Click to read the original article for details 01 The Glorious Achievements and Confusion of Chinese Marketing Today, no one doubts the power of Chinese marketing. In the 2021 Fortune Global 500 list, 143 Chinese companies were listed, surpassing the US's 122 for the first time. In 2011, 61 Chinese companies were listed, an increase of 82 over the decade. Looking at FMCG categories, in recent years we have not only seen a rapid rise of many local brands, but also more and more multinational brands appointing local marketers as heads of their Asia-Pacific or China regions. Chinese marketing has even begun to export talent. Many outstanding local marketers have gone to Africa to create excellent brands and companies. For example, Nigeria's CWAY Water Group has grown into a beverage brand with a scale of $1 billion. But behind the facts, Chinese marketing is not as rosy as our operational data suggests. In 2010, renowned marketing expert Jin Huanmin sharply pointed out the "contradiction" in Chinese marketing: "We are good at summarizing, but not at analyzing. So successful experiences cannot truly be connected, and no matter how rich the experience, we cannot persist. We are good at communicating, but we lack thought." Twelve years later, when Chinese marketing has reached its peak in numbers and scale, facing a new era without signposts, without "thought" to guide the direction, Chinese marketing will inevitably fall into confusion. Reason one: There is no longer a teacher in the world, nor is any teacher capable of directing where Chinese marketing should go. China is the world's largest and most complex consumer market. Chinese marketing, which has grown through four decades of market competition, has made it difficult for classic Western marketing theories to directly provide clear and direct development directions for Chinese marketing. This is a huge success for Chinese marketing, not a failure; it is also an inevitable situation that Chinese marketing faces today. Reason two: Over the past forty years, we have not produced a master of marketing thought. We have had a vigorous marketing enlightenment movement, the world's largest localization practice of marketing, and have achieved great success to this day. But most of what we have done in the past has been fragmented, scattered, phased, and partial. Therefore, as Jin Huanmin said, "If experience cannot truly be connected, thought cannot be formed; without thought, no experience is sufficient to guide all enterprises and all stages of an enterprise." Thus, today, confused Chinese marketing inevitably falls into the current state of "collective involution, repeated involution." The popularization of mobile internet has not made "business easy," but rather used technology to accelerate and aggravate this collective involution. Where will Chinese marketing go in the future? Can we escape collective involution? Where might the next breakthrough innovation in Chinese marketing be? Before the emergence of true marketing thought masters, these questions can only be answered through deep thinking and exploration by Chinese marketers themselves. Learning, summarizing, surpassing teachers, and surpassing oneself through practice is the only way for Chinese marketing. In the coming period, New Distribution will conduct in-depth interviews with numerous marketing experts, entrepreneurs, and brand managers, recording, organizing, and summarizing their thoughts and practices, hoping to explore possible answers through a series of articles. This article attempts to clarify two questions: Where has Chinese marketing's past great success mainly been? Where might the next major innovation and breakthrough in Chinese marketing be? Without answers, everything remains questions. But raising questions is at least a beginning. 02 Where Has Chinese Marketing Succeeded? Why Has It Not Produced Thought? If we cannot correctly summarize the past, we cannot correctly judge the future. Sometimes, even incorrectly summarizing success can be disastrous. Objectively speaking, the past achievements of Chinese marketing are not an overall success. They mainly stem from China's product manufacturing capabilities and channel innovation contributions. In brand marketing, we are still students, and there is indeed much to expect in innovation. The greatness of Chinese manufacturing is undeniable; without Chinese manufacturing, there would be no Chinese marketing. This is not the focus of this article. 