Wei Chuang shares Li Yizheng: Preschool education industry competition is still in a resource-driven stage
“The education industry needs to complete its iterations and upgrades with the help of high-quality capital, and there is still a long way for industry leaders to upgrade from a simple and ruthless resource-driven (site-driven) to operationally driven, brand-driven, and innovation-driven phase. I have to go." Li Yizheng, deputy general manager and secretary of the board of directors of Weichuang, said at the 2017 China Private Education Investment and Financing Forum held recently.
Li Yizheng served as senior vice president of investment banking department of CITIC Jiantou Securities Co., Ltd., joined Weichuang Co., Ltd. in May 2015, and served as general manager of the strategic investment department. In April 2016, he served as deputy general manager and secretary of the board of directors of Weichuang.
It is understood that Wei Chuang shares was established in August 2002, the main business is ultra-high-resolution digital splicing wall system business and kindergarten operation management services business, Li Yizheng revealed that "preschool education's profit contribution to Wei Chuang shares is close to 80%" . At present, Weichuang has established a brand operation entity that already has two preschool brands, namely, Hung Hom Education and Golden Cradle, and built an online portal through participation in the chat. In addition, it has also established Qidi Weichuang and Hejun. The college will train pre-school education talents to train and deliver talents for the Chinese preschool education industry.
The following is a speech by Li Yizheng, deputy general manager and secretary of the board of directors of Weichuang.
Since February 2015, Weichuang has spent more than RMB 100 billion on mergers and acquisitions in the education industry, and has done a lot of exploration in the combination of capital and early childhood education.
Exploring, I found that the education enterprise has a very shallow understanding of capital, and the understanding of capital is very shallow. The two sides have not found a point of convergence, so I hope to take the lead in clearly identifying the tool attributes of capital in this industry. Capital is a tool, and education companies must make rational use of capital tools.
First of all, I would like to share with you the positive impact that capital may have on the early childhood education industry.
First, from the perspective of investors , the core keyword of this year is AI and artificial intelligence. Last year, the keywords were AR and VR. The key word of the previous year was the Internet. It can be seen that the society is developing rapidly, the theme of each year and The direction is different, and education lags behind this change. However, when the society is undergoing rapid evolution, shouldn’t education be followed up in time, or even prematurely and anticipate these changes?
Second, the emergence of personalized education in the form of foreign innovations , such as Alt School, has had many positive effects on the development of the education industry, and this is inseparable from the support of capital.
Third, capital can help the education industry to improve service awareness , especially in the pre-school education field. A large number of parents pay more attention to the child's growth service rather than education, and the service consciousness is just a companion to capital.
Fourth, the rules of capital itself are promoting the standardization of enterprises , such as the attribution of intellectual property rights. At present, many early childhood education enterprises do not pay attention to the protection of intellectual property rights and the protection of trademark rights. Some early childhood education enterprises have not even protected their own trademarks. Enterprises directly follow some of the trademarks of well-known foreign education enterprises, which is a manifestation of intellectual property or trademark awareness is not clear; and, for example, the defects in governance structure, in the management process, the governance and emotional governance of early childhood education enterprises are often greater than the company system; In addition, from the perspective of personnel quality, the entire preschool education industry has low academic qualifications and no staff turnover. Once the industry talents have no liquidity, it means the stagnation of industry development.
Most educational companies have not yet risen to advanced forms such as operation-driven, brand-driven, and innovation-driven.
To look at an industry, we must first understand the driving force of the essence of this industry. If we compare the preschool education with other industries, we will have a deeper understanding of the preschool education.
For example, the driving factor of the consumer goods industry is the brand, and the price difference of the same consumer product is very large. Take the diamond ring as an example. Most domestic brands are about 10,000 yuan a carat, but international famous brands can sell 100,000 carats. The same diamond is the difference between 10,000 and 100,000. This is the value that the brand gives to consumer goods. Therefore, the essence of the consumer goods industry is not the cost control, but the strengthening of the brand.
The real estate industry is typically fund-driven. The competitiveness of real estate companies lies in their weak financing ability and the ability to obtain large amounts of capital at the cheapest cost. Today, the real estate industry has developed, except for the design and financing departments, all of which are almost all outsourced. The reason is that capital financing and design capabilities are the core of industry competitiveness.
