Dialogue with Zhongding Capital Zhu Yingchun: 10 years of supply chain innovation investment, my thinking on personnel situation

The underlying logic and experience behind investing in more than one hundred supply chain companies.

Dialogue with Zhongding Capital Zhu Yingchun: 10 years of supply chain innovation investment, my thinking on personnel situation

Title picture: Zhu Yingchun, partner of Zhongding Capital

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On July 23, Yiheda officially landed on the Growth Enterprise Market and became the first stock in the B2B supply chain field on the Growth Enterprise Market, with the highest opening increase of 734% and the market value of over 45 billion yuan. Titan Technology , which was listed recently , is also the first in the science and technology board A B2B supply chain company. We may be able to interpret it as: Industrial Internet track investment is ushering in the harvest season. It is worth noting that, behind these two companies, Zhongding Capital is its largest institutional investor.

In recent years, the Internet industry gradually from a concept into a hot word direction of many institutional investors and entrepreneurs to explore, the supply chain innovation underlying also pay attention to it, as deep supply chain investment capital for 10 years tripods concerned, in recent years, also ushered in a time of harvest, in addition to the two companies, prosperous preferred, Kankun, Jia Li Chong, superhuman , bluegrass music, mining goods Man and other enterprises also grow into the head of players in their respective fields.

At the time of Yiheda ’s listing, Catcher had an in-depth dialogue with Zhu Yingchun, a partner of Zhongding Capital, to investigate the underlying logic and laws of supply chain innovation, which is also the rare systemicity of Zhongding Capital, which is well-known in the supply chain field. Investment logic output.

With the deepening of the conversation, Catchers gradually discovered that supply chain innovation. With the depth and breadth of node digitization, the entire supply chain will usher in huge changes-B2B e-commerce is just an appetizer, and the three core supply chains of goods, transactions, and delivery The new supply model brought about by the innovative combination of elements will spread across all industries, nodes, and stages, regardless of 2C or 2B. Based on Zhong Ding’s in-depth research and continuous practice of the industry, the article has a high density of knowledge, I believe it will be inspiring for you.

Five opportunities for supply chain innovation

Li Zhao: B2B e-commerce has attracted much attention from the beginning of looking for steel network . In recent years, capital has been repeatedly optimistic about its attitudes and not optimistic. People can’t help but ask questions about whether we are investing when we are investing in B2B e-commerce. What?

Zhu Yingchun: The essence of our B2B investment is to invest in supply chain innovation. China’s e-commerce and digitalization have reshaped the supply chain, which is reflected in the emergence of new supply models in various vertical fields. Because of higher efficiency and better user experience, these new supply models are gradually replacing the original Supply model.

Initially, the C-side behavior was migrated to the online, which brought the reshaping of the transaction and delivery chain. 2016 ushered in the wave of online corporate procurement , and once corporate procurement behavior is migrated online, it will also bring Reengineering and transformation of the B-end supply chain system. This kind of reshaping does not depend on the will of human beings, but there is a sequence of categories.

Whether it’s C-end Ali replacing the offline clothing market, JD’s alternative digital city, fresh community group buying, or B-end Zhenkunxing replacing China’s offline hardware market, Baturu and the three-headed six-armed alternative to the offline auto parts city are essentially all Supply chain innovation.

Li Zhao: In recent years, supply chain investment has also become hot. Zhong Ding has been deeply involved in the front line of supply chain investment. What are the changes in the capital market that he feels?

Zhu Yingchun: Indeed, in this field, many investment institutions, like nomads, mainly decide whether to stay or stay based on the situation of water plants. When they see opportunities, they will kill them, and they will withdraw if they don’t find feelings. However, we always believe that China’s supply chain innovation is a huge opportunity. We will continue to focus on industrial Internet investment with supply chain innovation as the core, and we will firmly work in it.

We are a team that believes in laws. As far as supply chain innovation is concerned, there are five laws of category, timing, model, starting growth, and entrepreneurial characteristics. We continue to study, summarize, refine, iterate and deepen to form our own Know-How. In the end, it is reflected in project evaluation. We have a better feel than ordinary nomads, and the algorithm for investment decision-making is faster and more accurate.

Li Zhao: As you said, supply chain innovation is a huge opportunity. What is it in detail?

Zhu Yingchun: Supply chain innovation is a continuous and in-depth process. At present, the underlying driver of China’s supply chain innovation is the digital transformation of the supply chain. At present, B2B e-commerce is the first stage of China’s supply chain innovation. Supply chain innovation is not only the transformation of circulation, but also the transformation of manufacturing and research and development, and the three will be connected in the future.

