How Suning Helps Entrepreneurs Transform into Unicorns

The following is a transcript of Yang Yang's speech, edited and organized by a partner in Sunan, with some slight deletions:

Dear guests and entrepreneurs, I am delighted to have the opportunity to participate in today's sharing. I am Yang Yang from Suning Investment Group.

Just now in Mr. Chen's sharing, it was mentioned that from the perspective of investors, there is a lot of money now, but there are not many good projects. On the other hand, it is a good time for many of our startups and entrepreneurs. It is not difficult to raise funds in the current market. To raise funds, the market is filled with various funds, there are various good business models, and Mr. Wu's enterprise model of value dedication is mainly discussed from three aspects. The first one to share is my perspective on the overall venture capital market; The second one is about our industrial innovation in Suning over the years; The third topic is how Suning can use our own resources to support a large number of small and medium-sized enterprises throughout the entire industrial process.

It should be said that many on-site friends are very familiar with Suning's previous business. Suning started from retail in the early 1990s, and in the early 1990s, our chairman started as a specialized store for air conditioning. For nearly 20 years, we have been focusing on sales in the retail industry. However, in recent years, we have had new developments and changes, which many friends present may not be familiar with, Many words mentioned in this are about the transformation and upgrading of enterprises, and our transformation and upgrading of Suning can also serve as a good reference for everyone.

Let me first talk about our view on the current industrial innovation from an investment perspective on our venture capital market. As we mentioned earlier, the development of the market is very flooded with funds, and the government has also introduced a series of policy support. If we look back, in the early 1980s, our Torch Plan was implemented on the ChiNext around 2000, but the actual implementation of the ChiNext was in 2009.

The government now supports mass entrepreneurship and innovation, and further emphasizes measures to support entrepreneurship and innovation. This provides a very good macro environment for everyone's entrepreneurship. At the same time, based on the overall economic development and operation, considering that there are few good projects, in turn, it brings great opportunities to these entrepreneurial enterprises, especially good commercial enterprises. There are some data in this. In the past 10 years, the equity investment market in China has also developed very rapidly. Now, the scale of China's equity investment has reached the second place in the world, only second to the United States, with an overall scale of over 6 trillion yuan. Let's think about this is a very large number, with a growth of 50 times from 2006 to 2015. They are actively seeking to negotiate various projects.

These inverted statements have been repeatedly emphasized, creating opportunities for many startups and entrepreneurs, indicating that over 10000 venture capital institutions need to find suitable projects to invest in, making investment relatively easy. However, looking at the return on investment over a period of 5 years or even longer is still quite challenging. For us startups, this is a large venture capital environment that you are facing.

From another perspective, the rapid development of the entire society, including the development of the internet, mobile internet, and advanced technology mentioned by several guests, has different and broad market spaces for the overall market space, providing entrepreneurs with many opportunities. I used to work as an investment bank and switched to industrial institutions. With the upgrading of consumption and the advancement of our technology, there are many opportunities for entrepreneurship, which indicates that we still have a good space.

But both have two sides, and there are significant challenges in the venture capital process. Regarding entrepreneurship and the news about these enterprise level entrepreneurs, there are many companies in the market that have no users, no established business models, and no good products. After quickly running out of funds, they have not established the ability to independently generate blood, and the company ultimately went bankrupt. This year, when we talk about O2O, it seems like a relatively beautiful thing, but when we truly do it, For example, in the first half of this year, I saw some O2O car washing companies, fresh food companies, and department store companies all go bankrupt.

Looking at the news, since March this year, a large number of companies of this type have gone bankrupt. What kind of companies do entrepreneurs really think about? What kind of companies have long been favored by investors? The reason behind this is that these companies can better create value and share value. For entrepreneurs, there should be a very clear and clear vision, a specific strategic goal for implementation, and steps for action. For many companies, with the current market, there is often a mentality of being eager for success and quick success, which is a very dangerous signal. Whether it is a startup enterprise or an investment institution, the competition in the large environment is too fierce. With more than 10000 companies and a capital scale of 6 trillion yuan, we are looking for good projects. We must have assessment goals and tasks for each team, and give the money out.