1. Why do we say channel innovation is the greatest success of Chinese marketing in the past? When multinational brands entered the Chinese market with dazzling halos, what did Chinese companies have? What could Chinese companies compete with against European, American, Japanese, and Korean brands? They had none of brand, capital, products, or talent. But we keenly discovered an opportunity: the huge strategic depth formed by China's diverse market. This depth includes market factors such as economic development, purchasing power, and brand awareness, as well as uneven development of infrastructure like transportation and communications. The vast lower-tier market provided soil for the survival and development of Chinese FMCG brands. Many successful FMCG brands today originated in lower-tier markets. Even today, this strategic depth still protects many small and medium-sized brands, giving them space to survive and develop. After discovering the huge strategic depth of the diverse market, the most successful channel innovation model to date, "deep distribution," emerged. Through tens of thousands of distributors, hundreds of thousands of sub-distributors, and sales representatives, millions of sales terminals were built, presenting products to hundreds of millions of customers. "Make friends as many as possible, enemies as few as possible" is a channel model full of Chinese wisdom. Image source: Pexels Around deep distribution, Chinese marketing has continuously practiced, summarized, and enriched channel marketing tactics, strategies, and models. From channel system design, to the operation and management of distributors and terminals, to channel segmentation, profit design at each level, operational methods, and human nature analysis, it is all-encompassing and meticulous. It can be said that in the past two decades, Chinese marketing's research on channels has reached a certain extreme state, seemingly leaving only room for tool application and efficiency improvement. If only in the channel link, apart from continuously improving execution, it is almost difficult to make major innovations. Clearly, for a long time to come, even under great challenges, the innovative achievements of Chinese marketing in channels will continue to nourish Chinese FMCG enterprises. 2. Objectively understand why Chinese marketing has not produced thought in the past Has Chinese marketing made progress in branding? Of course, and it has been huge. But compared to the contribution of channel innovation, Chinese marketing has indeed innovated less in branding. Of course, there has indeed been no original, effective marketing thought produced. This is inevitable. In channel innovation, because of the diversity of the Chinese market, classic marketing theories cannot be directly applied, so practice and innovation are naturally needed. But in brand theory, there are too many masters in classic marketing theory, so we naturally need to be good students first. In the past thirty years, we have had "advertising masters," "planning masters," and many consulting experts, but indeed no masters of Chinese marketing thought. However, we must view this fact objectively. In an era of continuous learning and rapid catch-up in Chinese marketing, an era focused solely on sales volume and scale, an era of extensive growth, it is understandable that thought is difficult to produce. Even if great thought were produced at this time, it would probably be difficult for people to recognize and accept it. When everything revolves around the rapid growth of enterprises at the moment, who would be interested in thought? Advertising masters, planning masters, and consulting masters would have a market at this time, but only thought masters would not be welcomed. Pain is the source of inspiration for thought. Unless the economy develops to a certain extent, enterprises encounter collective problems and confusion, and the industry falls into involution for a period or even a long time, there will be no market foundation for thought, and managers will not have the desire or motivation to accept new ideas. Therefore, we must both admit that Chinese marketing has had few major innovations in branding in the past and no great marketing thought has been born, and also objectively recognize the rationality and inevitability of this phenomenon. The result of lacking brand innovation is low added value of brands, with competition completely evolving into channel competition, mainly in the form of price competition. When the market grows rapidly, there is no problem, but when the market cake stops growing, collective pain arrives. Since 2015, growth in most FMCG categories has slowed significantly, and some categories have even declined. Chinese marketing has been trapped in painful collective involution for several years. Whether large or small brands, brand owners, distributors, or retail terminals, almost no one says business has been easy in recent years. Therefore, today, Chinese marketing in branding is at a point where it is time to innovate and create value. 03 Where Might the Next Major Innovation and Breakthrough in Chinese Marketing Be? The birth of true Chinese marketing thought will still take a long time; we can only explore possible directions through practice. Deep distribution has shaped Chinese marketing over the past thirty years. Where will the breakthrough that affects the next decade or even two decades of Chinese marketing be? Although Pinduoduo has built a huge company with low prices, we believe that reversing history is not the direction forward. The next step for Chinese enterprises is definitely to move toward "quality development," with no other choice. 