The essence of Li Yanhong’s speech at the Securities and Futures Commission： The Internet is an improvement, not a subversive revolution.
Li Yanhong, founder, chairman and CEO (CEO) of Baidu Company
The Paper (www.thepaper.cn) learned that on the morning of April 24th, Li Yanhong, founder, chairman and CEO of Baidu Company, was invited to give a speech at the CSRC. Prior to this, on February 10th, Ma Yun, Chairman of Alibaba’s Board of Directors, also gave a speech at the CSRC. At that time, the report was the first lecture in a series of lectures on frontier issues sponsored by the Innovation Business Supervision Department of the CSRC. The following is a quick reading of the essence of Li Yanhong’s speech at the CSRC:
Baidu hopes to return to domestic listing.
This year is the 10th year of Baidu’s listing. We listed on NASDAQ on August 5th, 2005. Many people have the impression that the stock rose by more than 350% on the day of listing, and many investors were very happy. When we went public, our market value was 800 million dollars. Today, 10 years later, it is close to 80 billion dollars, so it is 100 times the return in 10 years.
In the past ten years, Baidu’s reputation on Wall Street is still good. Of course, I have also expressed on various occasions that I hope that Baidu will have the opportunity to come back, go public in China, or benefit China investors in some other way. Because our market is in China, users are in China and customers are in China, we also hope that our shareholders and investors can be in China.
Gold Venture Portfolio = Baidu Technology+Tencent Products+Ali Operation
Compared with companies such as Ali and Tencent, the main feature of Baidu is that technology is something that we attach more importance to and are better at. As we all know, the entrepreneurial craze is very hot now. There are various VCs stationed in the coffee shop next to our building for a long time, talking with our employees there every day, trying to "fool" them out and start a business.
What is a golden venture portfolio? It is a person who is engaged in technology in Baidu, plus a person who is engaged in products in Tencent, plus a person who is engaged in operations in Ali. It is the easiest for such a person to get venture capital.
China’s logistics efficiency is low, so technology can be used to improve efficiency.
I saw a figure that the overall logistics in our country is actually very inefficient, and the logistics cost accounts for about 17% of China’s GDP. More than 40% of the trucks we run on the highway are empty. They are available from Beijing to Shanghai, but they are out of stock when they return from Shanghai, but there are still costs.
How to achieve refined operation? How to realize scientific scheduling? How can we make all the trucks have goods to pull?
People in Beijing may often see people wearing Baidu takeaway clothes on the street, that is, knights. In fact, these seemingly hard-working jobs are actually not low in technical content. For example, I can tell you where to stay at 11: 00 a.m., which order to pick up first, which order to pick up later, which knight to pick up this order, and which orders can be merged together … These are very complicated calculations, and when the scale is large enough, these efficiency improvements will lead you to become more and more competitive.
I don’t have to sell Baidu shares for the next three to five years.
In 2013, I made up my mind to say that we should transform from PC Internet to mobile Internet. We have to pay a price for this transformation, and this price is not small. Before the transformation, our operating profit rate was 53%. Two years later, when the transformation was completed, our operating profit rate dropped to 29%.
The older the company, the more afraid it is to make such a decision. Because its decision makers are often not founders, but tend to be professional managers to be the CEO of the company. These people may leave after five years or even a shorter time. He worked for a year, and once the profit rate dropped by five or ten points, the board of directors fired him.
As a founder, I think I will still be in this company in five or ten years. Even if I don’t work in the front line, my biggest interest is still the long-term interest of the company. I don’t have to sell Baidu shares in the next quarter, or in the next three to five years.
The mobile Internet is a gradual improvement, not a subversive revolution.
Speech scene
Baidu’s current revenue from mobile phones also exceeds that of PCs. But this success does not mean that we are safe. The next thing we should consider every day is, although everyone is used to searching on mobile phones, is it still so important? Will search become less important with the development of mobile Internet? To raise this issue to a higher level is the change from PC Internet to mobile Internet. Is it a qualitative change or a quantitative change? Is it revolution or improvement?
My answer is: it is an evolution, not a revolution. We see that today’s Internet companies, the vast majority of the largest Internet companies have been produced in the PC era, and they have already made corresponding scales in the PC era, and then they will further move the original products to the Internet. But even if it is a gradual change and improvement, as I just said, we still need to pay a great price, and it will take a long time to realize the transformation.
An Internet company is at the forefront of the wave of technological revolution, and it is so painful and costly to make a slight turn and change direction, so it is really more difficult for traditional industries.
Traditional industries should make up their minds to pay the price to embrace the Internet.
In the past two years, we have seen that no matter what industry people are engaged in, they have really begun to seriously think about what I do has to do with the Internet, how can I embrace the Internet and how to do things by the Internet.
Including our government. In this year’s government work report, the Internet, cloud computing, big data, internet finance and so on have been mentioned countless times, as well as the "internet plus". When the Internet is combined with any traditional industry, there will be many opportunities.
I also see that the overall macro situation in the past two years is very beneficial to both Internet companies and traditional enterprises. Although the downward pressure on the economy is relatively great, there are more opportunities than difficulties if we can really study and make great determination to embrace the Internet.
China’s traditional media and retail industry are not determined enough to embrace the Internet.
What industries have the Internet subverted? A typical example is the media. Now the internet has become our main source of information, not TV, newspapers, magazines and so on. Last year, Zhang Ruimin of Haier Company also said that Haier would not put advertisements in newspapers and magazines in the future. This is an obvious sign that the media has indeed undergone a qualitative change. And our traditional media, in fact, is not fast enough and resolute enough to embrace the Internet. So now their influence is declining and their market share has been greatly affected.
The second industry that has almost been subverted is the retail industry. When we go to offline physical retail stores, we will find that there are very few customers, but e-commerce is booming and developing very fast. At present, the proportion of online retail in China and the United States is almost the same, but the annual growth rate of online retail in China is 50%, and that in the United States is 15%. Therefore, we can see that the impact on the retail industry in China in the future is far greater than that on the retail industry in the United States.
Artificial intelligence will bring convenience to human life.
The popular Kingsman is a little worried about the meaning of artificial intelligence technology. The characters in the movie can control people’s emotions through mobile phone chips. In the industry, founders of technology companies such as Bill Gates of Microsoft and elon musk of Tesla have publicly reminded people to pay attention to the dark side that artificial intelligence may bring. My position is more optimistic. At present, artificial intelligence brings us more convenience and efficiency, and it will always be like this in the foreseeable future.
Working in the CSRC, you will often check the information of various companies, and you should be very familiar with search engines and very dependent on them. But we think there is a more exciting possibility in the future. Baidu in the past can tell you how many dollars 108,000 yen is equal to and what the weather will be like tomorrow. Now and in the future, Baidu can meet more needs, such as which airport I am going to, and set it for me at 4 pm; At 8: 30 in the evening, I want to watch Speed and furious 7, and I want a seat in the fifth row. Book it for me. I will go on a business trip the day after tomorrow and what hotel I will stay in, all of which can be done. It can understand your words and it can do it.