---
title: "Big News! Eternal Asia Announces 2017 Financial Report: Revenue of 68.515 Billion Yuan, Net Profit of 595 Million Yuan"
description: "Eternal Asia, China's first listed supply chain company, released its 2017 financial report, revealing key insights for the FMCG industry. The report highlights the 380 distribution platform's dominance, the low-margin challenge in FMCG, the strategic push into convenience stores, and the high profitability of its supply chain finance arm."
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published: "2018-04-21"
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# Big News! Eternal Asia Announces 2017 Financial Report: Revenue of 68.515 Billion Yuan, Net Profit of 595 Million Yuan

> Eternal Asia, China's first listed supply chain company, released its 2017 financial report, revealing key insights for the FMCG industry. The report highlights the 380 distribution platform's dominance, the low-margin challenge in FMCG, the strategic push into convenience stores, and the high profitability of its supply chain finance arm.

Recently, Eternal Asia (Eternal Asia Supply Chain Management Co., Ltd.) released its 2017 financial report. As the first listed supply chain company in China, Eternal Asia's development is closely intertwined with the FMCG industry. What messages does Eternal Asia's financial data convey to the industry?

01
**Scale Effects Cannot Bring High Gross Margins; Refined Operations Still Have a Long Way to Go**

The financial report shows that Eternal Asia's 380 distribution platform business was its highest revenue contributor in 2017, accounting for 58.95% of total revenue. The 380 distribution platform supply chain service transforms the traditional channel agent model into a platform operation model. By integrating the channels of high-quality regional distributors, it builds a fast and efficient direct supply channel, optimizing supply chain management for clients and enhancing market competitiveness.

Currently, Eternal Asia's 380 distribution platform business **covers over 320 cities nationwide, with more than 2 million service outlets, a professional service team of nearly 3,000 people, and strategic partnerships with over 2,600 well-known brands across industries. In 2017, it achieved annual GMV of 40.12 billion yuan, with FMCG industry GMV exceeding 30 billion yuan.** Whether measured by terminal coverage or platform GMV, Eternal Asia is arguably the largest B2B platform in China.

According to the financial report, in 2017, Eternal Asia's 380 distribution platform achieved total operating revenue of 40.12 billion yuan, a year-on-year increase of 24.35%; business gross profit was 3.107 billion yuan, with a profit margin of 7.7%. Excluding high-margin industries such as home appliances, medical, and chemicals, the estimated gross margin for the alcohol and beverage, maternal and infant, daily chemical, and food industries was only around 6%.

It is clear that even with supply chain and nationwide scale advantages, Eternal Asia cannot break the low-margin curse of the FMCG industry, which places higher demands on its refined operations capabilities.

02
**Offline Convenience Stores Will Remain a Key Battleground for Giants in 2018**

Following JD.com, Alibaba, and Tencent, Eternal Asia has also joined the race to capture offline retail scenarios. According to relevant information, as of the reporting period, Eternal Asia had invested in and acquired stakes in high-quality brand chain franchisees such as Hunan Jinhele, Liaoning Jinkaida, and Chongqing Chuanyu Beauty, covering more than 8,000 terminal stores.

Eternal Asia's plan to integrate convenience stores is not unfounded. At a press conference hosted by Eternal Asia on March 21, themed "New Distribution Leading New Retail – Creating 300,000 New Chain Franchise Stores," Chen Fangquan, Executive President of the 380 Ecological Business, stated, "Eternal Asia will fully uphold the company's integration DNA, opening its new distribution integration capability system to the whole society, allowing outstanding brand retail channels and teams across the country to become our partners, jointly advancing the goal of 300,000 chain franchise stores." He hopes to first find around 60 partners nationwide and gradually complete the goal of 300,000 chain franchise stores over 3-5 years.

Currently, Alibaba and Tencent's layout in the supermarket and hypermarket sector has basically concluded. As the most frequent offline traffic entry point, the two internet giants will naturally not stand idly by regarding internet-based business formats. With more capital entering the field, the competition for convenience stores in 2018 is bound to intensify.

03
**Supply Chain Finance Has Great Potential**

In Eternal Asia's financial report, the performance of the Yushang Financial Control Platform business was relatively impressive. As Eternal Asia's supply chain financial service platform, Yushang Financial Control **achieved operating revenue of 551 million yuan in 2017, a year-on-year increase of 42.69%, with business gross profit of 343 million yuan and a gross margin of 62.3%,** making it the business segment with the highest gross margin among all Eternal Asia's businesses.

With the deepening of Eternal Asia's layout across the entire industry chain and the improvement of its industrial information data systems, Eternal Asia's innovative financial services will inevitably drive the entire industry forward. For other FMCG B2B platforms, innovating business models and gradually developing diversified revenue structures also hold significant reference value.

