📒 Notes | Summary of Duan Yongping's Economics
Duan Yongping is one of the masterminds behind OPPO and vivo, the founders of BBK Electronics.
One, long-termism is the fundamental principle.
Look long-term, not short-term: Duan Yongping emphasizes, 'If something is right five years from now, then you should do it today.' He rejects short-term speculation and short-term profit temptations.
The value of a business comes from the discounted future cash flows: He believes that the value of any asset comes from its future predictable cash flows and is not swayed by current market sentiment.
Two, the economics of subtraction.
Less is more: His business logic emphasizes focus, doing only 'the most important things.'
Focus on one thing and do it to perfection: During the BBK period, he cut all unprofitable or cluttered products, keeping only the tape recorder and phone, earning his first pot of gold.
Three, pricing power is the moat.
Good companies must have pricing power: Duan Yongping has repeatedly mentioned that if a company has sustained pricing power, it must have strong brand strength, product strength, or network effects.
This is similar to what Buffett says about 'whether the company has a moat.'
Four, value investing is the most efficient rationality.
Buy great companies, not cheap junk: He prefers the combination of 'good company + good price' rather than simply pursuing cheap options.
Understanding is a prerequisite: He said, 'I only invest in companies I understand,' such as Apple, NetEase, and Moutai.
Five, cash flow is more real than profit
'Profits can be manipulated, but cash flow does not lie.'
This is his primary standard when assessing whether a company is healthy and worth investing in.
Six, business logic must be simple.
He does not pursue 'complex intelligence' but emphasizes 'common sense' and 'simple logic.'
For example, he said, 'A company selling phones must rely on either products, channels, or brands; there won't be a fourth option.'
Seven, brand is the most cost-effective asset.
Duan Yongping believes that brand is the strongest intangible asset and an economic engine that can bring compound returns.
Investing in Apple, Moutai, and Coca-Cola is based on this logic.
Eight, people are more important than projects
He repeatedly emphasizes, 'If the person is right, then the matter is half right.' Particularly when starting a business or investing in a startup, he places extreme importance on the founder's character, mindset, and cognitive boundaries.
Nine, the market is a short-term voting machine, a long-term weighing machine.
This is a famous saying he learned from Buffett and serves as a fundamental reference for his decision-making.
He hardly looks at stock prices, only the fundamentals of the business.
Ten, the essence of investment is converting knowledge into value.
Duan Yongping said, 'Investment is actually the realization of knowledge. The deeper your understanding and the more you penetrate the essence of things, the more solid the money you earn will be.'