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Rock Huang: “‘Sunning Universal’ -- the most promising ‘dark horse’ in plastic surgery industry is coming!” The environment of plastic surgery industry is very complicated and changeable. People working in this environment must have great enthusiasm, persistent innovations, strong willpower and mental endurance. They not only need macro thought and strategic layout but also need to support front-line staffs and work straightly and permanently. Several years ago, the economy in China developed well and extremely quickly. However, the growth rate has been decelerating recently. More and more problems, which were accumulated during those years have been exposed. Competitions between different industries have been becoming more and more intense. The profit has been becoming less and less. Some industries have shown an obvious decline. Most small and medium-sized enterprises are struggling. While industries such as realty business, manufacturing industry, and IT industry are showing the unavoidable decline, plastic surgery industry is developing well. In 2015, the gross turnover was almost 1000 hundred million yuan, and maintain the growth rate at 30% CAGR (Compound Annual Growth Rate), which made many investors show appreciation. There have been many investment corporations such as Sequoia Capital, Matrix Partners, IDG, SAIF, Evergrande Group, Lancy Group, Suning Universal and Huapont Pharm entering plastic surgery market since 2015. Also, listed companies have been expanding quickly. Among all of them, Suning Universal Co., Ltd. Is the most arresting dark horse. PART ONE -- IMPORTANT INFORMATION Let us look at what Suning Universal has done first. At the beginning of 2015, Suning Universal determined the three most important directions of industry transition namely “Great Culture and Sports, Great Health and Great Finance”. Also, it started to reduce projects about realty business. In 2016, Suning Universal started health industry business quickly, efficiently and “generously”(Suning Universal spent a lot of money), which made people surprised. On 4th January 2016, the subsidiary corporation of Suning Universal Co., Ltd. -- Suning Universal Health Investment Development Co., Ltd. signed the “Framework Agreement” with the biggest healthcare group in South Korea -- ID Health Industry Group, Xiangxun Pu, and ID Plastic Surgery Hospital. Suning Universal will make more capital increase on South Korea ID Health Industry Group and plan to set up a joint venture company in China. The industrial distribution includes projects such as ID Plastic Surgery, cosmetics via hospital channel, stem cells, health monitoring, training and etc. On 3rd July 2016, Suning Universal published the restructuring plan announcing that it may buy 80% stake of Shanghai Guanghua Cosmetic Hospital for 2.08 hundred million yuan. On 15th July 2016, all the top management from Suning Universal went to Shanghai and held a great strategy conference. The chairman named Guiping Zhang said their main purpose in 2016 is to work hard on plastic surgery area and health industry area in order to develop on the “Great Health” area. At the conference, Suning Universal announced that it has signed cooperation agreements with South Korea ID Group and Gengmei App (更美APP). Suning Universal would spend 1.34 billion yuan on pursuing the most important company in plastic surgery industry -- Gengmei. The purpose is to make sure the marketing and selling can be done both in real life and on the internet. Therefore, it can get into the “Great Health” area. It spent 3.6 billion yuan on building up the partnership with South Korea ID Health Industry Group in China to make sure the underline selling go well. At the same time, they increase the money that is put into the plastic surgery fund up to 50 billion yuan and started their projects and investment in plastic surgery industry such as plastic surgery hospitals. On 18 July 2016, Suning Universal published another important thing -- the plastic surgery fund it has invested has bought several other shares of plastic surgery hospitals and clinics. The details would be explored as below. 1. Spending 145402.4 thousand yuan on Beijing Meiliancheng Plastic Surgery Hospital Co., Ltd.(investors: Saying Huang, Jinxiong Huang, and Guangbiao Huang). 2. Spending 28502 thousand yuan on Tangshan Meiliancheng Plastic Surgery Hospital Co., Ltd.(investors: Dexin Huang, Guoxian Yang, Hongda(in Beijing) hospital management Co., Ltd.) 3. Spending 23180.1 thousand yuan on Shijiazhuang Meiliancheng Plastic Surgery Hospital Co., Ltd.(investor: Beijing Wuzhou investment Co., Ltd.) 4. Spending 20955 thousand yuan on Wuxi Meiliancheng Plastic Surgery Hospital Co., Ltd. (investors: Qing Chen and etc.) 5. Spending 52000 thousand yuan (80% of the total shares )on Wuhan Hancheng Plastic Surgery Hospital Co., Ltd.(investors: Zhengqian Zhuo and etc.) 6. Spending 52000 thousand yuan on Kunming Hancheng Plastic Surgery Hospital Co., Ltd.(investors: Jiandong Huang and etc.) 7. Spending 4000 thousand yuan on Guangzhou Yanya Medical Hospital Co., Ltd.(investors: Haidong Fu and etc.) 8. Spending 1000 thousand yuan (80% of the total shares) on Shanghai Ganglong Traditional Chinese Medicine Hospital Co., Ltd. (Shanghai Ganghua Plastic Surgery Hospital Management Co., Ltd.)(investors: Haidong Fu and etc.) 9. Spending 1000 thousand yuan (80% of the total shares) on Shanghai Gubeiyueli Plastic Surgery Clinics Co., Ltd.