Revenue explodes against the trend! Shenzhen Dama finds new growth path

If someone says that a product requires a large investment and a three-year R&D cycle, I believe that even if the market prospects are good, most cross-border e-commerce sellers will be discouraged. But there are people who are willing to take on such a tough task and take it for fun. Its name is "Pepsi Tai".

Recently, various platforms have launched the "full trusteeship model" one after another, which has made the discussion about factory-type sellers in the industry reach an unprecedented level of heat. In fact, as early as more than ten years ago, factory-type sellers have already occupied an important position in the cross-border circle, among which the most representative one is Bestway, which is known as the "first stock of cross-border e-commerce".

After it, cross-border e-commerce companies set off a wave of listing on the New Third Board, and its founder Xu Xinhua was frequently invited to industry events to share their business and success stories after the company was listed on the New Third Board. However, two years after entering the capital market, the always active Bestee suddenly became low-key, and there was little news about Xu Xinhua in the "jianghu". Although cross-border e-commerce sellers are generally low-key, Bestee is unusually quiet.

Either you explode in silence or you perish in silence. Besita, which has been deeply involved in the cross-border e-commerce industry for more than ten years, obviously does not belong to the latter. In the past few years of silence, it has been strengthening its "product capabilities" and trying to find new growth directions. Today, Besita's "train" to overseas markets has successfully changed tracks to the medical device industry and is gradually accelerating forward.

The first cross-border e-commerce stock, a "veteran" seller in the industry

Yesterday ( June 26), Best Healthcare disclosed its 2022 annual report, with impressive results. According to the financial report data, it achieved revenue of 234 million yuan last year, a year-on-year increase of 26.24%. Among them, the newly opened home medical category developed rapidly, with revenue of 46.52 million yuan, a year-on-year increase of 54.08%, ranking second in the growth rate among the four major categories.

Last year, affected by factors such as the Russia-Ukraine conflict, inflation, and economic downturn, many cross-border e-commerce sellers experienced stagnant growth. Against this backdrop, Best Buy was still able to grow against the trend, which is inseparable from its transformation initiatives.

In the process of transformation to the medical device industry, it is bound to be accompanied by product structure upgrades and optimization, as well as discounts and promotions to clear products with low gross profit margins. In addition, it also made a large provision for asset impairment of epidemic prevention materials and equipment at the end of the year. Without the large provision for assets, Bestec would have increased its profit by 6.14 million yuan. Under the influence of these two aspects, Bestec's gross profit margin and net profit, two important indicators, were slightly lower, among which the gross profit margin fell by 7.68% year-on-year.

When it comes to Bestee, many new sellers may be a little unfamiliar with it, but in fact it is a "veteran" seller. In 2007 , Maorun Electric (the predecessor of Bestee) was headquartered in Shenzhen, and in 2011 it connected with cross-border e-commerce and began selling on Amazon. Since then, its e-commerce territory has gradually expanded on platforms such as eBay and Japan's Rakuten, and its products are sold to countries and regions such as the United States, Europe, and Japan.

Aigo Technology, Suntech Power, Anker Innovations and other now famous big sellers all entered the cross-border e-commerce market around the same time.

2015 was a milestone year for Bestec. It completed its shareholding reform and changed its name to "Guangdong Bestec E-Commerce Co., Ltd.". It was also listed on the New Third Board and became the "first cross-border e-commerce stock."

Its success opened a gap for cross-border e-commerce companies in the capital market. Since then, a wave of listing on the New Third Board has been set off in the cross-border e-commerce circle. Aojie Technology, Zeshang Technology, Jiazhilian, Aosen E-Commerce, and Youkeshu have all landed on the New Third Board.

Bestech was a hotshot at the time, and was invited to various events in the industry. However, two problems were soon discovered: plagiarism and limited growth.

"Many people don't come to listen to how you make products, but to see what you sell best and copy and sell that," Xu Xinhua felt helpless when talking about this bad habit.

In order to ensure that product sales are not affected, Bestai has laid out intellectual property rights and patents in advance and erected a solid intellectual property barrier. The company has obtained 43 invention patents , 135 utility model patents, 285 appearance patents, etc., and many products have won the German Red Dot Design Award . It has also taken up legal weapons and filed lawsuits against multiple infringing sellers. At the same time, it has used intellectual property rights to complain to Amazon about a large number of infringing sellers.

In addition to plagiarism, there are also problems with growth.

For several years, the revenue growth of Best Buy has not been significant, and it has even declined since 2018. However, many of the above sellers that went public at about the same time have increased their revenue from hundreds of millions to billions or even tens of billions now.

If Bestai wants to move to the next level, it must make changes. In fact, as early as 2016, Xu Xinhua had already seen the growth bottleneck of the company.