We judge that there are five typical opportunities for China’s supply chain innovation: e-commerce, short-chain, intelligent, collaborative, and international. With the deepening of China’s supply chain transformation, we already have a relatively in-depth investment layout for every opportunity.

Practice the pattern law to the extreme

Li Zhao: Yijiupi is one of Zhongding’s B2B supply chain investment cases. In 2016, their strategic center was still in the wine category and did not expand to other categories. What was the logic behind your investment in Yijiupi?

Zhu Yingchun: Single-category starts from the supply side, and multi-category starts from customer needs. But whether it is single- or multi-category, the ultimate goal of this type of company is to become a platform-based enterprise. For example, on the track of MRO, I voted for Zhenkunxing and also for Ruiying. Zhenkunxing started from multi-category to meet customer one-stop needs, and started from the scale of customer needs and then reversed the supply chain;

However, Ruiying did the opposite, starting from the vertical production line of hardware, electrical and mechanical, and then going down after opening up the upstream supply capacity. Just like climbing a mountain, the two companies start from the southern slope and the other from the northern slope, and both can reach the top of the mountain. The starting point often depends on the entrepreneur’s starting resource endowment and strategic choice.

Frankly speaking, if there is a strong category at the beginning, it is a very good starting point. Wang ( Yi long batch CEO Wang Chaocheng) starting resources and unique understanding of the industry, determined that it can establish a trading system and logistics infrastructure by the strong category, and then expand the category, it is very good path.

Li Zhao: I hear you like a team that has won the first battle or is thinking about how to fight it.

Zhu Yingchun: We like to cast inflection points. Either the first battle of the company we invested is nearing the end, or we judge that the entrepreneurial team has a clear understanding of the content of the first battle, methods of operations, and long-term stability, and this team has good starting resources to fight In the first battle, if the answer is positive, then we judge that the team has a greater chance of winning.

We believe that the process of corporate growth is a drama composed of a series of battles. Excellent entrepreneurs can clearly define the current and future battles, and lead the team to continuously win the battle. For example, when we invested in Zhenkunxing, we reached consensus with President Chen (Chen Long, CEO of Zhenkunxing) on ​​the next three battles:

The first battle is sales promotion, the second battle is supply chain driving, and the third battle is platformization. At present, the company has basically followed this plan. Of course, different business models and the choice of starting location are different, and the battles to go through to reach a steady-state structure are also different, but there are rules behind it.

We have invested in more than one hundred supply chain innovation companies, and many of the companies that have been close companions have climbed halfway up the mountain. Looking back, we will have strategically Good input. Entrepreneurs’ understanding of the industry must surpass us, but we are often ahead of them in terms of the growth pattern of the model.

Li Zhao: How to judge whether a supply chain company has reached the mountainside?

Zhu Yingchun: To judge whether a company has reached the mountainside, it depends on how far it is from a steady-state business model. Scale is not a goal in itself, it is just a starting point for an enterprise to establish a new supply chain system. The scale battle may have been completed on the mountainside, but the core capacity building of the supply chain is still not stable. It is necessary to continue to move forward. The current model is not locked. But when it reaches halfway up the mountain, its business model is basically close to a steady state.

Li Zhao: Zhong Ding is indeed very familiar with the growth path of supply chain companies, but the mountains that different industries have to climb are different.

Zhu Yingchun: The core of supply chain innovation is one horizontal knife and one vertical knife. The horizontal knife is the law of the model, and the vertical knife is the law of the category, or the law of the industry.

Frankly speaking, it is difficult to practice both knives to the extreme at the same time. Our method is to understand the model and practice this knife to the extreme, to ensure that this knife is ahead of the industry, and strive to be the best in the world, and at the same time to ensure that the category of this knife is not weaker than others. Each investment institution has different training points. For example, an industry-based investment institution may refine the category knife to the extreme, and use the model knife as an auxiliary.

Li Zhao: You have been mentioning the law of the model. What are the models of supply chain innovation? The pattern was summarized into four categories: terminal chain model, pay easy to mold type, platform model, warehouse distribution pattern, and these four models will continue to integration.

Zhu Yingchun: This simple classification is meaningless for investment, because the new type of supply chain must be integrated innovation in nature, and it is difficult for a single point of innovation to form a substitute for the traditional. Just choose a different time will be different starting entrepreneurs, some choose from trading, logistics and some starting start, starting start with some commodities, but in the end should integrate the three elements together , to build a new set of Combinations can form a new supply chain system.

