In the “Art of War”, Sun Tzu said that “victory belongs to those who share the same ideal from top to bottom”. At a closed-door Business China Network Group dialogue session on 7 November, Haidilao Hot Pot Founder Mr. Zhang Yong cited this phrase to underscore the importance of top-down motivation and having both management and staff aligned towards the same goal in the development of a company.
Over the past 24 years, Haidilao has grown rapidly. From a small hotspot store in Jianyang, Sichuan, it has become a global brand today with over 300 outlets and 50,000 employees in countries such as China, Singapore, Japan, and the United States. Haidilao’s success story was also selected as a case study at the Harvard Business School.
Mr. Zhang shared that as Haidilao continued to expand, it faced the problem of bloating costs. In order to lower operating costs and enhance efficiency, he chose to restructure the company and cut costs by spinning off certain business units of Haidilao. One example was Yihai International Holding Ltd, a supplier of hotpot soup base, sauce, and condiments. It was listed in Hong Kong in 2016 and is now worth over HKD 20 billion (SGD 3.5 billion). Mr. Zhang said that third-party suppliers like Yihai, which was spun off from Haidilao, would have the autonomy to develop its own ideas in increasing productivity and cost-cutting once it became independent. Such a development strategy also transformed departments which used to meet head-to-head into companies which work hand in hand. Mr. Zhang believes that given its benefits, corporate restructuring and spin-offs will become a trend in the future.
At the closed-door dialogue session held at OUE Downtown Gallery, Mr. Zhang also elaborated the development strategy of Haidilao. He revealed that in 2017, Haidilao’s outlets received 100 million diners, and this number is expected to increase to 150 million this year. He said that Haidilao would set up more branches in the future and hoped that the next 24 years would bring about more opportunities for the company. However, he was also concerned about various risks such as food safety.
Mr. Zhang was of the view that advancements in technology have brought about new opportunities for the food and beverage industry. He hoped to ride on this wave to open a new chapter for Haidilao, which includes the opening of Haidilao’s first ‘intelligent’ hotpot restaurant which was recently opened, and even possibly providing gaming services to consumers in the future.
The introduction of Haidilao’s ‘intelligent’ restaurants has raised speculation on whether robots would replace waiters. Mr. Zhang replied that “While production processes could be automated, human interactions cannot be replaced by robots.” He emphasized the importance of being ‘people-oriented’ as the vision of Haidilao as it continues to expand.
When asked what “kept him awake at night”, Mr. Zhang highlighted organizational structure and KPI as his greatest concerns. He felt that determining KPIs for an organisation is a combination of science and art; “it not only has a hard side (sales metrics), but also a soft side (consumer and employee satisfaction),” said Mr. Zhang. “And this soft side is an art.” Mr. Zhang said that he has been seeking an equilibrium between these two aspects since he founded Haidilao.
This was the first public speaking engagement by Mr. Zhang since Haidilao’s IPO in Hong Kong in September 2018. Singapore’s renowned news anchor Ms Zhao Wen Bei moderated the dialogue. This dialogue session was attended by business leaders including Board Directors of Business China, Chairman of Singapore Chinese Chamber of Commerce & Industry Mr. Roland Ng, Board of Director of Capitaland Mr. Lim Ming Yan.