After all , inverters and smart voltage converters are just a small category with a limited market size and a low ceiling. When a seller becomes the first in a small category, it means that the market has reached its limit and continuing to dig deeper into it will not help improve performance. "At that time, the performance of many of my peers increased exponentially, but we had no (new) products to sell at that time," said Xu Xinhua.

Based on these two reasons, he decided to "seclude himself" in 2017 to think about the future direction and way out of the company. In this process, Xu Xinhua established two points: one is to expand the product category, and the other is to give full play to the research and development advantages.

After three years of dormancy, when Bestec returned to the market in 2020, it had changed its name from "Guangdong Bestec E-Commerce Co., Ltd." to "Guangdong Bestec Medical Equipment Co., Ltd." and transformed into the home medical and health industries.

It is not difficult to find out from observing the sellers in the industry that most of them focus on categories such as 3C electronics, clothing, furniture and home furnishings, and toys, and almost none of them are involved in the medical device category.

When asked why he chose this category, Xu Xinhua said there were two reasons. First, from the perspective of corporate profitability, medical products are of the greatest help to people, and only things that truly help others can be recognized and rewarded. Second, this type of product is of great value to consumers and is not easily replaceable. "In this category , I have many innovative ideas that can meet the various application scenarios of consumers, and I can even develop some completely original products with complete functions. "

However, medical device products are different from ordinary consumer products. They have extremely high requirements on the seller's R&D capabilities, which is exactly what Bestec, which originated from a factory, has.

With a revenue of 30 million yuan in one year, the medical device category is really attractive

According to Precedence Research data, the global home medical device market size was estimated at US$35.7 billion in 2021 and is expected to reach around US$62.1 billion by 2030, with a compound annual growth rate of 6.34% from 2022 to 2030.

From the perspective of market prospects, Bestec has chosen the right direction for transformation, and its financial report data also provides direct evidence of this.

The financial report shows that in 2022, its home medical products achieved revenue of 46.52 million yuan, making it the third largest source of revenue, a year-on-year increase of 54.08%, ranking second in growth rate among the four major categories.

At present, Bestec's products are mainly divided into two categories. One category is the old products including inverters and intelligent voltage converters, and the other category is new products including electronic thermometers, blood oximeters, hearing aids, etc.

Transformation is a gradual process, and Xu Xinhua is well aware of this. "Old products have enough industry status, and I will not give them up easily." He said that now the company's main focus has been on new products.

"Expand" and "focus" are two things that Bestay is doing in the field of home medical care and health care. "Expand" means gradually enriching the categories. Home medical care and health care involve a very wide range of applications and require more products. "Focus" means investing heavily in several categories and pushing them to the top of the category. In general, to cover all scenarios, you also need to have your own core categories.

Electronic thermometers and hearing aids are the two products it focuses on. Among them, hearing aids are particularly important. Existing products in the industry generally have defects and are very noisy. Deaf people are reluctant to wear them and usually only wear them when they have conversations. Xu Xinhua believes that most deaf people are caused by the degeneration of their organs. They know what the real world is like and what the sounds of nature are. They all like to appreciate music. Although existing products allow deaf people to hear sounds, they will have a great impact on their hearts. Pepsi Tai wants to make music-level hearing aids to completely restore the hearing of deaf people so that their world is no longer filled with noise.

The electronic thermometer is the first product it developed when entering the home medical and health industry, and it has now become a leading online brand in many countries.

However, the application scenarios of a single product are limited. When the demand is fully tapped, repeat purchases will become a thorny issue. Because medical devices are not fast-moving consumer goods, it is difficult for consumers to buy a second one soon after buying one. The simplest way to solve this problem is to make products related to each other and achieve cross-category repeat purchases.

Because of this, Bestay's plan for home medical and health care is divided into three steps: the first step is to enrich products, the second step is to make products smart and then connect them with wearable devices. The third step is to launch value-added services based on the second step to expand profit space.

Xu Xinhua believes that this field cannot just stop at simply selling a single, independently working small device. "If your company wants to become greater, more scalable, or difficult to be replaced, it must go in this direction, because once the products are interconnected, consumer stickiness will also increase a lot."

During the interview, it was obvious that the head of Best Healthcare was full of confidence in the prospects of home healthcare and big health. He said: "Now is basically the early stage of dividends, and this field will have at least 10 years of growth in the future . "

Although the prospect is attractive, there will inevitably be some difficulties when the plan is actually implemented, such as difficulty in changing employees' mindset.