1. After channel innovation, the next major innovation can only be customer-centric. Taking food and beverages as an example, the total capacity of our market has almost reached its peak. The population is no longer increasing, and the total stomach capacity of customers has no increment. Where does enterprise growth come from? First, grab customers, make them eat more of ours and less or none of others; second, make customers eat better and higher-priced products. The first growth method is a zero-sum game, currently the mainstream competitive method, and the root of collective pain for FMCG enterprises. The second growth method has become the primary development strategy for some excellent enterprises. Abandoning the competitive method of "killing a thousand enemies and losing eight hundred," they continuously develop products and brands toward mid-to-high-end, pursuing quality development. In competitive strategy, they pursue "beauty shared, each excelling in its own way," thereby jointly promoting category upgrading and development. A typical excellent representative brand is "Moutai," which has brought prosperity to the baijiu industry, especially the sauce-flavored baijiu industry, by continuously breaking through the ceiling of brand value. Image source: Panoramic Vision We all know that channels are push, and brands are pull. The more mainstream and value-for-money a product is, the more it relies on channel push; coverage equals sales. The more mid-to-high-end a product is, the more it relies on brand pull; no brand, no market. To have a future, we need quality development; to have quality development, we need major innovations in products and brands. Centering on product and brand innovation is the inevitable direction for Chinese marketing next. 2. For major brand innovation, we must be infinitely close to customers. "Customer-centric" is a "golden rule" we have chanted for many years. But how many brands and enterprises chant it without sincerity? Probably over 80%. How many self-congratulatory products have been designed and pushed to market? How many brand promotions are self-righteous and forced? The "userism" on lips is definitely not userism. How many times a year can our organizations and team members contact customers? How many customers can they contact? Can customers easily find us? Are we directly interacting and communicating with our customers? Almost none. Our organizations and teams are almost all designed and serve channels. Product R&D departments work behind closed doors in laboratories; marketing departments and advertising agencies brainstorm behind closed doors over research company reports; tens of thousands of salespeople revolve around terminals day after day, just to put the products in front of customers. This is our current actual working state, where customers are excluded throughout the entire process. Customer experience requires more direct and close interaction, and continuous interaction with large samples, to be real. Their true needs cannot be researched out; projecting oneself onto others can only represent the personal preferences of R&D personnel. How can we find and seamlessly connect with our massive brand enthusiasts? How can we mobilize them to participate in our brand's product design, transactions, consumption experience, and communication, and actively give us timely and direct feedback? Of course, we can gain insights into the market and customer needs, but we must know that only customers can represent customers. 3. Whether brand or channel, the future requires seamless connection with massive customers. Renowned marketing expert Liu Chunxiong proposed the "BC integration" channel innovation model. That is, brand owners should connect and mobilize customers through channels in the future, and feed back to channels to bring more customers. This proves that from a channel perspective, moving infinitely closer to customers is also the most important innovation in the next stage. In the past, enterprises had the intention but not the ability to connect and serve massive brand customers. Today, mobile internet has solved this problem. In the past, the human communication cost of connecting massive customers was high, and most FMCG products have large volumes but thin profits, making it unaffordable. Today, mature AI intelligent technology can reduce communication costs by more than 90%. In the past, many marketers believed that most customers would not be willing to maintain long-term connections just because of an FMCG brand. But every well-known brand has about 1% to 5% of loyal fans. In your total user scale, how many are these loyal fans? 10,000? 100,000? 1 million? Don't they deserve deep connection from our brand? Find the loyal fans of our brand, get infinitely close to them, deeply connect, and continuously interact. They can definitely create greater value for us beyond sales. It is very likely that the next major breakthrough in Chinese marketing lies in customers. It lies in who can continuously connect with more customers and better operate, organize, and mobilize them. Where do you think the next major breakthrough in Chinese marketing will be after deep distribution? Welcome to leave your insights in the comments section. -END-