(Continued)
The Fourth One: the Difficult Level of the Connection between the Marketing Plans and the Methods of Spreading the Brand
This part may be the part that Suning feels most confident on since this is their biggest strength.
However, I still want to give some advice.
In many cases, the better an expert is in a specific area, the easier the inertial thinking way the expert get. If an expert has strong inertial thinking way, he or she may ignore the importances of the rules and traits of the development of the original industry. I don’t see and advantages at this point. Even more, this might be one of the most serious and biggest traps.
The reason why I am saying this is not that I don’t think Suning is bad at marketing, selling, dealing with brands and advertising. On the contrary, I feel that Suning is extremely good at these things. Just because Suning is a super expert, it is easily be trapped, for example, a very successful template is used in exactly the same way, how can't it be a failure? In fact, except that crossing industries is a huge problem, the successful methods that were used several years ago may not be useful now since the world is changing very quickly, especially the advertisement law.
As far as I know, almost all the plastic surgery businesses in China is advertising only in their local area, except Yixing that uses the national advertisement strategy.
Why?
Lots of experiences have improved that using this way to advertise is very effective and efficient even though it looks easy because markets like the things that are suitable to the whole environment (such as plans that are made depend on the real situation of the market).
I am thinking the question that whether Suning is going to use the national strategy or the one that concerns about the local situation.
Personally, I think Suning has already got its idea. Still, I want to give some suggestions since Hengda has failed once even though it spent lots of money because it just spread its brand but didn't do well on marketing. Jokes such as “The bottled water of Hengda smells like dirt” is pulling down the impression of this brand.
I believe that Suning wouldn’t fail at the same point but marketing and advertising are really hard. However, some difficulties are unavoidable. I am here just warn that this part should be paid high attention to.
The Fifth One: Advertising or Marketing, Which is more important?
This is another tough question for Suning. Nowadays, more plastic surgery enterprises are paying more attention to marketing than spreading the brand. These hospitals or clinics such as Huawei (that conceded more on marketing than advertising in the early stages.) believe that they need to build up a good hospitals or clinics first. Now, Huawei is a famous brand now.
Till now, in China, there are two famous investment companies who concern more about advertising than marketing. They are Yummier in the early stages and Yixing，especially Yixing who makes the brand be known very widely by using the national advertising strategy during five years. There is no doubt that it was a very successful template. I am not here talking about the problems whether Yixing has earned money or not, I am just talking about the way it used to advertise. As for Yummier in the early stages, at the beginning, it just spread its brand in the north. Also, it built up the hospitals first then focused on advertising later. Yiermei is another template that pays more attention to advertising than marketing.
If I am not wrong, this decision is a really deep trap that Suning will fall into for sure. Why am I so sure?
“I saw what happened yesterday, I know what is going to happen tomorrow.”
According to the successful experiences of Suning in terms of mediated, in its mind, there is no doubt that advertising is the first priority. That is what I would do if I were at that position.
However, the leaders in Suning are not expert in marketing in this industry. They know very little about the plastic surgery projects, marketing plans and the thinking way of costumes in this industry. Even though they want to pay more attention to marketing, it would be extremely hard for them to make effective plans. Therefore, I am certain that they will be trapped by this decision.
In the future, even though they would like to be modest and study how the market in this industry works, it would be very hard to know exactly the unspoken rules in this industry and make an effective and national marketing plans.
Off course, different branches can make different marketing plans but who can the main company manage all these branches?
If they are lucky enough to hire an excellent marketing expert, they can make more and more money but if they can’t or the plans they the excellent marketing expert makes is not suitable, their profits will decline all the way down.
I always believe that “In plastic surgery industry, there is nothing wrong to pay attention to adverting but there would be lots of problems if the leaders don’t pay attention to marketing.”
As for how to pay more attention to marketing, that is a more difficult question.
The proper way is to make different plans for different areas. Make every single plan by depending on the real situation. In this industry, the template may not be very helpful because everything is so flexible. Tuning can’t avoid his trap but I just want to notice them in advance so that they can reduce their loss as much as possible.
The Sixth One: Marketing and the Quality of Medical Treatment, How to deal with the conflicts between them and make them together?
This is even a more difficult decision. Even for me who has worked in this industry for 20 years, it is really hard.
In this industry, we always say that there is two red (warning) lines that can’t be gone over. The first one is political red line involving the projects that the health authorities have said that are not allowed to do (for example, there are numerous rules for the materials). As a listed company, I believe that Suning can handle this.
