Gao Hongqing of Dachen Venture Capital: The diaosi economy is collapsing and middle-class consumption will become the new mainstream

Gao Hongqing said in his speech that 2016 is a very unusual year in China's history. It is the first year of consumption for the middle class, the first year of the Internet celebrity economy, and the first year of live broadcast. After the in-depth transformation of the entire industry by the mobile Internet in previous years, the Internet infrastructure has been completed. Before and after the stock market crash in June 2015, many habits of consumption upgrades have been cultivated, and many middle class habits of using the mobile Internet have been cultivated.

Recently, everyone has been talking about the cold winter of capital. In fact, we don't feel anything. On the contrary, our investment pace has accelerated. So far this year, we have invested in more than 40 projects, and today we have 4 projects submitted to the Investment Committee. There is no cold winter in our eyes. As long as you return to the essence of business, every day will be the same all year round. The title I shared today is "Talking about Consumption Upgrading Without Consumer Insights, It's All 2VC". In fact, my own title is not this, but "Talking about Consumption Upgrading Without Consumer Insights is like Talking about Climbing by Eunuch." The organizer said the title was too dirty, so I changed it to this. Everyone is used to the media saying that every year is an unusual and most difficult year in history. 2008 is, 2009 is, 2010 and 2011 are both, but 2016 is really a very unusual year in China's history. It is the first year of consumption for the middle class, the first year of Internet celebrity economy, and the first year of live broadcast.

Why is 2016 different from other years? I think the main reason is that after the mobile Internet completed the in-depth transformation of the entire industry in previous years, the Internet infrastructure has been completed. Before and after the stock market crash in June 2015, many habits of consumption upgrades have been cultivated, and many middle class users have been cultivated. habit of using the mobile Internet. Why this year's live broadcast and the Internet celebrity economy broke out is actually related to the accumulation of several years.

Why do we need to delve into consumer insights? Because consumers have changed. Last night, I said in my circle of friends that maybe two years ago you were an innovative company, and two years ago you were still a vibrant company, but this year if you don't understand consumers, you may become a backward business model or a traditional company, because our era has undergone many drastic changes. The mobile Internet has made the whole world flat, but when you want to redefine business boundaries, you must use mobile phones and mobile Internet to establish a fence of competition. When you can't explain who you are, say who you are not-then the labeling effect is often clearer.

I think first of all, we must follow the changes of the times. In fact, you will find that many companies inexplicably defeat a company that has been decades or even hundreds of years in a very short period of time. Who would have thought that companies like oppo and vivo could defeat Xiaomi in such a short period of time, or even Samsung? I highly agree with Professor Li Shanyou's description of this era-this is an era of reduced dimensions and survival, this is an era of death, this is an era of subversive survival, this is an era of obtaining resources beyond time and space, this is an aesthetic era, this is an era of spiritual return.

So where do I mainly say this "change"?

First, times have changed, with the post-80s and post-90s making their debut. The post-85s and post-90s have stood at the center of the consumption stage. We have always said that the post-80s and post-90s are not our next generation. They are completely different species. If we cannot deeply understand the changes of the post-90s generation, we will not be able to please them. I often tell a few jokes when I am born in the 1990s, but I don't have enough time to tell them today.

What are the biggest changes in the post-90s generation? I am born in the 1970s, born in the 1960s, 1970s, and even the generation before 1985. Our life is not very prosperous. We lack a sense of security. So when we started to have money, we wanted everything. We wanted to have a car, a house, and a wife. But the post-90s and post-85s generation don't care at all because their fathers, namely us, gave them a rich life, so they only care about the right to use, not the right to ownership.

We have a lot of arrangements in the pan-entertainment industry. I have always joked that China's traditional entertainment industry, especially the nightclub industry, will die out without change. There is always a second half when the post-60s and post-70s banquet guests, and a second half after eating. They either sing or do something else. Why? Because there were too few ways of communication between men and women in that era. At the beginning, only money could buy smiles, and money could buy joy. Nowadays, it is different for the post-90s generation. When Momo and Detective make it so easy for strangers to socialize, if the entertainment industry does not have many new ways of playing or new changes, the entire industry will have the possibility of subversive destruction.

We saw hot moms born in the 1980s and 1990s. Unlike our mothers born in the 1970s and 1960s, they rarely sunned their babies, mainly themselves. This is an important change. Our research found that the real post-90s generation is not the post-90s generation, but the post-93s generation. I won't elaborate on the specific logic.