(investors: Xiangming Zhou and etc.) 10. Spending 1000 thousand yuan (80% of the total shares) on Shanghai Yuemei Plastic Surgery Clinics Co., Ltd. (Shanghai Ganghua Plastic Surgery Hospital Management Co., Ltd.) 11. Spending less than 2.4 billion yuan (80% of the total shares) on Shanghai Ganghua Hospital Co., Ltd. (Shanghai Haipei Advertisement Co., Ltd.) The amount of the money spent in this “shopping” was close to 5.7 billion yuan. These hospitals are focusing on medical beauty, aesthetic surgery, cosmetic dentistry, cosmetic dermatology, beauty department of traditional Chinese medicine and plastic surgery. The vice president of Suning Sengming Jia has stated clearly that while national income is increasing continuously, the cost in medical market is accelerating, it is not surprising that the business in plastic surgery industry is getting heated and heated. What Suning is doing is also with an exception, too. PART TWO: CAME LATE BUT WON EVENTUALLY We can see Suning’ ambitions and great plans in plastic surgery industry by analyzing what it has done till now clearly. As a worker in plastic surgery industry, and the one who has been working with the managers from the companies that Suning bought, I have some opinions and predictions toward Suning’s plans. That’s the reason why I am writing this article, using this event (Suning’s purchase) as an example, to let more people such as employees in this industry and investors know more about the development of this industry. There are numerous talents who are better than me. I am here just stating some personal ideas, hoping that these ideas can inspire others. First of all, I strongly believe that there is no doubt what Suning has done this time would be recorded into the history of Chinese plastic surgery industry, whatever it is going to succeed or fail. This event had a power influence on the pattern that people have been using to invest in this industry, the way how brand operations work and how to connect the hospitals and investment companies. This event can be described as the most impressive one among all the investment events in this industry till now, including the event that Hengda acquired the biggest plastic surgery hospital Yuancheng in South Korea and spending a large amount of money on building “Hengda in Tianjing”, and GF Securities Capital to support it's listed A site plastic. It was even greater than venture capital company called Duolunfeng supported Yiermei to build up its company, and tried to expand and fight against hospitals from Pu system. This time, Suning did something different than before. It bought these hospitals and clinics from the original owners, which means it kept the original manage team as much as possible. Actually, I have already known that there were lots of investors discussing purchase with the hospitals, that I have been cooperating with. Among all of them, Suning was not the first one or the richest one but how could it “win” these hospitals? WHY? As far as I know, the processes of buying these hospitals were really short. The shortest one only lasted for two months. What Suning has shown (making decision decisively, pricing accurately, and so on) made other investors jealous. Acquiring companies is a very complicated process including learning about the companies at the first stage, making offers, counter-bid, discussing the details, drafting provision, signing contracts, share transferring and publishing the final announcement. This process is really hard, especially for the listed companies because there are too many unspoken rules, under the table deals, and it is very time-consuming and fussy. However, Suning did a great job this time. While making decisions, Suning was more decisive than others. While making offers, Suning tried to satisfy both itself and the original owners instead of only caring its own profit, which pulled the speed of the process up effectively. Therefore, Suning was much more efficient than others. Compare to Suning, Hengda (The Evergrande Group or the Evergrande Real Estate Group) was really inefficient even though Hengda has more money. It only did two things during this period ( 1. Acquiring Yuanheng in South Korea 2. Investing a hospital in Tianjing ). There has not been anything Hengda has done would make me wonder what Hengda will do in the future. What is worse, Hengda may fail in investing in plastic surgery industry like what it did while developing “Evergrande Spring” PART THREE: RESPECT AND FUSION As a collaborator and investor in plastic surgery industry, I have talked with the leaders who hold the capitals from all kinds of other industries. While communicating with them, I feel that they have some bias towards this industry, and their attitudes are arrogant. As a brand new industry that just came out about two decades years ago compare to other industries, the educational levels of the workers at the first stage are usually lower, and their bosses have numerous special and personal ideas. Instead of diplomas and certifications, the leaders care more about their workers’ experiences and the capabilities of applying theory in real life. They want the talents who can bring them visible economical benefits. However, the talents in the bosses’ minds may worth nothing in the investors’ minds. The investors think they can’t even understand the popular words on the