Breakthrough in institutional reforms Sichuan Changhong opens up a new round of growth

Leading the home appliance industry into the era of artificial intelligence, pushing the world’s first voiceprint recognition artificial intelligence TV, building the world's first personal smart TV technology system... Recently, Changhong, known as a veteran home appliance giant, “played” Many new games are played, and many Internet giants are far behind.

Recently, Changhong has been pushed to the forefront with the launch of the world’s first voiceprint recognition artificial intelligence TV. Following Changhong's launch of the world's first artificial-smart TV and the introduction of the global television industry into the age of artificial intelligence, the trend of artificial intelligence has risen in all fields. Internet companies such as Xiaomi, Lenovo, and Storm have also followed suit. But now, "playing" voiceprint recognition, so that the silence has already revitalized the existing color TV market.

In recent years, Changhong has been at the forefront of the industry in terms of technological innovation and pattern exploration. Technological innovations such as voice recognition and voiceprint identification have caused the outside world to follow suit. However, in the first three quarters of this year, the performance of Sichuan Changhong was affected by a number of factors such as rising costs and a decline.

Industrial economy critic Hong Shibin said: “Sichuan Changhong's performance decline is temporary, mainly due to rising prices of color TV panels and other rising costs. Changhong is a rare domestic 'high rise' home appliance giant with better state-owned enterprises in recent years The institutional reform path and innovative business model are worth learning from.”

Costs and other factors have caused pressure on performance, and technological innovation has opened up new growth opportunities.

Actually, in recent years, Changhong has been at the forefront in the wave of several transformations and upgrading of the color TV industry. On July 28 last year, Changhong’s world’s first artificial TV, the Changhong CHiQ (Qiike) artificial intelligence TV, launched a tsunami of artificial intelligence in the home appliance industry. For the first time, artificial intelligence was launched on color TVs and launched globally. A new era of artificial intelligence in the television industry.

After picking up the banner of artificial intelligence in the home appliance industry, Changhong's kick-off effect has been fully fermented in white power and other fields. New products continue to be launched, and innovative products are quickly iterated. Last year, the performance of Sichuan Changhong also showed a large-scale increase. The industry generally believes that the growth of Changhong's performance is mainly due to its institutional reforms and technological innovations. New products are sought after by the market.

It is worth noting that last year, Changhong TV 55 and above, 4K TV sales increased by 87.5% and 113.4% year-on-year, Q3T single-product profit and smart operating business revenue exceeded 100 million yuan; Meiling inverter refrigerator sales increased by 73% year-on-year, The frequency conversion market share ranks second in the industry; IT distribution operating performance hits a record high.

However, soon, the price of the panel that took up the largest proportion of the price system in color TVs has risen sharply. This has caused the color TV manufacturers' profits to be squeezed again. In the fiercely competitive environment, the rising panel prices have worsened the industry, and a considerable part of small and medium-sized manufacturers have been eliminated. Large-scale manufacturers still stick to their own pricing advantages.

Due to the insufficient capacity of the global TV panel market, the price of global TV panels has continued to rise since the third quarter of last year, which has caused terminal TV manufacturers to adjust their prices. However, for large color TV giants, some manufacturers to ease this pressure through internal digestion, did not pass on prices to consumers. Changhong is one of them.

Panel prices may be unexpected in the color TV industry. It is understood that not only panels, LED components of backlight, numerous chemical and optical products, and labor costs have also increased in different degrees, which has caused price fluctuations in the color TV market since last year. It is reported that Samsung Display only closed a G7 production line from December 2016.

According to data from Yikang, the market has gradually recovered since May of this year. In the offline market in May, domestic brands occupied the mainstream, including traditional brands such as Changhong, Hisense and TCL occupying the top five positions. The market share of these brands exceeds 10%.

According to the announcement from Sichuan Changhong, due to the increase in raw material prices and labor costs, the gross profit margin of the products dropped; exchange rate fluctuations, exchange losses increased, and non-recurring income decreased year-on-year. In the first three quarters of this year, the company’s operating income increased by 12% year-on-year to RMB 54.4 billion, and net profit fell by 68% to RMB 160 million.

"The decline in net profit was mainly attributable to the increase in the cost of Changhong's main color TV sets. From 2016 to the third quarter of 2017, the supply prices of different sizes of upstream LCD panels rose from 50% to 100% in different ranges. LCD panels It also accounts for a two-thirds cost ratio of the entire machine, and in the face of sharp increase in panel prices, the sales price of downstream retail terminals will not easily rise sharply in the fierce competition. Machine manufacturers bear this. This has caused Changhong's performance to decline. However, this situation will not continue.” Industry economic watcher Liang Zhenpeng believes, “This is the situation facing the entire industry. Last year, the overall color TV manufacturers have unfavorable results. We usually don't compare Changhong with Haier, Midea, etc. The latter is a white giant. Last year, the overall white market situation was relatively satisfactory."