Second, business logic has also changed. Brands have been weakened, consumer experiences have become entertaining, and laymen may subvert experts. Why does everyone like Durex's ads? All consumption has become entertaining, including when it fights Okamoto. We are the happiest. No matter how much it fights, I think these two brands are deeply rooted in the hearts of the people.

Consumers have changed. Consumers believe in themselves more, and consumers believe in common sense more. Although the product itself is important, the concept of making a product is even more important. Characteristics of products in the Internet era: good-looking, fun and easy to use; interesting, tasteful and loving. I think in this era, we should no longer make some fake foreign devils brands. We really should not deceive people. When the Internet is so transparent, we should be more sincere and less routine. The entire economic shape has changed, and all industries have social attributes. Green Arrow chewing gum and Weiquan juice have both become props for chatting up.

What is community? I think the Santong is the best interpretation of the community: the same people, the same good and the same good. First, we must have common values. Second, we must have common interests. If we have no interests together, if we have no interests, we are a mob. A very good community must meet these three points. Products are just the entrance, and community is the business model. In this era, communities are used to gather consumers.

Our communication environment has also changed, and all communication has become social, localized, mobile and personalized. I met the editor-in-chief of fashion magazines a few days ago, and their lives were having a difficult time. In the past, fashion magazines provided guidance for consumers on consumption methods, but now every Internet celebrity is a magazine.

What is the essence of the Internet celebrity economy? It is the arrival of the era of personal branding and personalization. We have already laid out the industry of Internet celebrities, live broadcasts, including e-sports for a long time. We never follow the trend, we don't chase the wind, and we don't create the wind. We wait for the wind to come, and we act boldly after judging the trend.

What is the nature of the Internet celebrity economy? How long can Internet celebrities be popular? What kind of state is Internet celebrity? We have always envied the United States, saying that the United States respects individuality and individuals very much, but we have found that the mobile Internet has made China begin to respect individuality. In this era, as long as a person has a skill, he can live well. In the past, people said that you have no skills and rely on your mouth. Now there are too many people who rely on your mouth to make a living. YY and Kuaidi anchors are like this. Paying attention to individuality and personal strength, I believe that China will soon usher in a truly personalized era.

Why did P & G, Uniqlo, and even Wahaha and Master Kong, including Belle Shoes, the benchmark of China's consumer goods industry, all experience historic significant declines in profits and sales this year? Why did we all experience this in 2016? Because new consumers have come to the center of the stage, Wahaha's turnover this year has dropped by more than 10 billion yuan. Why? You tell customers born in the 1995 generation that I only have eyes for you. Who still knows about Jinggangshan? Who young people will drink Nutrition Express? At this time, if these industries do not undergo profound changes, they will soon be abandoned by a new generation of consumers.

In the eyes of the post-90s and post-95s generation, the best-selling brands we think are backward and outdated brands. Brands such as Olay and Rejoice are used by uncles and aunts. I will never use them. I use British handmade soaps and a small town in Provence, France. For body wash produced in them, they want to highlight their individuality. Why P & G has changed several CEOs in a row? I think they underestimated the changes in China consumers and the growth rate of China's middle class. I hope everyone can truly understand what a personalized era is.

Another essence of Internet celebrities is the rise of personal brands. One of the companies I admire most is Coca-Cola. You see, those born in the 1990s like it now, and I also like it when I am born in the 1970s. I only drink Coca-Cola, and I only drink iced cans. I am at this age. Although I dress a little fashionable today, I still prefer to drink classic Coca-Cola. You find that the post-90s and post-95s also love to drink Coca-Cola, and Pepsi has been abandoned by young people. I admire Coca-Cola's courage and determination to embrace young people. Looking at the various lyrics bottles and nicknames bottles, you can know why Coca-Cola has been successful. Young people like such interesting communication methods very much. When flirting with girls, a can of Coca-Cola with the lyrics of "You are my The Most Important Decision in my Life" may be more effective than a French meal.

