead of starting from scratch, use accumulated skills and experience in new contexts. For example, a shipbuilding company could apply its expertise in steel structures and mechanical systems to engineering projects.
Case: Jiangmen Shipbuilding, once loss-making, applied its modular construction technology to large-scale steel structures and autonomous control systems for highway projects. This led to increased revenue by 370% in 2024 compared to 2020, turning the company from a loss-maker to a profit-generating entity.
Prerequisites: Possess core technologies, identify new application areas, and integrate technology with practical needs.
#### 2. Innovative Partnerships: Collaborating with Others to Combine Strengths (Huadian Inner Mongolia Case)
Logic: When alone, it may be difficult to enter new markets (e.g., hydrogen energy). Partnering with upstream and downstream companies can create a closed-loop supply chain.
Case: Huadian Inner Mongolia partnered with several firms to produce green hydrogen for transportation. Each company contributed a key component: Huadian provided the hydrogen, Beiben manufactured the trucks, and Ordos Green Energy transported the coal. This partnership established a complete hydrogen production and utilization chain.
Prerequisites: An open mindset, leadership skills, and the ability to transform technology into a viable business model.
#### 3. Premium Product Upgrades: Moving from Low-End to High-End (Kaisheng Haofeng Case)
Logic: Enhance existing products to earn higher profits. For example, switching from traditional greenhouses to smart glass greenhouses for tomato cultivation.
Case: Kaisheng Haofeng upgraded its tomato farming by using advanced lighting and irrigation systems, reducing water usage by 95% and increasing yields significantly. Its online sales strategy further boosted revenue by 6-8 times compared to traditional methods.
Prerequisites: The willingness to invest in innovation and overcome technical and managerial barriers.
#### 4. Capital Acquisitions: Quickly Overcoming Weaknesses (Ordnance Industry Group Case)
Logic: If developing new businesses is slow, acquiring a leading company can accelerate entry into the market.
Case: Ordnance Industry Group acquired Aisheng Group, a leading drone manufacturer, to quickly enter the drone industry. The acquisition helped with funding and management improvements, resulting in 76% revenue growth and 152% profit growth for Aisheng in 2024.
Prerequisites: Financial resources, the ability to select suitable targets, and effective integration of acquired assets.
III. The Key to Choosing the Right Approach: Don't Follow Trends Blindly; Choose Based on Your Company's Situation
Each approach has its own challenges. Companies should consider their strengths and weaknesses:
- If you have core technologies, consider capability transfer.
- If you can lead resource integration, opt for innovative partnerships.
- If you prefer small-scale experiments, use proactive internal development.
- If you have financial resources and need to quickly address shortcomings, consider capital acquisitions.
- If you want to upgrade existing products, choose premium product upgrades.
- If you are willing to diversify, explore diverse opportunities (e.g., Huadian Ke Gong's expansion into new industries).
IV. Evidence of Success: Can These Approaches Truly Help Companies Turn Around?
The case studies provide compelling results:
- Jiangmen Shipbuilding: Revenue increased by 370% in 2024.
- Aisheng Group: Revenue and profit both grew by 76% after the acquisition.
- Kaisheng Haofeng: Tomato yields increased by 6-8 times, with daily production reaching 25 tons.
- Huadian Ke Gong: New business revenues accounted for nearly 40% of total sales in 2024, a year-on-year increase of 2.74%.
These companies have successfully overcome difficulties and achieved new growth.
Final Advice for Companies
The "second growth curve" does not necessarily mean changing industries; it can also involve upgrading existing products or services. The key is to choose the right approach based on your resources and capabilities, make gradual improvements, and proceed steadily. True growth that enables a company to thrive comes from a well-planned strategy that aligns with its unique strengths.