---
title: "“Being Conservative Misses Opportunities, Being Aggressive Loses Foundations”: The Clash Between FMCG Manufacturers and Community Group Buying"
description: "At the 6th China FMCG Channel Innovation Conference, hosted by New Distribution, the leading new media in the FMCG industry, Ni Fangliang, Deputy General Manager of Hutchison Whampoa (China) Trading Co., Ltd., delivered a keynote speech on 'Manufacturers' Choices in Channel Transformation'. He shared insights from the perspective of the White Cat brand, discussing the challenges and opportunities presented by community group buying, emphasizing the need to balance tradition and innovation."
author: "倪昉亮"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2021-04-12"
language: "en"
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# “Being Conservative Misses Opportunities, Being Aggressive Loses Foundations”: The Clash Between FMCG Manufacturers and Community Group Buying

> At the 6th China FMCG Channel Innovation Conference, hosted by New Distribution, the leading new media in the FMCG industry, Ni Fangliang, Deputy General Manager of Hutchison Whampoa (China) Trading Co., Ltd., delivered a keynote speech on 'Manufacturers' Choices in Channel Transformation'. He shared insights from the perspective of the White Cat brand, discussing the challenges and opportunities presented by community group buying, emphasizing the need to balance tradition and innovation.

The 6th China FMCG Channel Innovation Conference, hosted by New Distribution, the leading new media in the FMCG industry, was grandly held from April 1 to 3 at the Howard Johnson Agile Plaza Chengdu. The event attracted 3,000 industry professionals, including distributors, community e-commerce platforms, brand owners, and internet companies, from all over the country, with a full house and unprecedented scale.

On April 2, at the main forum of the China FMCG Community E-commerce Conference, Mr. Ni Fangliang, Deputy General Manager of Hutchison Whampoa (China) Trading Co., Ltd., delivered a keynote speech titled "Manufacturers' Choices in Channel Transformation".

Hutchison Whampoa (China) Trading Co., Ltd. is a multi-business multinational enterprise established in 1999. In 2006, it acquired Shanghai White Cat, and by 2008, Hutchison Whampoa had begun to manage the marketing and sales of the White Cat brand across China.

White Cat, as many of you may have heard, is one of the earlier companies in the industry. Over the past years, White Cat has maintained its position in the industry in terms of channels, brand building, and product development.

As a very traditional daily chemical company, it is rare to have all of the "National Enterprise Technology Center", "National Accredited Laboratory", and "High-tech Enterprise" titles, but White Cat has achieved this, thanks to its substantial investment in technology research and development.

**Now, at the cusp of another channel transformation, if we are to discuss "manufacturers' choices in channel transformation", White Cat, which produced the first dishwashing liquid and the first laundry powder in China's daily chemical industry and has witnessed the vicissitudes of channel changes, is certainly qualified to speak on behalf of manufacturers.**

New Distribution has carefully organized and excerpted the essence of Mr. Ni Fangliang's speech at the conference, and now publishes it for the benefit of New Distribution readers.

Today, we will mainly discuss the community group buying business from the perspective of the White Cat brand. From my personal experience, channels are a particularly core issue in the consumer goods industry. Without channels, no product, good or bad, can be presented to consumers.

For White Cat, we have experienced a very painful period, which had both advantages and disadvantages in the history of White Cat's channel model transformation. The advantage is that consumers have become more aware of the White Cat brand, but the disadvantage is that many brand and channel burdens have to be carried along.

When Hutchison Whampoa acquired White Cat, the channel situation was very unfavorable. At that time, about 80% of White Cat's entire business structure came from very traditional low-end wholesale markets. As everyone knows, in wholesale markets, product categories are very limited because the SKUs available are restricted. This was a major obstacle in category expansion, due to channel unsupportiveness.

So, the theme of today's talk is because of the pain we once had: in the history of White Cat's development, there was a stage where we did not keep up with channel transformation, failing to advance with the times.

**Now, we can say that the entire consumer goods industry is facing another channel transformation. I even believe that this transformation may be greater than previous ones, and what is yet to come may be even greater than what we are currently experiencing.** So, how should we make choices under channel transformation?

**-01-**
**Channel Evolution Brings Not Only Challenges, but Also Opportunities**

In the past few years, we have achieved some growth. Last year, we grew by about 10%, but this growth came from many drivers, with multiple growth engines at play. One important engine was our community group buying business.

At the conference, Mr. Chen Siting said, "When you face a new thing, even if you don't embrace it, you should first shake hands with it." I agree with this view. About two or three years ago, when we started cooperating with some community group buying partners, we went from shaking hands to embracing. Now, we have been in deep cooperation for about two or three years.

Channels are constantly changing. We have spent a lot of time on channel construction. The channel we understand is a complete chain: manufacturer to distributor to retailer to consumer.

But in the new model, it is manufacturer to platform to group leader to consumer, and possibly also to retail stores. This chain has changed, but the start and end points remain the same. What has changed is the middle part. This change may be entirely new, like the two lines I drew. In the future, the two lines may coexist or continue to coexist for a considerable period.