internet. Well... What they haven’t realized is that this group of people is exactly the one who provides huge power to push the industry to develop, while the “experts” (such as managing experts, marketing experts, advertising experts and investing experts) are not good at applying the theories. Just one year ago, Hengda as one of the biggest (top three) real estate company with over one thousand hundred million yuan annual sales, wanted to “do something” in the medical industry area. Hengda hired lots of HR experts in order to get more talents, however, the results were not very good. Eventually, they still used their original team, and just tried to transfer, because the people they got were “useless and not suitable”. It seems that Hengda has misunderstood the situation and environment in plastic surgery industry, and so do other investors because they all think this industry in the wrong way. This industry is not easy at all! On the other hand, Suning showed its intelligence at this point. We can see that Suning showed its respect to the original teams, management ways, investors of the hospitals it acquired this time during the whole process. It showed what an excellent company should have -- endurance, patience, restraint and trying to make sure both sides can earn benefits. Is having a good beginning means there will be a “happy ending”? It is hard to tell. During the two decade years of development without a standard, there are too many unspoken rules and under table deals. However, things that involving listed companies should be “visible” so there will be tons of problems that can’t be avoided or solved by using the “normal methods”. For example, talents may go to private companies because of the lost from individual income tax in listed companies. The efficiency of dealing with public relation problems would decrease because under table deals would be not allowed. Marketing would be really hard too because the extremely high cost would not be realistic as before anymore. Suning showed its respect (especially when it kept 20% of the shares for the original shareholders). It has been generous and friendly. Compare to the heated issue these days (Baoneng got rid of the whole boards of directors), Suning is much smarter. First, it can make sure the original team would like to make effort for the future business. Also, it helps keep the good reputation for Suning itself so that it will develop better in the future. PART FOUR: BRAND AND STRATEGY On 15th strategy conference, Suning showed their new brand in plastic surgery industry called Suya for the first time. Suning has abundant market channels and high-quality resources. It is believed that it will pay lots of attention on Suya. It is advertising both online and in real life, which is good fro expanding the market and improving the influence of the brand. The leader of Suning has “controlled” some famous TV channels like “Dragon TV” so I believe that Suning has already got the plan in detail, even though it may make some mistakes. Throughout the progress of buying these companies, Suning got the all kinds of certifications for hospitals and clients in the north-east, east and south of China, making Suning get into the plastic surgery industry quickly. It is predicted that Suning may manage them and use them to make an “aircraft carrier” in this industry, and keep on till it finishes the progress of transforming to “Great Health”. However, it is not clear whether Suning is going to use single-brand strategy for “Suya” or multiple-brand strategy like “Procter & Gamble”. There haven’t been any announcements about its strategy yet. I still believe and hope that Suning will get better and better, in creating new ideas particularly in this industry, because it is so good at cross-border cooperation (with the film industry, celebrities, TV industry and so on). I have to emphasise it again, it doesn’t mean Suning will keep developing smoothly in the future. I am still pretty worried. Personally, I believe that as soon as you hold respect towards the original teams and the history of the companies you want to acquire, instead of being arrogant and rude because you are pretty wealthy, acquiring them would not be too hard. As for managing these 11 hospitals and keep them working well will not be as easy as just acquiring them. This is not what you can do by having some money and holding a “kind” heart. That is what I am worried about, and that is the reason why I am writing these articles. This one is ending here. In the next article, I will give out some suggestions and warns about the traps and problems that Suning may need to face in the future because I really appreciate this team and want to do some favor. There are too many unspoken rules and under table deals in this industry. In order to succeed, what you need is not only enthusiasm and innovations, but also great willpower and psychological endurance. What’s more, macro-thinking and strategy, the support of the first-line workers are necessary, too. To be honest, I am not good enough so I am just a deserter. I really appreciate Suning because of its money, endurance, enthusiasm and so on. I am here hoping that it will succeed and become the best company in plastic surgery industry sincerely, (Rock Huang 20 July 2016) The translator SH 2 Fedruary 2017
 新医频道·创刊执行主编：黄石头 扫一扫 关注“新医频道” ----只-为-新-兴-医-疗-发-声---- |
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