Over the years, Changhong has been sizing the industry based on the “new coordinates” smart strategy, and has strategically reorganized or withdrawn its subsidiaries that do not meet the company’s strategy and are dragging on development. At the same time, it has expanded some new businesses and optimized the industrial layout.

Hong Shibin said: "The diversification of Changhong is based on a smart strategy. From intelligent, network, collaborative, and different latitude layouts, we don't blindly diversify. It takes time for each of its business lines to be effective."

Breakthrough in institutional reforms, performance-oriented employment mechanisms

To seek for future development, "reform" is also Changhong has been promoting and implementing. In the past period, from the system to the management level, Changhong has experienced a “heartbreaking” change.

Three years ago, Changhong, a major shareholder of Sichuan Changhong Group, transmitted the signals of Changhong’s transformation: appropriately adjusting the decision-making power of the electronic group, researching and formulating medium and long-term incentives for the management of electronic group holding companies, and actively introducing various types of strategic investors. To achieve the government's "decentralization + burden reduction."

In 2015, Changhong Sichuan's net profit turned from profit to loss, with a loss of 1.976 billion yuan. Since then, Changhong has accelerated the pace of change and made an unprecedented change from the system, business to personnel structure. In just three months, Sichuan Changhong turned a profit, and its performance increased from a loss of nearly 2 billion yuan to a net profit of 11 times.

At the shareholder level, Sichuan Changhong began a series of reforms such as management reforms, business reforms, and resource allocations this year. In terms of management system and company structure, Changhong Holdings has launched the market-oriented recruitment general manager Li Jin, further clarified the relationship between parent company and subsidiary company's interest distribution and management structure, and began to enter into emerging areas on a large scale. Sichuan Changhong and its subsidiaries, Meiling Electric Appliances and Huayi Compression, have also proposed the goal of scale reengineering, accelerating their expansion in areas such as smart communities and artificial intelligence. At the same time, Changhong is also looking for new profit space, and its projects in the areas of financial services, new energy vehicles, new energy materials, etc. are accelerating.

It is also understood that in August this year, Changhong authorized the operating plan was officially approved. As a pilot for authorized business reform, Changhong has obtained multiple independent decision-making powers in terms of personnel remuneration, equity changes, investment, and financial management.

In the first half of this year, a group of young “70s” executives with growth and operating performance were promoted inside Changhong. Changhong's move has released a new direction for Changhong's employment mechanism. This group of management talents has also been regarded as the backbone of Changhong's reform and intelligent transformation.

In terms of business structure, Changhong integrates existing industries, establishes six BGs, and strengthens business synergy. According to industry insiders, it was Changhong that opened the new round of state-owned enterprise reform in 2016. And in 2017, Changhong’s reforms will gradually land on performance, and Changhong may open a new round of growth channels for emerging businesses.

Zhao Yong, chairman of Changhong, stated that the reforms of state-owned enterprises in previous years were more concentrated on the top-level design and the rationalization of the institutional mechanisms such as the relationship between the government and enterprises. Today, the key to the reform of institutional mechanisms has been a breakthrough. The reform of state-owned enterprises has begun to truly penetrate into all aspects of the company.

In fact, a number of growth opportunities have been opened within Changhong, and many companies that have provided profit growth points have already started to emerge. Haier's small and micro enterprises have similar results. At present, a large number of companies have hatched in Changhong, including the newly established Changhong Smart Health, Changhong Education Company and so on.

A Changhong insider revealed: “With the new system, several companies incubated by Changhong have established mature and innovative business models in the industry, and have introduced multiple partners such as real estate companies to form economies of scale. Changhong is now Accelerate expansion into these emerging areas."

At the same time, at the capital level, since last year, Changhong New Energy, Changhong Minsheng Logistics and Changhong’s Zhongke Meiling have successively listed the new three boards. In September of this year, Huayi Compressed and subscribed for the new three-board Granbo, entered the field of intelligent home service robots, and its capital map was further expanded.

“The implementation of reforms in the system to achieve results can only prove that the reforms have been effective. Today, Changhong, the state-owned company, is gradually embodying the achievements. This is a major step forward for Changhong. In recent years, Changhong’s brand image has also changed, showing young people. This shows that Changhong’s reforms in recent years have begun. However, the rapid growth of Changhong’s overall performance requires that it accelerate the pace of commercialization of various industries, so that the performance advantage is highlighted as soon as possible.” industry insiders said.



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