Why is the light asset investment model becoming more and more popular in the Internet age? What is the difference between light asset investment and heavy asset investment?

The light asset model is favored by more and more enterprises. Light-asset enterprises can use their own R&D technology and brand effect to achieve rapid expansion of scale, realize leap-forward growth of profits on the basis of greatly reducing costs, abandon low-tech factories and logistics and transportation, and concentrate all resources on core business.

By June 30, 2020, Derby Group has managed more than 40 cultural and creative industrial parks in domestic cities such as Shanghai, Beijing, Hangzhou, Chengdu, Suzhou, Nanjing and Changsha, as well as overseas regions such as Italy and the United States. Behind the development of "light assets" is the change of internal and external environment. As the profit margin and leverage ratio of the real estate industry continue to decline, the expansion of heavy assets will also be limited accordingly. When industrial real estate enterprises reach a certain scale, the cost of scale increase will increase, the efficiency is likely to decline instead of rising, and the yield will continue to decline. Only relying on the profit model of sales and leasing for development, industrial parks have no future. It is urgent to increase profit points with light assets, reduce business risks and solve the problems of park enterprises in the process of asset expansion. At the same time, in recent years, there is a strong demand for "custody operation" in the rapidly increasing stock parks in various places, which objectively provides conditions for the development of "light assets".

There is no absolute good or bad between light assets and heavy assets, both of which have their own advantages, because we think that heavy assets are a benefit, that is, they enjoy an appreciation and resist the risk of funds, but its disadvantage is that repeated expansion and more investment may cause certain financial burden and greater risks, while light assets will expand faster, but the rental cost will easily devour his performance. Therefore, we think that we prefer a company with good material carrying capacity in the early stage, while light assets seem to have formed a better expansion model, and we are also more optimistic about companies that form a virtuous circle.