Age of light company: downscale the company, expand the customer

The traditional business rules are being challenged in today's business world. Sales volume is no longer the kingcraft, profit speaks louder.

The Internet upstarts with small scale and high profit are challenging those companies with large numbers of employees and high cost in traditional industries. A typical example is the recently hot companies YESPPG, a company selling men's shirts through Internet with only 500 employees to handle 10 thousand products per day. Compared to this figure, the flagship of the industry Youngor only gets 13 thousand to handle every day. Moreover, it has only been 2 years since YESPPG was established.

Companies of some traditional industries are seeking innovation. The CEO of Haier Corporation, Yang Mianmian declared that the target of Haier was to downscale the company and expand the customer, indicating their determination to shift to a "light company".

1. First rule of light company: seek outsourcing

From the traditional perspective, outsourcing is the last resort for enterprises. But in the age of Internet, outsourcing is becoming an inevitable trend for enterprise development. In this way, enterprises can isolate design, production and sales from the business chain and only focus on the brand building with most value in order to enable themselves to concentrate the efforts on the most important section.

The most successful example is NIKE. It is surprising that the most famous sports brand doesn't have a factory of its own. They rely entirely on outsourcing on production, packaging, transporting to marketing. Giants such as Microsoft and IBM now only focus on the development of their core sections with outsourcing development work to small and medium software companies.

2. Second rule of light company: seek partners

In the 21st century, the large companies with all-around business functions will find it is difficult to gaining advantages, on the contrast, the small-scaled and concentrated companies are easy to form their core competitiveness. In the times to break down production chain, enterprises can concentrate their strength on their core value and cooperate with companies involved in their production chain, which will accumulate much more power to stand in the market.

Wenzhou is most well-known for its prosperous private enterprises, which can be the most typical example of division of work and cooperation with others. Wenzhou has developed five scaled industrial groups from the original one village for one industry and one kind of product: low-voltage apparatus industry cluster taking up 33% of the domestic market, leather for shoes production industry cluster taking up 20% of the domestic market, suit industry cluster taking up 10% of the domestic apparel market, lighter industry cluster taking up 95% of the domestic market and 70% of the global market, as well as glasses industry cluster taking up 80% of the domestic market.

In this mode of adopting both labor division and cooperation, enterprises of Wenzhou can achieve higher production efficiency and advantageous costs than those in other areas. They gain a faster speed to innovate in both technology and quality and divide more specialized labors and social cooperation, which in turn brings unparalleled advantageous competitiveness for Wenzhou's industries.

3. Third rule of light company: fully utilize Internet

Internet is definitely the greatest work of human beings in the 20th century, which brings Email, instant message tools to people to enhance their communication efficiency. Search engines provide people a better way to find a wide range of useful information and filter those not needed. BBS, portals and online shopping websites mushroom to dig a new channel for people to read, communicate and go shopping in a new way.

In the age of Internet, light companies fully realize and utilize the features of Internet, in order to promote their products in all over the world with the lowest cost. The employees of light companies may be distributed over the country or even the world, but they can co-work on the Internet in the way of soho to cut down the operating cost of the company. If you still hold a suspicious attitude about this, take a look at those excellent sellers on Taobao and Ebay. They are exempted from the costs rising from the traditional sales channel and enormous operating costs, which make their businesses easier to handle.

Facing the competition in markets, it is unnecessary for enterprises to scale up themselves; instead, to lay down their burdens, may be this is the better way to win.