Restart – A Letter to Sharecold Employees
November 21, 2021Dear Sharecold Employees,
From any point of view, 2023 will be an extraordinary year. From a macroeconomic point of view, the oversupply of the real estate industry, the depreciation of the CNY exchange rate, the persistently low PPI and industrial profits, and the rising youth unemployment rate seem to indicate the prospect of economic pressure. From our own management, we face the problem of How to continue the continuous growth after the record-breaking performance in 2022. Although the impact of the macroeconomic situation on the cold chain logistics industry is limited, we are always vigilant and constantly improve the quality and efficiency of our work to enhance our competitiveness. Several internal reorganizations and reforms we have carried out in 2022 have also made us more capable of risk prevention.
Under the current situation, we found that many owners will conduct more detailed investigation and analysis due to the current high vacancy rate and macroeconomic situation before investing in cold store renovation or new construction projects, and some of them may even delay investment due to their uncertainty about new investment. As far as this phenomenon is concerned, our research has found that there are three major reasons: 1. Some cold storage investment does not take into account the diversity of demand and only builds a single type of freezer as cold store, which makes it lack universality; 2. Some cold store investment only consider the customization needs of a single tenant, it does not have the necessary flexibility and applicability for later replacement of tenants; 3. Some cold store investment does not have basic cooling or thermal insulation performance due to the initial reduction in quality requirement, resulting in a reduced return on investment . To ensure that our service users will not face these problems, Sharecold continues to provide free technical support to better assist various users to achieve their expected return on investment.
On this basis, we believe that the current range of interest rate differentials with Europe and the United States will gradually narrow in 2024. The current level of activity in the peripheral capital market will further stimulate the investment enthusiasm of enterprises to return to the expansionary range. Although the domestic consumer economy is sluggish, large catering and consumer companies are still expanding the number of stores, the construction of self-use cold storage continues to develop at a high speed, cold chain logistics is counter-cyclical due to its positioning in the livelihood industry, and Sino-US/China-EU relations are improving after Ursula von de Leyen’s key policy strategy of “de-risking”, there is a clear recovery trend. These are the basis for our continued high confidence in the industry, and the main reason why we encourage cold store investors to continue to invest.
The restructuring of Sharecold in 2022 also gives us a stronger competitive advantage in the current economic situation. The Sharecold Compliance Group, which was reorganized in 2022, helps company to better control quality risks, safety risks and capital risks, and the continuous output of our Technical Group also enables us to better serve users to meet changing needs. Sharecold’s expansionary work in the financial aspect has enabled us to have a better return on investment. On this basis, we have lowered the net profit rate requirement for the project and will maintain it within 5% in the foreseeable future to promote the continuous expansion of the project scale. Sharecold expects to meet our social responsibility and realize our goal of accelerate the world’s transition to continuous cold chains with stronger internal control and risk control, better quality performance, a more active collaborative attitude, and a lower net profit margin.
These distinctive requirements are revolutionary to a certain extent, but they are also my requirements for the internal working model of Sharecold and the core concept of our development prospects. This core philosophy can be shortened to the “1-2-3” philosophy. Among them, “1” refers to our work method of achieving all-round continuous optimization using “first principles” logic, and “2” refers to our two operating philosophies of “social contract” and “categorical imperative” as the basis for judgment, and “3” refers to the three major characteristics we pursue in our work, sustainability, replicability, and scalability.
The work process of the Sharecold team using the logic of “first principles” to continuously seek better solutions from the source is the core method for us to achieve all-round continuous optimization, and it is also our winning strategy for achieving stronger competitive advantages. Whether it is continuous improvement in technical solutions or continuous progress in daily work, we are on a journey of continuous advancement. Over the past year, our dozen or so guidelines have been updated to varying degrees. This is not only because of the strategy changes caused by the rapidly changing market, but also because the more effective and powerful working methods we have continuously summed up in our daily work have been applied to a wider range. Sharecold not only uses the “first principle” logic in daily work, but we also use it to solve various technical problems repeatedly to achieve a nearly 100% project fund recovery rate. As one of the core parameters that Sharecold is considerably proud of, the ultra-high project fund recovery rate is the customer’s recognition for our continuous and stable high-standard output in our incessant work efforts, and it is also the basis for our high-standard obligation for future work.
Any judgment within Sharecold is based on our two operating philosophies, “Social Contract” and “Categorical Imperative”. We firmly believe that the corporate social responsibility of a 28-year-old company is that we should continue to provide high-quality, cost-effective, and low-risk services in the current livelihood industry to repay our users and society. Although there are common methods in the industry to reduce costs by disorienting user at the early stage or using word games to substitute low-quality products in the later stage, we will always be quality-oriented and user-oriented to improve the user’s return on investment and do everything possible to reduce any unforeseen expenses. This also reflects our philosophy of using “categorical imperative” as the critique of practical reason. The employees of Sharecold insist on acting with their own obligations rather than personal utilitarian purposes as the behavioral logic. This is the root cause of our continuous strict requirements on ourselves, and it is also a way for us not to do anything that may make us regret our decisions.
The three characteristics that Sharecold pursues in its work are the requirements for us to ensure continuous growth in the long-term development. “Sustainability” includes our attitude of insisting on eliminating quality risks, safety risks, and capital risks at work, and includes our constant responsibilities to users, suppliers, employees, and society. Our operating philosophy and ethical principles also guide us in conducting business with integrity. “Replicability” is our core requirement for internal work. Our continuous process of documentation and digitizing various industry experiences and operating logic is also the basis for Sharecold’s all-round continuous optimization. Sharecold’s work requires maintaining the same requirements and standards no matter when and where in the country, which is also our core approach to achieve the highest standard output. “Scalability” is our continuous investment in emerging energy-saving technologies and artificial intelligence technologies. Several patented technologies produced by Sharecold’s continuous investment in technology research and development have been applied to various projects. Our intelligent cloud monitoring platform will also gradually transform from PaaS service to SaaS artificial intelligence IoT system. We firmly believe that the research and development of energy-saving technologies will enable us to have stronger quantitative growth capabilities.
As we ensure the establishment of “1-2-3” philosophy, we would achieve efficient and reliable growth. Sharecold would also be able to obtain stronger business capacity and team mobility. These renewed requirement might have fundamental change to the previous model, but they would stand the test of Sharecold Management’s principle on Value Investing. Upon the basis of maintaining highest Capital Turnover Rate and Return on Investment, we stand firm on continual investment in talents and team building to ensure basic quality and safety safeguard and long-term anti-risk capability. We would realize our responsibility and social value by being responsible to not only ourselves, but also to our users, suppliers, industry, and society. Sharecold’s systematic, programmatic, compliance driven management on People Operation, On-site Management, Maintenance Service, and Supply Chain Management would lead us to more sustainable and scalable growth.
Through the reorganization of the internal structure in 2022 and the release of more than ten internal guidelines, Sharecold has laid the foundation for our long-term development and provide the impetus to break through the difficult economic environment. Our foundation of behavioral principles on the “1-2-3” philosophy will give us the ability to swim upstream. Sharecold has continuously created industry standards and case benchmarks in the past 28 years and will have more market competitiveness and brand influence in the future development. We will also gradually realize our vision of accelerating the world’s transition to continuous cold chains.
Best regards,
William Gerald Lynn
July 16th, 2023