Actually, while building up a plastic surgery hospital, dealing with the public relation under the unspoken rules is really hard, too. Well… As a listed company, I believe that Suning can deal with it easily, too.
However, we always say that it is easier to deal with the difficult problems that are obvious and really hard but it is harder to deal with the problems that seem easy and tiny.
I believe that Suning has already figured out how to deal with the higher level of the public relation but it may not ready to deal with all kinds of inspections from local institutions. If they can’t deal with these relations well, it will lower the work efficiency, even face the risk of being the warning or being forced to shut down for a while. The reasons are clear. In this industry, there are some gray areas.
The second red line is the safety of the medical treatment.
For the managers in Suning, they are the “outside people” who are managing the “inside people” (the experienced staff in this industry.)
You can’t analyze how much experience in the safety of medical treatment your president has and whether your president is responsible enough or not easily.
Some people only say something without doing anything but others may only do thins without opening their mouths. Therefore, Suning must be very careful while hiring employees. The process in a listed company is very slow because listed companies are very complicated and big. Therefore, emergencies is a big trouble.
Some people may suggest finding the best presidents among all the presidents in public hospitals to make sure everything moves smoothly.
However, these hospitals may be too inflexible, which makes lots of projects at a very embarrassing position. (They can’t make a decision that whether they are going to the projects in the gray areas.) Therefore, the talents would leave and the company will fail.
It is really hard to keep the balance.
As a big-scale listed company, the management of this company is institutionalized. However, actually, lots of the projects in plastic surgery industry are innovative. Academically, there are lots of conflicts about that whether they can be applied or not. It is easy to cause medical accidents such as disfigurement. What is worse, they would be harmful to the brand of this hospital.
Plastic surgery projects are not the projects that people have to consume on such as food or water, in most cases, customers are attracted to spend money on marketing plans. As a high company, especially a listed company, it is very important to take care of the news of the brand. The leaders need to avoid the negative impacts of their brand as much as possible. Unfortunately, on the other hand, these actions make making plans and decisions very hard.
Why the smaller hospitals and clinics in this industries can always get more profit? Because “the smaller the boats are, the more easily the boat can turn around”. In another word, they are more flexible.
The companies that Suning has bought have been using their own marketing teams. They have been using their own plans, which is very effective, efficient and flexible. Therefore, they can earn more money.
However, when they are bought by Suning, it would be very hard for them to make decisions and plans freely. Also, it would be hard for Suning to manage and control them.
The conflicts between marketing and the safety of medical treatment are very serious.
A little mistake would lead to the serious medical accident. Ever more, if it is published by media, it would turn to a social event, which will be harmful to the brand, even the company. The company may need to shut down.
The Seventh One: the Problems of the High cost and the Decline of the Profit
It is known that the profit is easy to decline since the cost listed companies pay for is usually very high.
I am here illustrating this phenomenon by using some data. I have done some research. The cost will increase by at least 30% in listed companies when individual income tax, recipe tax and the tax for earning a profit. Plastic surgery companies may be up to 50%, which makes the profit decrees.
Another problem is that in the past, plastic surgery companies use lots of advertisement to attract people. Now, if you want to save the cost of advertising, your profit would only get less and less.
Usually, there is a maximum limit on advertising cost in listed company at about 8% or 10%.
As far as I know, in China, most plastic surgery companies pay more than 30% of the cost of advertising. Companies that can control the cost less than 25% are very successful.
Advertising or not? How much should they cost? Is it possible to earn the money back?
There are lots of traps inside these questions, or in another word, decisions.
If we spend more money on advertising, can we earn more money? Are the marketing staff good enough to catch the advertising staff’s footstep?
If we spend less money to save the cost, there will be less and less new customers, which will make the profit decline.
These relations are very complicated and combined to each other, which is also the conflict between cost and profit. That’s one of the most important questions Suning needs to focus on in the future.
The Eighth One: the Strategy of Talents.
There is no doubt that the strategy of talents is significant, too. It is not only important but also necessary.
In the past, the strategy of talents focused more on the abilities of individuals. For example, if someone is really good at marketing and selling, he or she would get much higher salary than others. The companies use all kinds of benefits to keep them.
However, this method is not suitable for big-scale companies, especially listed companies like Suning.
First, the old way focused too much on marketing and selling, which ignored the attitude and thoughts towards the brand of people. For a listed company, overlooking the negative effect on brand is “lethal”.
