Sustainability requires five capabilities - technological innovation, product competition, capital expansion, corporate profitability, cash flow management capabilities

The sustainable growth of a business is essentially about becoming larger, stronger, and more enduring. In today’s highly competitive market, companies must develop five key capabilities to ensure long-term success. First, technological innovation is crucial. A company's vitality and long-term development depend heavily on its ability to innovate. With the rapid advancement of technology, businesses that fail to innovate risk becoming obsolete. The most visible sign of this capability is the creation of new products and technologies. Many Chinese companies have enjoyed short-term popularity with certain products, but they often lack follow-up innovations. In contrast, companies in Japan and other developed nations maintain product reserves for decades, consistently maintaining a leading position in the market due to their advanced technology and quality. Second, product competitiveness is essential. A company’s core strength must be reflected in the competitiveness of its products. This competitiveness is typically measured in three areas: technological advancement, consistent quality, and reasonable pricing. These factors determine whether a product can stand out in the market and retain customers over time. Third, the ability to expand capital is vital. Unlike traditional self-development, modern enterprises increasingly rely on mergers, acquisitions, and restructuring as cost-effective ways to grow. Recently, the Chinese government has been piloting reforms on equity division for listed companies, which will significantly impact financing, governance, ownership structure, and corporate management. Fourth, profitability is a key indicator of a company’s health. Even with competitive products, a company must generate enough profit to sustain and grow. Profitability reflects a company’s credibility and determines its ability to survive and thrive. Without strong profits, even the most promising projects may fail. Some argue that maximizing shareholder value is the goal, but ultimately, all such goals depend on solid profitability. Lastly, cash flow management is critical. Many domestic companies focus on growth and profit but neglect the importance of managing cash flow effectively. A company might have strong profits, but if it struggles with delayed receivables or inefficient fund allocation, it could face severe liquidity issues—potentially leading to bankruptcy. Effective cash flow management ensures a company can operate smoothly and sustain itself over the long term. In conclusion, these five capabilities are not just strategies—they are the foundation of a truly sustainable enterprise.

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