For example, the Procurement Man, which we invested in Zhuanzhuan, started as a B2B trading platform, but it is definitely more than that. The company’s goal is to adopt the four systems of data-based grading standards, centralized fulfillment and delivery, product remanufacturing, and three-dimensional and efficient distribution channels. Build and empower a large number of second-hand 3C recyclers at the front end, and lead the industry to reconstruct a more efficient 3C after-market supply chain system.

Characteristics of “Water Supply Company”

Li Zhao: If the new supply chain system must be an integrated innovation of three elements, then simply understanding a B2B enterprise as a logistics company or a trading platform will be somewhat one-sided.

Zhu Yingchun: First of all, logistics is very important for supply chain innovation. Why does JD want to establish such a heavy logistics system? Similarly, why does Yiheda raise funds to build a large-scale supply chain center? Everyone has underestimated the power behind it, and new business flows require new logistics to support them.

When these companies mature, they are essentially an infrastructure company. We compare them to a “water-like” company. Water-based companies are composed of three segments: the first is the front-end faucet linking a huge customer base, which is specifically composed of online trading systems and offline sales systems; the second is the pipeline network, including trading platforms and warehouse distribution systems; The third is the back-end water plant, which refers to the product system and supplier system. Commodities, transactions and delivery are indispensable.

Li Zhao: Can a tap-water company be designed, or must it have certain characteristics to grow naturally?

Zhu Yingchun: Not all categories have the opportunity to build such a company. Only industries with decentralized upstream and downstream and many SKUs are likely to have chain owners and control pricing power. Only by mastering the pricing power of the entire industry chain can you master the distribution power of the value chain, leading the industry to build a new infrastructure. Only when a new infrastructure is established can your business be locked in. Otherwise, no matter how large the scale is Can’t lock it.

Why did we give up Steel Trade B2B? Because the pricing power of the entire industry lies in the upstream steel mills, circulation and distribution is always a weak link, and no matter how integrated it is, it is difficult to form pricing power. The essential difference between general traders and super channel providers lies in whether they can control the pricing power of the industrial chain, although they are all in circulation business.

Li Zhao: Many of the projects you have invested in are already star companies. Were there some controversies in the market at the beginning of our investment process, but Zhongding has grown up relatively well after investing?

Zhu Yingchun: Zhenkunxing is an example. When we first invested, everyone questioned that the company was doing too much. It started out as a 2B self-operated. Not only did it require a relatively large working capital, but the upstream also had to build a product line team. To build a direct sales team, a heavy logistics system must be built in between. If you don’t understand the patterns and laws of this kind of business growth, you will easily be affected by the company’s surface data and feel that this business is not sexy.

But we feel that the starting point is right, and we encourage the company to increase investment in the focus. The first battle for this business is to fight a heavy battle. Only when the heavy becomes heavy will it be lightened. Through the heavy self-support system, the core competence of the supply chain and the logistics infrastructure are established to form a good purchasing experience for customers It is our first judgment that the customer’s good purchasing experience will further feed back the scale. More importantly, the transaction and logistics infrastructure will have a real opportunity to achieve platformization. This is our first judgment.

Secondly, the problem of working capital is only an initial problem, not a long-term problem. After scale up, capital efficiency will naturally improve substantially.

When we first invested, we and Mr. Chen estimated that the inflection point of the scale might be 6 billion. Later, when we reached the 5 billion inflection point, our previous predictions were realized. Therefore, in the company’s last round of financing, the capital had a clear consensus. Everyone agreed that the company had a chance to become the Amazon of China’s industrial products, and it was oversubscribed several times within a month.

Returning to the simple logic of business, the scale of this kind of business is king. Many early problems will naturally disappear with the growth of scale. This is the law. It is difficult to make decisions if you are limited to the data in front of you.

Our important value as investors is to use our accumulated knowledge at the regular level to form an effective input for the company’s strategic determination and encourage the company to continuously invest funds and resources in the right direction.

From digital supply chain to digital technology

Li Zhao: In the past two years, everyone has mentioned a lot of industrial Internet. In Zhong Ding’s eyes, what is the relationship between supply chain innovation and industrial Internet?

Zhu Yingchun: At present, there is no clear and unified definition of Industrial Internet, but from a literal understanding, Industrial Internet is the use of Internet technology and capabilities to transform industries. So what to transform? We believe that what is being transformed is the supply chain system of various industries.

The industrial supply chain system includes five major nodes: consumers, retail terminals, circulation and distribution, manufacturing, and R&D. Every two nodes are linked through logistics. Since 2010, the supply chain of every vertical industry in China has been set off. The wave of digital transformation.