In this era, people are organized above everything else. In the past, we would say that we should trust the organization and always ask which unit you are from? Everyone first talked about the unit and organization when they met. After reading "The Warlords", they knew that the organization is actually the most unreliable. People are greater than all organizations, and brands without temperature and personalization will have no life. Dong Mingzhu is a big Internet celebrity. Why? When the traditional economy was experiencing a very severe decline, she made a bet with Lei Jun. She stood up as a fighter of traditional manufacturing. Since then, Gree has not found any image spokesperson. She is the image spokesperson because she is very rigorous and inspirational., very serious. So when we saw Gree, we thought of Sister Dong, who was warm, and Chu Cheng was the same.

The relationship between personal brands and fans is weak but has strong influence. I think Internet celebrities are also a major change in retail logic. Almost no company in China's clothing industry has a better life. In addition to Hailan Home, Hailan Home is another operating model. Why? The inventory is too large. The problem in the clothing industry is that there is a lot of inventory. As soon as an Internet celebrity launches a new model, it may be sold in ten minutes for 20 million yuan. We invested in the largest Internet celebrity incubator in Hangzhou. At that time, I saw an Internet celebrity. I sat next to her and asked, little girl, how much can you make in a month? I had a very arrogant expression. She knew that I was an investor and casually handed me a card. Uncle, guess how much money I had in it? I said, how much money is it? She said it was 83 million.

We sometimes can't imagine that an Internet celebrity can have such a great ability to attract money. Why? Because she has no stock, she brings her own data. Whether it is Taobao, Jingdong, or Vipshop, it is all her checkout counter. Let's think about it carefully. Regarding the topic of Internet celebrities, it takes two hours to talk about it. I will only talk briefly. There are more than 7 million Internet celebrities active on Sina Weibo, and they bring huge traffic. Sina Weibo has become the fourth level in China. It is now a diversion for Taobao, and Taobao also needs its traffic.

2016 is the first year of consumption for the middle class. This year, countless entrepreneurial opportunities, countless business models, and countless new brands will be born. In the entire industry, I talked about returning to the essence of business and common sense relatively early, especially before June 2015, when the O2O industry was so crazy. I woke up laughing when I slept last night because we had never invested in an O2O company, although we had seen many O2O companies. I'm not saying that O2O companies are worthless, O2O companies must be valuable, but many companies before June 2015 were 2VC. We judge the investment logic of the project only by three points: first, whether it creates customer value, second, whether it improves industry efficiency, and third, whether there are core barriers.

The era of low prices and subsidies is over, the loser economy is collapsing, and middle-class consumption will become the new mainstream. The logic that dogs pay for wool when grown on pigs is wrong. In today's era, wool still has to be grown on sheep, and one must do one's main business well. So why is it the first year of consumption for the middle class? The middle class is more concerned about differentiated and personalized services, the sense of scene, ritual, and professionalism of consumption. Diaosi is a lover of cost performance, and the middle class is a lover of performance ratio.

What is a consumption upgrade? Not more expensive, not better, but different. They need something different and different from others. I often give an example. 99% of products targeted at the middle class need to be redone. Extreme thinking can make China catch up with Germany in corners.

This is Xiaomi's dragline. Lei Jun makes many products. Xiaomi is good at everything except mobile phones. He spent tens of millions to make such a beautiful thing and sold it for 49 yuan. I think this is a model of extreme thinking. This product makes a profit of almost hundreds of millions a year. This is the ultimate power.

What opportunities are there in the clothing, food, housing and transportation industry? There are many "clothing" industry. You use LV, but you don't know the brand I wear. If LV does not change, and changes that do not cater to consumers will still be abandoned. There will be no higher premium for "eating" organic food and food marked with origin. "Living" what is a floor and what is a sofa? I just need a complete home, and the era of overall home decoration is coming. Just tell me how much it costs, what style, and when it will be delivered. Education on personal skills and interests will become a hot spot, and private K12 education will usher in spring.

You use Didi and I use Shenzhou. Why use Shenzhou? Because its services are consistent. Although it is more expensive, it is reliable and reassuring. Why is the supply of first-class business seats is in short supply? This is also a change of the times.

The era of art consumption and IP is approaching, the era of national entertainment has arrived, health and sports will become fashionable, and bicycles will become the most fashionable way to travel. You buy a Bentley, I buy a particularly good bicycle, and I can also be very dazzling and satisfied.

I think there are a lot of entrepreneurial opportunities in terms of consumption upgrades. As long as we can truly gain insight into consumers, their consumption habits and psychology, have empathy, embrace them, and respect them, we will experience the climax of business. Don't worry about the cold winter.

Good dream, let's reach it together, thank you all!

Editor: yvette