However, they may also overlap, and the more they overlap, the more severe the channel conflict will be. Therefore, **if we handle the "overlap" well, it can bring us incremental growth; if not, it will cause significant internal friction.** Thus, channel evolution brings us challenges, but I hope we can see them as opportunities.

**1. Clear Family Consumption Orientation**

Community group buying, as I have seen in many peers' sharing, first, I believe the family consumption orientation of community group buying is becoming increasingly clear, with one-stop shopping for families becoming more attractive than traditional retail.

**2. More Direct and Faster Channel Downward Penetration**

Second, as mentioned in New Distribution's report, the speed and capability of channel downward penetration are more direct and faster than before. In traditional sales models, achieving such speed and directness would require incomparable costs, especially time costs.

**3. More Direct Consumer Reach**

Third, contact with consumers becomes more direct. Consumers have a larger platform to access more brands, and the likelihood of trying new things is much greater than before. These are the opportunities I see in community group buying.

So, in the past few years, because Xingsheng Youxuan was one of the earlier platforms in community group buying, White Cat formed a good cooperative relationship with it very early. Over the past three years, we have seen good growth, from a very low number to a relatively high one now. Besides Xingsheng Youxuan, we have also cooperated with other community group buying platforms, continuously exploring new partnerships.

In the past three years, the proportion of community group buying in our business has grown from a negligible 0.2% to nearly 5%. Of course, I don't think 4.8% is really good. Personally, I believe that in the future, this red proportion will become larger and larger, to an extent we might not have imagined.

So, channel transformation is a challenge for us. For an old brand like White Cat, with channel burdens and existing channel models, it will inevitably bring challenges. But how to face these challenges and turn them into opportunities is a test of our work wisdom.

**-02-**
**Characteristics Highlighted by the Community Group Buying Model**

Community group buying has many competitive relationships with traditional channels. Its downward penetration speed and coverage are clearly its advantages. But from the consumer's perspective, convenience is a very intuitive feeling. For consumers, shopping in a store versus on a phone is very different, in terms of the number of products visible and the product introductions. In this regard, community group buying platforms are currently doing very well.

Under this new model, **there are many tests for manufacturers and distributors. Being overly conservative may cause us to miss this development opportunity, but being overly aggressive may also lose the survival foundation we have built over the years.**

Therefore, coordination with traditional distributors and collaboration with emerging community group buying platforms will become increasingly important, as will the methods of cooperation.

Second, within the same platform, because it is relatively open, any supermarket, no matter how large, has limited shelf space, which can only display a limited number of products. But online, the space is unlimited, so more and more brands will appear on such display surfaces, and more consumers will see more brands.

However, on such a platform, competition among merchants in similar products will increasingly focus on product development and quality assurance. **Because consumers have a low cost of trying, but it also means that after using a product, they have an easy opportunity to switch. When consumers feel a product is not good enough, they can easily change next time,** unlike before when consumers entering a store could only see one brand.

This is why, as introduced at the beginning, White Cat pays special attention to product development and quality assurance.

Third, community group buying platforms and manufacturers have different positions, leading to conflicts in operations. In fact, win-win cooperation is easy to find. For community group buying platforms, there will always be cost considerations. **Scale leads to product homogenization, which is a simple mathematical logic. But for manufacturers, more categories represent more long-term business opportunities.** For consumers, more product categories and more advanced technology provide more reasons and motivations to choose.

So, in this regard, we need to find a balance between short-term and long-term goals. I believe that on long-term goals, platforms and manufacturers are unified, but in specific operations, we need to find the balance point.

**-03-**
**Face Challenges Head-On and Seize Opportunities**

First, I think the most important thing is subjective. We must clearly recognize what this change means. **I use the phrase "reality is the future". What has not happened in the past is the future, and what we are facing now is our future.**

We will see some conflicts now, but all conflicts will find a balance point. For manufacturers, this balance point requires balancing the roles that new and old models can play in common business development. Breaking through is necessary for development; being conservative will not lead to development.

Second, I believe it is about products. The product structure should be more three-dimensional. White Cat has been committed to this, presenting consumers with a more three-dimensional product portfolio and a product portfolio with real consumer value. This is the core to capturing consumers ultimately.

Price competition will always exist. Perhaps in the next channel revolution, we will also face price competition. I think if used well, price competition is a very good tool and weapon. Of course, price competition is always a double-edged sword, with costs and returns for us and the channel.

Third, we must always adhere to quality assurance. We need to continuously introduce more and more advanced products, so consumers perceive that we offer better products, continuously stimulate new consumption intentions, and build their willingness to try new products. This is a help to the entire industry.

Our market capacity has every opportunity to grow larger. At the same time, we need to join a channel to gain market position in front of consumers, provided that our products are up to standard and we can offer consumers products they don't need to worry about and are willing to try. This is our core competitiveness.

**Summary:**

All changes are never initiated by us, but none of us are outsiders to these changes. These changes may bring us troubles, but as long as we recognize that they may bring us opportunities, I think we should embrace them and find ways to cooperate for win-win outcomes.

Tips will be paid 400-2000 yuan once adopted.


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