Positioning “Broken Wall Herbs”, Cao Jinghua achieves high compound growth and creates new Chinese medicines in the minds of users.
Targeting and Leading Strategy China’s Enterprise Practice Enlightenment 12 The average compound growth rate for the fifth consecutive year is over 70%. The dream of Cao Jinghua is to realize the modernization of Chinese medicine
In 2015, Hong Kong-listed company Zhongzhi Pharmaceutical (03737) and Trout cooperated. In its many businesses, the two sides selected the broken wall piece as the strategic direction of the whole company, renamed the broken wall piece as the “broken wall herb”, and decided to build it through the “Cao Jinghua” brand, representing the user’s mind. This brand new Chinese medicine class. The biggest difference in the value of this product is the eight words “better absorption, easy to take.”
Although the company’s largest business unit at the time was a chain pharmacy, the broken-wall herb business accounted for only 20% of the total business, but after determining its strategic positioning, 80% of the company’s resources were allocated to “Cao Jinghua Broken Wall Herbs”. “, launched a full impact on this wall.”
Since 2015, Caojinghua’s broken-wall herbs have maintained a compound annual growth rate of over 70%, which has caused great concern in the Chinese medicine industry. In 2018, the Zhongzhi Pharmaceutical Annual Report showed that the company’s total revenue and profit both increased by more than 20%, mainly due to the strong growth of Caojinghua. At present, Caojinghua’s broken-wall herb series products account for more than 70% of the market share of similar products.
All along, traditional Chinese medicine has the pain of uncontrollable quality, difficult standardization, unstable efficacy, inconvenient taking, and so on. As the landing point of the “Modernization of Traditional Chinese Medicine”, Caojinghua Broken Wall Herb has achieved a breakthrough in the standardization of traditional Chinese medicine. In November 2018, Zhongzhi Pharmaceutical declared the “Key Technology Research and Industrialization Application of Innovative Development of Traditional Chinese Medicine Broken Pieces” and won the first prize of Science and Technology awarded by the Chinese Medicine Association.
Teng Delong, global president of Trout Partners, said: “If companies can’t lead in one area, they can only make money, and companies will soon fall into ambush. You can’t build a unique presence in this industry. It is also impossible to bring this industry to a higher level.” This should be the greatest inspiration for the story of Cao Jinghua.
Here are the videos:
Deng Delong, global president of Trout Partners, commented:
The founder of Zhongzhi Pharmaceutical, Mr. Lai Zhilu, was born in a family of Chinese medicine, and the taste of Chinese medicine is flowing in his blood. The strength of positioning for Cao Jinghua lies in the strategic direction of “broken wall herb”, which takes on the responsibility of modernizing Chinese medicine and reviving traditional Chinese medicine, thus activating the mission and vitality of the entire enterprise and employees. The traditional Chinese medicine artillery uniform is not convenient to use, and it is difficult to adapt to the modern lifestyle. However, the grass-breaking herb of Caojinghua is more convenient to take and absorb better. It can continue along this direction and continue with the times. Innovation, update iterations.
Like other excellent small and medium-sized enterprises, Cao Jinghua also faced a situation in which all kinds of opportunities were in front of him and everything could be earned. However, if you can’t lead in a certain field, just make a little money, the company will soon fall into an ambush, you can’t build a unique existence in this industry, and you can’t bring this industry to the more High realm. It is the greatest opportunity and strategic choice for Cao Jinghua to make the broken wall herb a model and representative of the modernization of traditional Chinese medicine.
In fact, modern Chinese medicine is one of the industries that China is most likely to have international competitiveness. In the pharmaceutical industry, it will be difficult to compete with companies such as Roche, Pfizer and Merck. However, if you can establish international competitiveness in the Chinese medicine industry, you can certainly have a group of Chinese companies. Liquor, rice wine, tea, Chinese medicine, Chinese food, etc. These industries with Chinese cultural elements will certainly be able to produce a large number of outstanding enterprises, and will certainly make a unique contribution to all mankind. Therefore, the struggle of Cao Jinghua is to a certain extent the struggle of China!
Principal Content Officer Li Yang Comments:
Even in an extremely modern history, in the modern business world, Chinese herbal medicines are still a category that has not been standardized. Without standardization, it means that it is difficult to do large-scale. Therefore, finding a point of innovation and trying to standardize it is the key to breaking.
Under the guidance of the special theory of special labor, Zhongzhi Pharmaceutical chose the strategic direction of “broken herb”, and the revenue of the broken-wall herb business accounted for only 20% of the group’s income. Zhongzhi still withstood the internal controversy and injected 70% of the resources into the broken-wall herb business. The final product was the “Cao Jinghua” series. Behind the product is the entire upgrade from R&D, brand to production. On the level of looking for “compass”, Cao Jinghua is undoubtedly a successful case.
Video text recording
Lai Zhi, Chairman of Zhongzhi Pharmaceutical Group:
Before working with Trout, we have chain pharmacies, proprietary Chinese medicines, and broken-wall herbs. The direction is not clear. In which direction we can make some money, we have allocated resources.
For example, at the time we wanted to make a “Shenzhen oral liquid”. Mr. Deng Delong said, “If you do this.If you have a product, you don’t have to do it, and there is no value at all. However, in terms of the category of broken wall herbs, it can do 10 billion or 100 billion.
After cooperating with Trout in 2015, Zhongzhi Pharmaceutical has allocated more than 80% of its resources to the product of Caojinghua Broken Wall Herb. At present, Cao Jinghua has a very high position in Zhongzhi Pharmaceutical. Almost all employees have the soul of Cao Jinghua.
What is the soul of Cao Jinghua? “To bring value to consumers and create value for society.”
Why did you choose Caojinghua as the core business of the company?
