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Three Fundamental Principles for Running a Business

Sep 29-2025   



*This article is based on a keynote speech by Song Zhiping—author of The Art of Business , President of the China Association of Listed Companies, and Distinguished Professor at the National School of Development, Peking University.

 

The Art of an Enterprise: Uphold the Original Aspiration and Identify the Right Model

The Art of an enterprise refers to its guiding principles—it is the fundamental philosophy underlying business operations, as well as the beliefs and original aspiration that drive the company. In the process of running a business, it is not enough to merely excel at management, master technology, or produce products. More importantly, enterprises must understand the original purpose and inherent laws of doing business, clarify their direction, and grasp the underlying logic. This art embodies the enterprise’s values, methodologies, and business philosophy.

In the past, we may have prioritized product manufacturing and profit-making. Today, however, we are returning to our roots and recognizing the significance of our starting point and original aspiration. An increasing number of enterprises and entrepreneurs have become aware of this and are carefully reflecting on the purpose and original intention of their businesses. The “Art of management” also represents a unique form of Chinese wisdom. Practice has proven that both outstanding companies and exceptional entrepreneurs must adhere to relatively sound and clear management strategies. Some enterprises, unfortunately, run into trouble due to flaws in their original aspiration or ethical standards.

 

The Root of an Enterprise: Strategy Takes Top Priority

A company’s strategy is its “root”. Strategic research focuses on defining what an enterprise should do—it integrates planning for the present with preparation for the future. Strategy is the top priority for any enterprise: success in strategy translates to a major victory, while failure in strategy leads to a severe setback. Minor tactical mistakes can be corrected, but the impact of strategic errors is far more long-lasting, and there may even be no opportunity or room to remedy them.

Formulating strategy is a key responsibility of business leaders, and the role of a company’s top executive is crucial in this process. At the same time, strategy cannot be the sole work of leaders—it must also be broken down into actionable steps and implemented effectively. Strategy is not merely a goal; it requires a supporting roadmap and clear division of responsibilities, even down to every department and every employee. It is far from being a vague, one-size-fits-all concept.

 

The Soul of an Enterprise: Branding Is a “Soul-Building”

Endeavor A brand is the soul of a company. Peter Drucker once stated, “In the 21st century, the only way for organizations to compete is through brands—there is almost no other alternative.” Quality builds brands, and brands create value. The core foundation of a brand is quality, which serves as the source of value creation. Amid today’s fierce domestic competition, enterprises seeking to move from the “red ocean” to the “blue ocean” must pursue differentiation, high-end positioning, branding, and service excellence. Branding is a critical pathway to the blue ocean: it allows enterprises to avoid homogeneous low-price competition—or, worse, vicious competition.

Building a brand is also a top-tier initiative for enterprises. Brands require investment, yet some business leaders may be more willing to invest in equipment and R&D than in branding. However, without sufficient brand investment, the growth of an enterprise’s value will be limited. No matter how much it produces, the company will struggle to sell its products at a reasonable price—or even sell them at all—resulting in meager profits. Only by excelling at branding can enterprises achieve sustainable profitability, enabling greater investment in technology, R&D, and equipment, and ultimately realizing long-term sustainable development.

Chinese enterprises should have the confidence to build strong brands. In the past, many of us may have favored foreign products, as there was indeed a quality gap between domestic and foreign goods at the time. Today, however, the younger generation of consumers recognizes that Chinese products are no worse than their international counterparts. The rise of “China-Chic” is ample proof of this. Instead of engaging in simple price wars, Chinese companies should advocate the principle of “quality first, value first, and service first.”

 

Three Fundamental Principles for Running a Business

Sep 29-2025   



*This article is based on a keynote speech by Song Zhiping—author of The Art of Business , President of the China Association of Listed Companies, and Distinguished Professor at the National School of Development, Peking University.

 

The Art of an Enterprise: Uphold the Original Aspiration and Identify the Right Model

The Art of an enterprise refers to its guiding principles—it is the fundamental philosophy underlying business operations, as well as the beliefs and original aspiration that drive the company. In the process of running a business, it is not enough to merely excel at management, master technology, or produce products. More importantly, enterprises must understand the original purpose and inherent laws of doing business, clarify their direction, and grasp the underlying logic. This art embodies the enterprise’s values, methodologies, and business philosophy.

In the past, we may have prioritized product manufacturing and profit-making. Today, however, we are returning to our roots and recognizing the significance of our starting point and original aspiration. An increasing number of enterprises and entrepreneurs have become aware of this and are carefully reflecting on the purpose and original intention of their businesses. The “Art of management” also represents a unique form of Chinese wisdom. Practice has proven that both outstanding companies and exceptional entrepreneurs must adhere to relatively sound and clear management strategies. Some enterprises, unfortunately, run into trouble due to flaws in their original aspiration or ethical standards.

 

The Root of an Enterprise: Strategy Takes Top Priority

A company’s strategy is its “root”. Strategic research focuses on defining what an enterprise should do—it integrates planning for the present with preparation for the future. Strategy is the top priority for any enterprise: success in strategy translates to a major victory, while failure in strategy leads to a severe setback. Minor tactical mistakes can be corrected, but the impact of strategic errors is far more long-lasting, and there may even be no opportunity or room to remedy them.

Formulating strategy is a key responsibility of business leaders, and the role of a company’s top executive is crucial in this process. At the same time, strategy cannot be the sole work of leaders—it must also be broken down into actionable steps and implemented effectively. Strategy is not merely a goal; it requires a supporting roadmap and clear division of responsibilities, even down to every department and every employee. It is far from being a vague, one-size-fits-all concept.

 

The Soul of an Enterprise: Branding Is a “Soul-Building”

Endeavor A brand is the soul of a company. Peter Drucker once stated, “In the 21st century, the only way for organizations to compete is through brands—there is almost no other alternative.” Quality builds brands, and brands create value. The core foundation of a brand is quality, which serves as the source of value creation. Amid today’s fierce domestic competition, enterprises seeking to move from the “red ocean” to the “blue ocean” must pursue differentiation, high-end positioning, branding, and service excellence. Branding is a critical pathway to the blue ocean: it allows enterprises to avoid homogeneous low-price competition—or, worse, vicious competition.

Building a brand is also a top-tier initiative for enterprises. Brands require investment, yet some business leaders may be more willing to invest in equipment and R&D than in branding. However, without sufficient brand investment, the growth of an enterprise’s value will be limited. No matter how much it produces, the company will struggle to sell its products at a reasonable price—or even sell them at all—resulting in meager profits. Only by excelling at branding can enterprises achieve sustainable profitability, enabling greater investment in technology, R&D, and equipment, and ultimately realizing long-term sustainable development.

Chinese enterprises should have the confidence to build strong brands. In the past, many of us may have favored foreign products, as there was indeed a quality gap between domestic and foreign goods at the time. Today, however, the younger generation of consumers recognizes that Chinese products are no worse than their international counterparts. The rise of “China-Chic” is ample proof of this. Instead of engaging in simple price wars, Chinese companies should advocate the principle of “quality first, value first, and service first.”