The core of the technology industry is innovation . When the smartphone appeared, Nokia’s century-old company had no resistance and almost collapsed, precisely because it did not keep up with the trend of technological innovation. It is not that he has no capital ability or talent, so when a technology company loses its ability to innovate, it loses its competitiveness.
The essence of the Internet industry lies in whether there is user thinking and product thinking. The manufacturing industry is based on cost control. The core of the quality education industry is operational capability.
By comparison, we find that the preschool education industry is still a relatively primitive industry, and most preschool education companies have not yet risen to operational drive, brand drive or innovation drive. There is no school that says that just because I am a certain school, I dare to be much more expensive than others. The profitability of the same location schools is not particularly different because of the difference in operational capabilities. The competition in the early childhood education industry. It is also reflected in the resource-driven, location-driven level, that is to say, can you get the school venue, where to get the school venue, and whether it can be better than others afterwards, it is better brand effect and more operational ability. Or the ability to innovate is more prominent, which has not been greatly reflected in the early childhood education industry.
Therefore, the early childhood education industry needs to complete its iteration and upgrade with the help of high-quality capital, and we have a long way to go from simple resource-driven upgrade to operation-driven, brand-driven, and innovation-driven.
Education industry capital utilization is extremely low
In all industries, the use of capital by education should be extremely low.
The report of an A-share real estate listed company is casually opened. The real estate company's asset-liability ratio is basically 80%, but the education enterprise has almost no leverage, including equity leverage, debt leverage and economic leverage.
For example, there is basically no dispersal in equity. Many educational companies have a 100% stake in a person or a family, but if you compare some of the fast-growing industries, such as Alibaba in the Internet industry, Ma Yun only accounts for 8 points. Only the release of equity can introduce talents that are more helpful to the company, or introduce various partners in various industrial chains to help the company take a higher level.
Debt leverage is also very simple. If the financing capital is at 7 or 8 points, as long as the return on investment exceeds 10 points, it means that you can fully use the debt leverage tool, but the current utilization rate of the education industry is very low. However, I believe that it can be used reasonably in the context of ensuring the safety of business operations.
Operating leverage means that the incentives of educational enterprises for talents are relatively low, and the proportion of employees holding shares is relatively small.
When choosing capital cooperation, you must recognize its capital attributes.
Capital includes both financial capital and industrial capital .
Financial capital includes long-term investment and short-term investment . There are money that can be spent in the enterprise for eight years and money that has been withdrawn after two or three years. Each capital has its own attributes and characteristics. Correspondingly, its requirements for the enterprise are also It will be different. Some companies feel that capital is so scary. I came here to make money, but in fact, this long-term capital has lower requirements on the rate of return than the education companies themselves. They can get a 10% return every year. Happy.
Industrial capital will prompt the industry to enter a deep development stage, which is now reflected in the industry. Everyone is looking for a suitable and differentiated development path.
You can go to develop a special education program, or you can try a more modern and international education form, or you can form a small chain group in a certain area, do a good job in service and word of mouth, and make regional characteristics. Every company is seeking The development path of differentiation is precisely due to the deep promotion of industrial capital.
When it comes to the combination of education and capital, I have to learn from the development path of the cultural industry. In the past, the cultural industry was also very sensitive to the entry of capital. Until 2005, the 15th National Congress proposed to define the two attributes of cultural industry and cultural undertakings, and capital gradually entered the cultural industry. Since then, a number of cultural enterprises have been listed on the market. In 2009, Beijing Film Company went public, then the first game company went public, and the first Internet media company went public...
I think that education must also clearly distinguish between the education industry and the education cause, the part of the education industry, the capital is not allowed to enter, and the part of the education industry, capital can be entered. When the part of the business is separated from the part of the industry, the rules are formulated. After that, the governments, capitals and enterprises of the parties will play according to the rules of the game. Thus, this market will definitely enter a benign development.
Finally, the barriers to the development of an industry will always be broken from the outside, and education is no exception. I believe that the promotion of capital can gradually bring the education industry into an ideal state of sound development.
Source: Blue Whale
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