Jianlibao Sinking and Floating

Author: Ding Xiuhong / Lin Yougang
Publisher:
Publish Date: 2005-04-01
Features: Jianlibao is an enterprise of great symbolic significance in China over the past 20 years. The value of the book "The Rise and Fall of Jianlibao" lies in its rational approach to narrating the history of a company, thoroughly and meticulously analyzing the successes and shortcomings of its various management aspects, thus possessing long-term case study value. —China Reform and Development Research Institute Executive President Chi Fulin
For many managers, the rise and fall of Jianlibao is full of legends: How did the Sanxian Liquor Factory, located in a remote corner of the south, under the leadership of Li Jingwei, create a national flag brand that the Chinese people were proud of? How did Zhang Hai, at the age of 28, use the "karate" technique to achieve control over Jianlibao? What "rescue actions" did Zhu Weisha and Li Zhida, these fleeting visitors, undertake? At the same time, Jianlibao also holds profound lessons. Where did Jianlibao lose its way? What were the congenital and acquired shortcomings in Jianlibao's business strategy, marketing, organizational management, corporate culture, and other aspects over the past 20 years? According to the authors', the existence of these shortcomings and their failure to be eradicated over the long term were the fundamental reasons for Jianlibao's current chaos. At the top of these shortcomings is "strategic confusion"—Jianlibao in Li Jingwei's era had only a few simple economic indicators to guide its future efforts, while in Zhang Hai's era, apart from some fancy slogans, it still lacked a well-defined strategic plan. Think about it: how could a company that is not even clear about its own development goals sustain itself in the long run? How could it provide a clear direction for other aspects of its business operations? A clear strategy points the way forward and also provides direction for establishing the system's operational capabilities and corporate culture. To a large extent, both Li Jingwei and Zhang Hai failed to truly grasp the development laws of the beverage industry. During Li Jingwei's era, the company's development was actually driven by various decisions that "came along as they may," pushing it forward "naturally." In Zhang Hai's era, Jianlibao was more like a child with "hyperkinesis," always striking out in different directions. Of course, Zhang Hai had his own unique explanations for various investments, which were reflected in his interview with Sina Finance on December 24, 2004. Zhang Hai claimed that his investments in Industrial Bank and Ping An Insurance were highly profitable projects, and from the results that followed, it turned out that this was indeed the case. However, even so, from the perspective of Jianlibao's core industry, this perfectly demonstrated the lack of a clear strategy in Jianlibao. Compared to Li Jingwei, Zhang Hai's modern competitive awareness was clearly stronger, and his understanding of brand positioning in the beverage industry was undoubtedly higher. Therefore, after taking over Jianlibao, faced with the aging of the brand and the rigidity of the corporate mechanism, Zhang Hai carried out bold reforms. For example, he restructured the organizational framework, reorganized personnel, created new organizational operational mechanisms, and underwent brand transformation, launching a completely new brand. After a series of bold moves, Jianlibao's operations were effectively improved, and its brand image was reactivated. However, at this point, Jianlibao was still clearly lacking in effective strategic management, and its strategy remained confused. Zhang Hai's strategic confusion had much in common with Li Jingwei's, such as unrelated diversification investments and neglect of strategic management. Due to the strategic confusion, Jianlibao also suffered flaws in some key aspects of corporate management. For example, organizational structure—the so-called "business units" in Jianlibao were merely a few subsidiaries with similar businesses managed by one person, and they did not operate according to the model of a business unit system. The structural flaw became one of Jianlibao's major weaknesses. Another major weakness was business processes. In Jianlibao, "process" was a frequently mentioned management term, but almost everyone seemed to misunderstand the true meaning behind "process," failing to truly optimize the company's supply chain or build a high-quality corporate value chain as the core process, falling into a bad cycle of "process for process," contrary to the original purpose of process. At the end of the day, success depends on management. After 20 years, as a typical example of Chinese enterprise development, Jianlibao has reached its current state, and apart from strategic confusion, it was also defeated by management. Jianlibao lacked a systematic execution capability to adapt to the fierce competition in the beverage industry. Jianlibao's management can only be described with the word "tragic." The last five years of Jianlibao were essentially a tragic symphony of management. Strategic confusion led Jianlibao into the trap of diversification. But let's turn the page, although diversification scattered too many of Jianlibao's resources, if the beverage business could have been managed well and continuously provided cash flow support for diversification development, Jianlibao would never have ended up as it did. Unfortunately, the reason for Jianlibao's decline was precisely that it failed to manage the beverage business well, and the fundamental reason for this failure lay in its management flaws.