For some entrepreneurial enterprises, due to the abundance of funds, many times they become a cross PPP company, only wanting to instill their ideas without truly considering their core business model, focusing on product research and development, researching the supply chain, and studying the gap between the market and competitors in terms of core competitiveness. These are all aspects that the majority of entrepreneurial enterprises need to deeply consider. Of course, as you can see on the right, there are not many good assets mentioned in the venture capital market, and it is required that everyone, especially senior partners of some startup institutions, mention that the capital winter is coming. In this context, everyone should reserve cash to prepare for the winter, and in fact, the capital market is also conducting a large number of acquisitions with great momentum. If you take a look at the piece on the right side of the PPT, Tencent has recently made a significant transaction, spending over 8 billion US dollars to acquire a gaming company, with only 4 games. Inter Milan is also the acquisition led by my team, and Chinese capital is rapidly expanding, with many industrial companies involved in the entire venture capital process.

In terms of everyone's development environment now, in addition to facing many venture capital funds and PE institutional investments in the early days, there are also many industries involved, such as Suning Investment. However, there are several reasons why industrial capital enters these fields now, and I think there are mainly three aspects:

The transformation and upgrading of the first traditional enterprise, with the continuous development of new technologies and technologies in the entire internet and mobile internet, traditional enterprises need to embrace these new changes. For example, for our retail companies, both the internet and mobile internet have become the existence of water and air. If not used, they will be eliminated by the times. Therefore, many traditional enterprises have the need for transformation and upgrading. In the past years of development, they have accumulated a large amount of resources and funds, and the resources of the entire customer relationship network exist. In this situation, many enterprises, especially industries, enter the venture capital market and enter the process of industrial investment.

The second is the internationalization of many enterprises. In 2009 and 2010, Suning became the largest offline chain enterprise and home appliance chain enterprise in China, spreading across the main markets of the country. At that time, we wanted to seek further expansion of the market and find more users. So in 2009, we advanced to the Hong Kong market, Hong Kong acquired Laser Appliances, and also entered the Japanese market TESCO Group. This listed company is the largest free sightseeing enterprise in Japan, Last year, half of the Chinese people who went to Japan to buy toilet covers were from the company we acquired. We started developing from 2009 to 2010 and have invested more overseas in recent years. In 2013, we acquired PPTV and used it as a foundation to acquire many high-quality copyrights in Europe. If you have football fans, watching La Liga is played on our PPTV platform. Last year, we acquired all media copyrights in La Liga and also invested in the sales of culture and sports. We just completed the acquisition of 108 year old Inter Milan in June, This is an international acquisition during a certain period of enterprise development.

The third is the acquisition of cutting-edge technology. We have heard a lot about cloud computing, big data technology, and artificial intelligence, which are changing our industry. They may dominate some fields in 3-5 years, and even have a disruptive impact on some fields. These are all areas that we constantly pay attention to during the development process of large industries. In summary, they are the transformation and upgrading of industries, internationalization, and acquisition of cutting-edge technologies and products.

For industrial capital like Suning, there is a certain difference from general financial investment institutions. We pay more attention to the construction of core business capabilities of entrepreneurial enterprises, which are generated by Suning and the capabilities possessed by these enterprises. These are aspects that our industrial capital pays special attention to in investment.

On the other hand, let me talk about the entire industrial innovation and investment development of Suning. We are familiar with Suning Cloud Commerce or Suning Electrical Appliances as an industry sector. In recent years, after making many innovations around some new industrial sectors, Suning has formed six major industries in front of the industrial map. The five physical industries are Suning Cloud Commerce, which mainly focuses on consumer retail, and Suning Real Estate, which includes payment as the core. Our existing core product Suning Finance, as well as Suning Cultural and Creative, which focuses on PPTV, and Suning Sports, form a bond with the entire Suning consumer's needs and product services. With this as the core, our equity investment and the development of other industries will form a bond to create better quality products and life services for everyone.

The transformation and upgrading of Suning Cloud Commerce is easy to say. If we have heard more or less about the development of electronics retail and consumer retail in the past few years, especially the impact on traditional business brought by the development of internet technology and mobile internet in recent years. If you see this, Suning is obviously a textbook style. Just now, we had a conversation with Mr. Zhou and mentioned that the management team led by our chairman is very strategic.