Lai Zhi, Chairman of Zhongzhi Pharmaceutical Group:
It turns out that we have been doing traditional Chinese medicine, and the standard of Chinese medicine decoction pieces has not been standardized. In 2003, we began to establish this topic and conduct research on broken wall pieces. From 2003 to the present, I have described it as being hard to wear every day. It is very difficult.
It should be said that the Trout team gave us a strategy to sort out the whole enterprise and identified “Cao Jinghua Broken Herbs” as the core business of the company, centering on the “Broken Herbs, Better Absorption, and Convenient Taking”. To expand our various resource configurations.
To ensure the quality of Caojinghua, you must start from the source. Where is the authentic medicinal material of our products, the seeds of the local medicinal herbs, the local water, soil, etc. we must study. For example, the planting process needs to consider the season, when is the most suitable, the pesticide can not be used in the planting process, all kinds of safety indicators, we have real-time monitoring, the harvest should also consider the season, the August harvest is still in June, This time difference (the impact) is to be studied.
Be careful when you plant, and pay attention when you receive it. How to process the medicinal materials, how to break the wall, and then form it into granules, etc., all must be studied, the whole process of the entire industry chain needs to be controlled.
“To make products speak for themselves”, that is, regardless of technology, research and development, branding, production, etc., including the entire organization, we must be ahead.
Now every year, Caojinghua has a 70%-80% increase, and the company’s benefits are also very good. The annual profit also increases by 20%-30%.
What is the principle behind growth? It is our strategic positioning around the enterprise, creating value for the society and consumers, making products that consumers are willing to pay, and the society recognizes our brand. Then, in the process of creating value, we will make some money by the way.
We have completed the registration of natural medicines for this NPN (Natural Product Number) in Canada this year, which is the result of our many years. (I hope) to make Cao Jinghua truly international.
Cao Jinghua is the modernization of traditional Chinese medicine, allowing young people to use Chinese medicine and fall in love with Chinese medicine, so that they can feel the Chinese herbal medicine.The value of this.
How do you feel when you position your practice
Lai Zhi, Chairman of Zhongzhi Pharmaceutical Group:
We have to decide that the process of working with Trout is the most difficult. To pay such a large fee, we must not only convince ourselves, but also persuade the board of directors and employees of our company to make changes throughout the organization. At least fifteen meetings were held before we decided to cooperate with Trout.
Lai Yingfeng, Vice President of Zhongzhi Pharmaceutical Group:
We were actually excluded from this cooperation except for the chairman of the board, so we did not take it (Cao Jinghua) as an intention of the strategy to understand it.
The opinions of Chinese medicine and chain pharmacies are very large. Our chain pharmacy business accounted for 60% of the entire group at that time, and then our grass Jinghua business accounted for 20% at that time. All business units give way to it, and all the learning opportunities and resource allocations are given to Grass Crystal.
As we have fully focused on the grass-breaking herbs of Caojinghua, Caojinghua has achieved rapid growth in four years and now accounts for about 55% of the entire group’s business. What’s more important is the potential energy it brings, and the recognition of our company in the society. This kind of cognition grows with Cao Jinghua, and all our employees are very respected by the society.
Lai Zhi, Chairman of Zhongzhi Pharmaceutical Group:
The more people become more confident, the more they feel the importance of strategy and the importance of positioning. The more you do, the more you have the mission, the easier it is to say, but the more clear you are.
Targeting is the compass of our business. It allows us to find external opportunities, and then allocate resources to a single opportunity point, to pursue this opportunity, to produce results, and ultimately to make our entire organization have a soul and a mission.
What is the relationship with Trout’s “Entrepreneurship Partner”?
Lai Zhi, Chairman of Zhongzhi Pharmaceutical Group:
Trout can help us see the external environment and give us an open view. I think our company is completely transformed.
All of our (enterprise and Trout) communication is built around creating value. Can we create value for the channel? Can we create value for consumers? Can we create value for society?
I think Deng’s concept is very positive and the ideological realm is very high. He has brought us a high level of ideological realm for the society, the industrial chain, the contribution to the economy, and how to create value for the society. At the same time, he has fallen to the ground.
The same is true of Trout’s entire project team. If we have a strategy to do something, the Trout team will seamlessly dock for 24 hours, and there is no time and space concept anytime, anywhere. This is almost the case.
madeHow do you see positioning for the second generation?
Lai Yingfeng, Vice President of Zhongzhi Pharmaceutical Group:
In fact, my personality is relatively soft, and in many decisions, I am very passive and not confident. However, during the process of learning and positioning, I have precipitated a lot of thoughts. Therefore, when I was in charge of the new section, I thought it was a very big challenge, but now when I really make decisions or take responsibility, I will naturally It is easy to make the right choice, which is the biggest help given by positioning.
Location will guide me, free from outside interference, see the direction, focus on what I want to do, and iterate over and keep on.
In-depth understanding of my father is based on Deng. I usually understand that my father is relatively shallow, I know that he is very busy, I know that the company is very big, nothing more. However, after meeting with General Deng, including my father’s meeting with General Deng, I learned that Cao Jinghua is great and I know how great my father is.
Deng is always my enlightenment teacher. He made me recognize the weight of the word “entrepreneur” and let me see the path of inheritance. Let me see the path of our three brothers becoming entrepreneurs. Like Tang Yunchuan, he is my head coach. He is the head coach of the three brothers and beat us every day.
Blessings for the 50th anniversary of the birth of positioning theory
Lai Yingfeng, Vice President of Zhongzhi Pharmaceutical Group:
Blessing Trout and Cao Jinghua can work together for the next 50 years.
Lai Zhi, Chairman of Zhongzhi Pharmaceutical Group:
Blessing all of China and even the world, it is possible to apply positioning theory widely, which is a greater contribution to everyone.