Therefore, what we invest in is the industrial Internet with supply chain innovation as the core. Whether we provide industrial Internet or provide chain innovation, it is actually only two sides of the whole thing . The goal is to digitally realize the online and online supply of all nodes in the supply chain. Dataization, intelligence and collaboration.

Li Zhao: From the perspective of new technology reshaping the supply chain, what will your next layout look like? In addition to the supply chain platform, will digital technologies such as software that transform the supply chain also be the subject of concern?

Zhu Yingchun: Yes. We mentioned earlier that the underlying driver of China’s current supply chain innovation is digital transformation. From an investment perspective, we have always adhered to a two-wheel drive, while investing in digital new supply chains, while investing in digital technology, looking at the world from two perspectives, mutual input and promotion.

On the one hand, the digital supply chain is not limited to the commodity supply chain mentioned above, but also includes the digital service supply chain. For example, we invested in China’s largest trunk line capacity platform and the largest urban distribution capacity platform, a new type of industrial equipment leasing service provider/ Hospital asset management service providers/clinical CRO/taxation service providers and network security service providers, etc.

On the other hand, we have also invested in a series of software and technology companies that provide support for the digitization of supply chain nodes or supply chain collaboration, such as industrial software for R&D digitalization, SRM software for supply chain collaboration, and SAAS management software for the largest domestic fleet Enterprises, etc. Others include excellent software companies in the fields of intelligent customer service, finance and taxation and human resources.

Accompanying the growth of outstanding companies

Li Zhao: Congratulations to the listing of Yiheda, but I am more curious that it has been 11 years since the establishment of Yiheda, and Zhong Ding only invested in it 3 years ago. What is the story?

Zhu Yingchun: We have found in doing research in Japan there is a category called Misumi outstanding enterprises, has two core businesses, a Lan-kun line business is done, another piece of business is Yue doing. We believe that in the field of China’s automation components, there is a chance to create an enterprise several times the size of MISUMI.

We are already looking for excellent targets in the field of automation components during the CDD process of Zhenkunxing. We have maintained a community of purchasing managers for a long time. After we asked the community whether there was any replacement for Misumi in China, we soon got feedback, and everyone’s consensus was Yiheda. We went to visit Dongguan Yue, chairman of the total gold ( Jin country), he is a very ambitious entrepreneur, he created before the meeting is doubtful value to investors, but we all felt after the meeting to talk to each other Quite unexpected.

Li Zhao: Where is the surprise?

Zhu Yingchun: I was surprised that he fought the most difficult first battle of this type of business model very beautifully. He was surprised by what I said in a word, and pointed out the company’s bottleneck restricting growth at that time-warehouse distribution. The company did an excellent job in the construction of the upstream supply chain, with clear customer needs and under the wave of China’s automation The demand is growing rapidly, and the trading platform is doing well, but the company did not place the warehouse allocation in a sufficiently important position at the beginning, which restricted the company’s delivery capacity.

We have invested in many innovative supply chain companies and are familiar with their growth laws. The most difficult task for Yiheda’s business model of this type is the first battle-establishing standards and standardizing a large number of non-standard parts to achieve back-end scale. And when you first started, there was no brand and scale. Why should customers trust your standards, and why should the company use your standards to restrain upstream suppliers? However, after the first battle is won, the following battles will be much easier. At present, the company has fully entered the stage of platformization and will continue to maintain rapid growth.

Li Zhao: So is a see as before it finalized?

Zhu Yingchun: Actually it is not. Although I have all the ideas, he is still dubious. Lao Yan (Zhong Ding Capital founding partner Yan Li) also communicated with him in the past, and later participated in the supply chain salon organized by us. It proves our knowledge and reputation in the industry. We did the due diligence and passed the meeting very quickly. The core reason why we can do so quickly is that we have done in-depth research on what he did.

A company is like a work of art for entrepreneurs. Every entrepreneur is eager for someone to understand him, to recognize and appreciate the value of the work they create. Only on the basis of understanding can we talk about how to help the enterprise. This is the very important reason why we come together. Mr. Jin himself gave an example. It’s like having a bowl that was passed down from the ancestors during the Chenghua period of the Ming Dynasty. Many investors always asked him to prove that the bowl was from the Chenghua period of the Ming Dynasty, but Zhong Ding told him after seeing the bowl. This was during the Chenghua period of the Ming Dynasty.

Li Zhao: What help did you give to the growth bottleneck of Yiheda?