In 2008, of course, after the sales volume became the top of the entire offline retail enterprise, it quickly faced a second war and shifted to the stage of internet retail. Starting from 2009, Suning Cloud Commerce began to firmly transform, adopting an O2O model and unifying online and offline. So far, our Suning Cloud Commerce online transactions have accounted for over 40% of the scale, and our mobile payment accounts for over 70% of the entire online portion. Especially last year, we also had some strategic cooperation with Alibaba in this field. With the help of each other's resources, we have further strengthened our commitment to the application of internet tools and Alibaba's technology. Alibaba has also utilized Suning and our accumulated offline stores for many years, and our logistics, after-sales service, and other advantages to enter a very healthy and rapid development track, In addition to developing our entire network domestically, we also establish local retail businesses overseas, including our Hong Kong and Macao regions, Japan, and the United States, with nearly a hundred retail outlets overseas.

The second is financial business. Suning Finance now has 12 licenses. We have applied for Suning Consumer Finance, the only consumer finance company in the country named after a company name. This is a collaboration between Suning and two other financial industry partners. We also have our own small loans, factoring, crowdfunding, and other licenses. We are also applying for other licenses and hope to establish an account and data system, Suning Finance has an overall registered user base of 140 million, combining Suning's existing advantages in offline scenarios to create the most leading financial O2O platform in China.

Thirdly, Suning Real Estate estimates that many friends may not be very familiar. We are located in many cities, including Wuxi, Zhenjiang, Nanjing, Xuzhou, Shanghai, Beijing, etc. Suning Real Estate mainly focuses on commercial real estate, including Shopingmall, technology real estate, logistics real estate, etc., and has entered nearly 100 cities nationwide.

The fourth point is that it is more closely related to the original business. The first few are, especially Suning Cloud Commerce and Suning Real Estate, which provide physical products and services. With the further development of the entire consumption upgrade and the improvement of user income level, consumption has entered another level, and consumption continues to upgrade. The disposable amount is increasing. In 2013, the entire Suning Group acquired PPTV, With him as the core, we have developed Suning's cinemas, film and television. In recent years, with four years of development, Suning's cultural group has formed an omnichannel scene layout. For example, on the media platform, in addition to PPTV's online video playback, we have also participated in a very influential TV provincial-level satellite TV group, and increased investment in the family field. Additionally, as you can see from OTT internet programs, We hold a controlling stake in a VST TV giant software and also invest in the application of large screen end Dangbei. Our industrial investment revolves around the next development goals of PPTV Suning Culture, with a systematic layout in several fields. Our industry chain is the most comprehensive and diverse in the entire multi-channel media platform supply chain across the country. After creating a good channel, we are very interested in the content IP that runs in the channel, So we are also a key investment direction in this field, and my team colleagues are also looking for various projects in this field.

The fifth is a relatively new industry sector, Suning Sports. If you want to enter sports, you would have a very advanced golf car factory facility in Nanjing earlier. PPTV focuses on sports content and sports media as its core content. Last year, we invested and controlled Jiangsu Suning Football Club, and also invested in Inter Milan. Suning Sports is also one of the largest sports industry development groups in China, In this, we focus on strengthening our data capabilities, strengthening our direction in areas such as mass sports, venue operation derivatives sales, and even seeing data and lottery tickets, in addition to competitive sports. This is an area where Suning Sports is developing.

Next, let's talk about Suning's collaboration with entrepreneurs to create the future, as well as our investment and investment situation.

We have prepared multiple measures around entrepreneurship and innovation in a very short period of time, including our Suning Entrepreneurship Camp and Entrepreneurship Support Plan. We have established a Youth Entrepreneurship Fund and developed an equity crowdfunding platform around this. PPTV has launched a entrepreneurship reality show around entrepreneurship, which has developed rapidly in a very short period of time this year. Mr. Wu mentioned that the development speed of entrepreneurship and innovation in China is very fast, From the perspective of Suning, we hope to contribute the resources and capital of the industry that has developed over the years, and share them with the vast number of entrepreneurial entrepreneurs to grow together.

We have also established a crowdsourcing alliance with many institutions, including venture capital institutions, including universities such as Nanjing University, and some incubation institutions. We have established an incubation base in Jiangsu and Nanjing, which is also very beautiful. It is located in the Xugang Software Park in Nanjing, where our headquarters is located. We have several villas, but the space is not the same. In this space, which enterprises are the key to entrepreneurship, We expect to provide 10000 square meters of space, focusing on the anime of animation. In the second phase, 80000 square meters will also be in Xugang Software Park, which is also in Nanjing. Enterprises that meet this direction are very welcome to contact us and settle in this park.

In addition to providing hardware facilities for entrepreneurship parks, there are also many