“Support platform companies in playing a leading role in driving development, creating jobs, and competing on the global stage.”

This message from the Central Economic Work Conference has drawn considerable attention.

At the meeting, the General Secretary strongly backed private enterprises: “I have always supported private enterprises, and I have worked in regions where the private economy is relatively well-developed.”

When you think of the platform economy and private enterprises, who comes to mind?

Sure enough, the day after the meeting concluded, Yi Lianhong, Secretary of the Zhejiang Provincial Party Committee, immediately visited Alibaba for an inspection.

The significance of this “signal” is quite clear.

Putting oneself in others’ shoes

Over the past three years of the pandemic, private enterprises have truly faced immense challenges.

Access to financing has been difficult, and so has gaining entry into certain industries. Some government agencies and state-owned enterprises have also been cautious when dealing with private enterprises, hesitant to offer full support.

Given the prevailing environment, companies not only hesitate to invest but also dare not innovate.

Whether it’s interest rate cuts or tax reductions, whenever favorable policies are introduced, entrepreneurs always wait and see for a while, worried that rushing to invest further might result in losing everything.

First, there was Luo Yonghao, who accumulated a massive debt of 600 million yuan; then, New Oriental saw its market value evaporate by over 200 billion yuan.

Later, they pivoted to live-streamed e-commerce and found a new lease on life.

Luo Yonghao has gradually paid off his debts, and New Oriental has frequently gone viral with its “bilingual live-streaming sales,” successfully pivoting to a new business model.

This is the value of platform companies.

E-commerce platforms, mobile payment platforms, social media platforms... These are the shining achievements of China’s internet economy and, to date, the most successful examples of “new infrastructure.”

By creating jobs, driving consumption, and generating tax revenue, platform companies have provided powerful momentum for economic and social development.

Moreover, they are highly innovative.

In 2021, Alibaba and Tencent invested 57.8 billion yuan and 51.9 billion yuan, respectively, in research and development. The self-innovation of platform companies has significantly reduced sales and communication costs for the manufacturing sector and small and medium-sized enterprises, indirectly boosting labor productivity.

In 2021, the Central Economic Work Conference proposed:

“Set ‘traffic lights’ for capital, strengthen effective regulation of capital in accordance with the law, and prevent the unchecked growth of capital.”

This year, however, the stance toward capital and platform companies has shifted from effective regulation to supporting their full potential.

This signifies that the national regulatory framework has matured, the “traffic lights” have been clearly defined, and the conditions are now in place to stimulate vitality within this framework.

The potential of private enterprises is limitless, and the revolution of the platform economy is far from over.

As long as platform companies are treated fairly, more outstanding platform companies—even better than Alibaba, Tencent, and JD.com—will surely emerge.

As long as the private sector is treated with respect, more entrepreneurs will emerge, seizing opportunities amid challenges and forging new paths.

As Professor Yao Yang, Dean of the National School of Development at Peking University, stated:

“This meeting emphasized the ‘two unwavering commitments,’ which will play a crucial role in the development of the platform economy, as large private enterprises are the backbone of this sector.”

Putting themselves in others’ shoes, Chinese entrepreneurs will certainly not let down this era, which demands that they strive and fight harder—not retreat or shy away.

Show Their True Colors

2023 will be a golden opportunity for the development of private enterprises.

The greatest shackles hindering national development are being lifted, people’s living standards are recovering, and policies are shifting to prioritize economic development.

In the fields of consumption and investment, private enterprises have vast room for growth.

For instance, as emphasized by the strategy to expand domestic demand, traditional consumption (such as clothing, food, housing, and transportation), service-based consumption (such as cultural tourism), and new forms of consumption (such as the sharing economy) will all gradually recover with the revival of public consumer confidence and market expectations, driven by policy support.

Relevant enterprises must also plan their site selection early, as expanding production capacity cannot be achieved overnight.

From a single pill to a whole car, there is an entire industrial chain behind them, involving hundreds or even thousands of enterprises.

A change in one part affects the whole.

To give a rather extreme example:

To alleviate the supply shortage of ibuprofen, many companies have joined the ranks of emergency production.

It takes a factory 30 days to produce 400 tons of active pharmaceutical ingredients (APIs). Selling these 400 tons of APIs to pharmaceutical companies could yield approximately 400 million ibuprofen tablets. However, even if a pharmaceutical company has a production capacity in the tens of millions, it would still take at least 10 days to manufacture them.

On the demand side, consuming 400 million ibuprofen tablets a day is no problem in China right now.

This means that what the manufacturers spent a month and a half producing can be consumed in a single day—they simply cannot keep up.

Over the past two years, the new energy vehicle and semiconductor industries have faced the same dilemma: surging demand and insufficient production capacity, leaving them powerless to capitalize on the booming market.

Only by responding swiftly to policy and market shifts and positioning oneself in advance can one hope to capture the market at the optimal moment. Whoever assesses the situation more accurately and reacts faster will emerge victorious.

Right now, the signals are crystal clear.

Government and Business in Unison

Interestingly, within an industrial chain, the segment that is hardest to scale up is precisely the most profitable one.

Take the new energy vehicle sector as an example.

For segments like battery manufacturing and vehicle assembly, as long as there is capital, talent is not an issue, nor is technology.

Consequently, competition in these sectors is extremely fierce. Fierce competition means:

1. Profits are squeezed to the bone, making it difficult to turn a profit;

2. Technological iteration accelerates, making it easier to produce innovative results.

So, which stage is the most difficult to scale up?

Lithium mining.

The distribution of lithium deposits is entirely determined by nature. No matter how much money or technology you have, you cannot create a lithium deposit out of thin air.

Therefore, for the next few decades, owning a lithium mine will be a money-maker—and a big one at that. As long as new energy vehicle manufacturers want to expand production, they’ll have no choice but to pay up.

Many domestic automakers are also rushing overseas to secure mining rights, attempting to recoup lost profits from the upstream sector.

This creates a contradiction:

The most profitable segments are difficult to innovate in; conversely, the segments most capable of producing innovative results are not profitable.

Yes, private enterprises will always face challenges.

From major industry-wide bottlenecks that are hard to break through to minor hurdles like business licenses that remain unobtainable no matter how many times you run around trying to get them.

These are all tests for local governments.

Only by approaching these challenges with dedication and empathy can local governments restore entrepreneurs’ confidence and ensure that the positive signals sent by the central government are truly put into practice.

Why is the private economy so developed in Guangdong, Jiangsu, and Zhejiang?

It is precisely because the government has adopted a humble and service-oriented stance. Although they do not explicitly tout the concept of building a “service-oriented government,” their actions have long made them the “servants” of enterprises.

For private enterprises, the provincial party secretary’s visit to Alibaba sends a very important signal.

However, it is clearly unrealistic to expect that a single gesture by a provincial party secretary could instantly raise entrepreneurs’ expectations and stir their passion.

Restoring confidence is a difficult process; entrepreneurs need more signals.

Nevertheless, the Chinese economy is already on a positive trajectory. I believe that after this arduous process of rebuilding confidence, we will pay even greater attention to nurturing the confidence of entrepreneurs.