Zhu Yingchun: Yiheda is also a tap water company. The construction of the front-end faucet of Yiheda , the construction of the entire back-end water plant, and the construction of the transaction platform above were all done very well. The delivery system was in the process of upgrading at that time. The delivery system of this kind of business model becomes more important in the future. You can see from the prospectus that a large part of the funds raised by the company is invested in the construction of the delivery system-South China’s supply chain center. This highly automated supply chain center is Zhong Ding Of experts assisted in planning.

On the one hand, we discuss with the company to find out where to win in the future, such as warehousing and logistics infrastructure construction and digital construction, and make strategic plans for this; on the other hand, we build on these two core capabilities and use our resources To support the company’s landing.

Li Zhao: Yiheda is the first B2B stock on the GEM, and the first B2B supply chain stock on the Sci-tech Innovation Board is Titan Technology. Both are Zhongding’s investments. Titan Technology has been listed on the New Third Board in 15 years. What is it? The opportunity allowed you to invest before it went public on the Science and Technology Innovation Board?

Zhu Yingchun: Helping laboratories solve the one-stop supply of R&D materials. There are very large companies in Europe, America and Japan. The market value of Thermo Fisher, the largest benchmarking company in the United States, is nearly 200 billion US dollars.

As long as we judge that China’s biomedical industry has entered the era of R&D-driven, then China must have its own Thermo fisher to provide material supply services for China’s biomedical research and development.

Moreover, laboratory supplies are a category that should naturally be e-commerce, which conforms to the basic industrial characteristics of B2B e-commerce. The upstream and downstream are very scattered, and there are many SKUs. Therefore, in this field, China has a better chance to give birth to a new type of large-scale platform company.

There is a law for the growth of B2B supply chain companies, that is, it is difficult to become a leader, but once they become a leader, they will enter a continuous growth bonus period. Although Titan Technology has developed into a leading company in this field, relative to the ceiling of the entire industry, we believe that only the small lotus has revealed its sharp corners.

Li Zhao: But judging from the listing experience of Titan, it has not been so smooth.

Zhu Yingchun: Yes. It was the first time the company declared the rejection of the Sci-tech Innovation Board. On the day of rejection, Mr. Xie called me and was rather frustrated. We were also surprised, but I discussed it with Mr. Yan that night, and sent Mr. Xie WeChat to tell him that we have a high degree of confidence in the company and the team. We can increase our capital at any time if necessary, and then we will be within a week. We have completed a new round of capital increase for the company. We have no counter-offer on the price. We believe that the company is undervalued and we are optimistic about it in the long run.

At that point, the company is not short of cash flow, but Mr. Xie needs someone to stand firmly by his side, give him a support, and let the upstream and downstream and management maintain confidence. The reason why we can make quick decisions and complete the investment settlement within a week is that we have sufficient confidence in the core areas and the judgment of entrepreneurs.

Li Zhao: In the past few years, you have invested in many excellent companies and accompanied these entrepreneurs to grow. How do you feel during this process?

Zhu Yingchun: In recent years, I have deeply felt that there are really a group of entrepreneurs in China. They have a strong sense of mission to transform the world and the industry they belong to. They are rare species. Many of the entrepreneurs we invest in are “secondary self-abuse”, such as Zhenkunxing, Yiheda, Jiali Chuang, Yi Jiupi, Three Heads and Six Arms, and the helmsman.

What is the secondary masochistic type? I have succeeded in starting my business for the first time, but I am not satisfied with a profitable business. I choose to start a business again for a bigger dream and a more valuable business. Failure is not the mother of success. There are countless roads to failure, but there is often only one road to success. Success in a business for the first time must be the person who has mastered the key to business success. They often have more control over strategy, rhythm and organization. .

Supply chain innovation is a very difficult road. Only with strong strategic ambition and strategic will can one endure loneliness and not give up easily. They have clear goals and absolute concentration. For example, Mr. Francis Hou told me that he has only two hobbies, one is to do business and the other is to play basketball. In order to solve the automation of flexible production, Mr. Yuan, the CEO of Jiali Chuang, can work in the factory. Sleep for two months. They are all minded.

The slogan of Zhongding Capital is to gather together after hearing the clock, and make a promise. It refers to a group of odor -minded friends together and shared commitment to do valuable, meaningful, challenging and there is a certain thing. And a group of excellent corporate home together , they not only inspired and touched me, let me explore and cognitive way the world more efficient and alone. Their ability to explore and recognize the world is stronger than ordinary people. It is my luck to be able to learn from them and forge friendships in the process of supporting and witnessing their success.

 

Author/Li Zhao

Editor/Pan Yubo

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/dialogue-with-zhongding-capital-zhu-yingchun-10-years-of-supply-chain-innovation-investment-my-thinking-on-personnel-situation/
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