"In the beginning, many people didn't understand and thought the boss was fickle. The current products were obviously quite profitable, so why did we need to transform, and even lose money in the early stages?" No matter who you are, it is uncomfortable to make changes and leave your comfort zone. Xu Xinhua understands this feeling very well, but he is also determined about the direction he wants to take.

In order to change this mindset, they spent a lot of time educating their employees. At first, they emphasized the need for transformation in both large and small meetings. Starting this year, they sent their employees back to university to deepen their understanding of the home medical and health industry.

This academic qualification improvement plan is open to all employees. There are three major professional directions: clinical, nursing and traditional Chinese medicine. All schools in Guangdong Province that offer these majors are welcome to apply, and the company will reimburse the tuition fees. According to the plan, this year Bestai will arrange 30 employees to go to various universities to improve their academic qualifications.

This is not a small expense, but it was done without hesitation. This is a plan that benefits both the company and the employees. From the company's perspective, it can change the employees' habitual thinking and instill new things that they are unwilling to accept into their minds through exams and lectures in school. Of course, employees also benefit because their personal connections are expanded and their cognition is improved in the process, which in turn will play a positive role in improving the company's performance.

In addition to resistance from employees, the qualification of medical device products takes a very long time. The certification cycle for ordinary products is basically three to six months, but it takes two to three years for medical device products to obtain registration certificates, and the approval of production licenses is also very slow. In the meantime, clinical trials must be conducted in tertiary hospitals, and R&D investment is also huge.

In fact, the path a company takes is closely related to the personality of its leader . Xu Xinhua is a person who is very persistent in product research and development. Therefore, although it sells online, Bestai is destined to be a " product-oriented, technology-oriented " enterprise.

The founder takes the lead in R&D and wants to be the pearl in the crown

At Bestec, Xu Xinhua is both the helmsman and the top product manager. He is the lead developer of most of the company's products. During the interview, whenever he mentioned product development, he would talk endlessly, with a sparkle in his eyes.

Many people would treat product development as a job, but he treats it as a hobby. He doesn't like traveling or playing games, but he likes researching products .

"Simple", "comfortable", "fun" and "aesthetic" are his product development concepts. "I don't like those junk products that are eye-catching. Things with a sense of design are pleasing to the eye and make people happy. The older generation thought that as long as it can be used, it's fine, but young people today don't think so, so we must meet the needs of consumers. "

However, he also pointed out that companies that truly engage in product research and development should not just focus on product appearance design, but should discover consumers' potential needs (pain points) and then put research and development in the forefront to create original products.

The former is market logic, and the latter is product logic. Currently in the cross-border circle, there are many companies that operate according to market logic, but very few that operate according to product logic. Bestai is one of them.

Xu Xinhua believes that the core difficulty in product development does not lie in technical issues, but in the fact that most people are too self-centered, unable to think from the perspective of others and unable to understand consumers.

Today, Xu Xinhua has fully understood the things behind "product research and development", but in fact, when he first entered the industry, his ability to understand products was not that strong, and he was not that persistent in research and development. The reason why he has come this far is mainly due to his early experience of opening a factory.

At that time, the factory received many orders from Japan, so he came into contact with many Japanese during the process, some of whom were bosses who were engineers. Influenced by their previous professions, they always had many ideas about products.

"When faced with suggestions from others, many people think, 'Why should I make changes for you?', but they never think that they are actually the beneficiaries." He said: "When others put forward good ideas, your R&D capabilities will be improved during the modification process, and the product will become better."

This experience enabled Xu Xinhua, a new entrepreneur, to quickly build and improve his product capabilities. As the saying goes, a strong general has no weak soldiers. Under his leadership, the employees of Bestai also have a high level of product awareness.

Over the years, he has devoted most of his time and energy to work, treating it as fun, and even connecting work with life. He thinks of things that others can't think of, and he does things that others can't do, which makes him feel very satisfied.

But in fact, as the helmsman of an enterprise, one must not only have strong product recognition ability, but also comprehensive ability. Therefore, outside of work, Xu Xinhua spends a lot of time on learning, but the content of learning is not necessarily directly related to the work content. "As the person in charge of an enterprise, you need breadth. If you learn something useful, use it. If not, put it aside. Maybe it will inspire your thinking one day."

Xu Xinhua is a long-term person, and the formation of a brand happens to be a long-term process. Therefore, when talking about how to build the brand of Besty, he said that brand and product complement each other, and the brand's popularity and reputation will increase with the growth of product sales. This is a slow and natural thing. When a company accumulates a certain scale of sales by making good products, the brand's popularity and reputation will also be well-known in a certain field. Of course, these are the underlying long-term logic, and necessary marketing means are still necessary.

Brands have highs and lows, and Xu Xinhua’s goal is to make BestEasy the pearl in the crown.

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