In addition, listed companies can’t avoid some tax, which makes the salary of these high-paid employees “lost a large number of money”. Therefore, the talents would choose to leave.
In a word, the old way to keep excellent talents is not suitable for Suning.
Many people may think about share option. It is true that lots of listed companies are using share option to encourage their high-level employees.
However, this industry is so special.
In this industry, not only president, doctors, the leader of finance and HR are needed to be encouraged, but also lots of first-line staff like online marketing talents, planning talents, consult talents and etc. Each of them is very important. For example, losing one of them can lose over one million yuan in only one month.
Therefore, the method managing high-skilled staff in other industries may not work effectively in this industry. Also, another problem is that in this industry, the talents “flow” quickly and flexibly, which makes this method even more impossible.
Additionally, even though in the same position, different people will create different value, the share option will be extremely different, too. However, making each single plan for share option for every single person is held to achieve.
Therefore, these conflicts can’t be solved easily in the first place.
The normal encouragement rules in listed companies may not be suitable for the companies in plastic surgery industry. The whole employees share option encouragement system is too hard to learn.
I am here to warn Suning that the effort and effects of individuals (individualistic heroism) are still very powerful and important.
This phenomenon worthy to consider more about.
If Suning can figure out the way to solve this problem, I can say that Suning has succeeded halfway. Or, whatever they do, how much they cost, the future projects would only be harder and harder because this industry relies on talents a lot.
The Ninth One: the Problems about Building A Regular Standard System
It is difficult to build a standard system, we can even say that is a wish.
Big-scale companies can’t “turn around easily like small boats”, so they are more hurry on making a macroscopical and standardized pattern, which would help expand their businesses in the future.
What pity is that in other industry, it may be possible but not in plastic surgery industry.
Some people say that we can know what this industry would be like tomorrow by analyzing what this industry likes like in other western countries today.
I don’t think so.
By researching the information about the plastic surgery enterprises in western countries, we know that most of them can only do some specific things and they have good experts in a small and specific area. There are barely enterprises which can cover all kinds of surgery, treatment, medicine.
There haven’t any “big event” like what Suning has done this time — buying 11 hospitals and clinics at once.
Why?
The reason is that in this industry, it is rarely possible to make things standardized and Datamation. (Except several projects like Q-YAG) Even slight cosmetic can’t be standardized. A little mistake would lead to vascular blockage or nervous necrosis. For example, the eyelid is very hard to get recovered if it is hurt in double-eyelid surgery. Big surgeries such as breast implants and bone-shaving operations are even harder to be standardized.
In this industry, the doctors make different plans depending on different people’s physical conditions, their own experiences and their feelings.
Some people ask me whether Chines plastic surgery industry would go back the “root” like the one in western countries to focus on specific areas.
According to the characteristics of Chinese customers, I think both wide-covered big hospitals and small but specific clinics would exist. The mid-scale ones may not survive in the competitions. (I need to write another article for this task so I am not explaining the reasons here.)
End.
I just randomly wrote down these words while holding my passion to this industry and some experiences because I don’t have enough time. I am really happy to see what Suning has done. I am here showing my greatest admiration and encouragement to Suning.
The last article talks more about my happiness and encouragement.
This one talks more about my worries and warnings.
I hope Suning can save some time and money by preparing to avoid these 9 traps, and move more smoothly in the future.
I drop my pen here because my time doesn’t allow me to do too much and if there are some mistakes or errors, I would like to add by writing other articles in the future.
It is said that “China is so unlucky because it just catches up the very last bus in Industrial Age but it is lucky enough to catch up the easiest bus in Internet Age”. China is really good at the internet now. There are even some companies whose development speed is faster than the companies in the USA, such as BAT.
The Chinese plastic surgery market nowadays is like the first bus in Internet Age, which means there are all kinds of challenges and opportunities.
Suning has become the “aircraft carrier” in Chinese plastic surgery industry and has the listed company background. What they need to consider about next is that how to “drive this aircraft carrier” successfully.
(Advance notice for next article: when Suning comes into plastic surgery market, what should the old big-scale company do? How can the mid-and-small-scale enterprises react? Do they need to ask the capitals for help? Or keep doing what they have been doing? Or corporate with other groups in the industry? Whatever they do, there is no doubt that when the listed companies come into this industry, a brand new age has started at the same time.)
(Rock Huang 2016)
The translator
SH
6 Fedruary 2017
新医频道·创刊执行主编：黄石头
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