**Attached: Eternal Asia's 2017 Annual Report:**

In 2017, Eternal Asia achieved total operating revenue of 68.515 billion yuan, a year-on-year increase of 17.54%; total annual profit was 764 million yuan, a year-on-year increase of 15.19%; net profit attributable to the parent company was 595 million yuan, a year-on-year increase of 14.74%. Among them:

- Breadth business platform operating revenue was 14.275 billion yuan, a year-on-year decrease of 10.69%.
- Global procurement platform operating revenue was 13.114 billion yuan, a year-on-year increase of 33.86%.
- 380 distribution platform operating revenue was 40.12 billion yuan, a year-on-year increase of 24.35%; business gross profit was 3.107 billion yuan, a year-on-year increase of 25.43%.
- Logistics platform operating revenue was 540 million yuan, a year-on-year increase of 22.36%; business gross profit was 99 million yuan, a year-on-year decrease of 2.74%.
- Yushang Financial Control platform total operating revenue was 551 million yuan, a year-on-year increase of 42.69%; business gross profit was 343 million yuan, a year-on-year increase of 31.33%.

As of the end of 2017, Eternal Asia had 20,098 registered employees. Eternal Asia's revenue and profit growth have been relatively stable over the years:

- 2016 operating revenue: 58.291 billion yuan, up 45%; net profit: 519 million yuan, up 5.34%.
- 2015 operating revenue: 39.939 billion yuan, up 18%; net profit: 492 million yuan, up 57.69%.

Eternal Asia's five major supply chain service segments: **Production-oriented supply chain services, Circulation-consumption supply chain services, Logistics platform services, Yushang Financial Control platform, and Internet platform.**

**(I) Production-oriented Supply Chain Services**

1. Breadth Platform Business Operations

Breadth supply chain business is dedicated to building bridges for upstream and downstream enterprises, professionally undertaking outsourcing of non-core business links in the enterprise supply chain, such as material procurement, production processing, finished product sales, logistics warehousing, and marketing services. It acts as an "expressway" between enterprises, providing high-quality end-to-end supply chain services, allowing partners to focus on core businesses (product technology R&D, market strategy planning, etc.), achieving total cost leadership, and enhancing competitiveness and operational efficiency. The platform's business model revolves around providing supply chain services to core clients, mainly procurement and procurement execution, sales and sales execution. Breadth platform business revenue is mostly in the form of service fees charged to clients. As market demand changes, breadth services have upgraded to a "supply chain operations + marketing" model, assisting brand manufacturers in marketing management, improving efficiency while reflecting the value of Eternal Asia's operations and marketing services.

2. Global Procurement Platform Business Operations

The Global Procurement Platform (Global Procurement and Product Integration Supply Chain) deeply integrates upstream and downstream resources across industries, forming a one-stop procurement and integration platform, achieving "global buying, global selling" of raw materials, semi-finished products, and finished products. From upstream, it provides raw materials, semi-finished products, and finished product resources from different global suppliers; downstream, it integrates national or regional channels, ultimately connecting to clients, selecting the most efficient supply chain operation model to accelerate capital flow and improve gross margins. For example, the American cranberry brand Ocean Spray (holding 70% global share) cooperates with Eternal Asia, which provides full-process supply chain services including import, logistics, distributor management (JD.com, Tmall, Metro, etc.), and marketing. Currently, the business involves new industries such as new energy, system integration, and apparel.

**(II) Circulation-consumption Supply Chain Services**

1. 380 Distribution Platform Business Operations

The 380 distribution platform supply chain service transforms the traditional channel agent model into a platform operation model. By integrating the channels of high-quality regional distributors, it achieves sharing of urban platforms nationwide and optimization of the distribution system, building a fast and efficient direct supply channel, optimizing supply chain management for clients, and enhancing market competitiveness. Its distribution categories include: fast-moving consumer goods (daily chemicals, maternal and infant, alcohol and beverages, food), communications, home appliances, medical devices, and pharmaceuticals. The 380 distribution platform continues to strengthen the integration of regional distributors in the circulation field, expand the team of high-quality distribution partners, expand different distribution channels in the circulation industry, and deepen terminal coverage. The platform's service network has reached over 320 cities, achieving five firsts in the industry: first in national scale (2017 operating revenue of 40.12 billion yuan), first in national service network (regional distribution platforms established in over 320 cities), first in national terminal coverage (serving nearly 2 million terminal retail stores), first in national product brand count (strategic partnerships with over 2,600 well-known brands across industries), and first in national team size (nearly 30,000 professional service personnel).

2. Chain Franchise Platform Business Operations

The chain franchise platform relies on the solid foundation of the existing 380 distribution platform system, creating a new retail comprehensive service platform integrating chain franchising, collective procurement, brand services, marketing support, logistics distribution, O2O operations, and value-added services. It is committed to integrating high-quality retail chain franchise enterprises to jointly establish China's largest B2B2C/O2O chain franchise brand consortium. Leveraging Eternal Asia's massive supply chain empowerment system, it promotes the transformation and upgrading of circulation stores. By integrating and linking all links in the upstream and downstream channels, the platform helps brand owners cover terminals, helps terminals directly procure from upstream through the platform, and enables terminals to interconnect directly with brand owners. During the reporting period, the platform had high-quality brand chain franchisees such as Hunan Jinhele, Liaoning Jinkaida, and Chongqing Chuanyu Beauty. Through cooperative development, franchisees have leveraged Eternal Asia's brand and product resources, capital layout, team support, supply chain and logistics services, finance, marketing, and other value-added services to achieve rapid expansion, integrating more than 8,000 terminal stores, realizing the community-based layout of the company's upstream 400,000 product categories, getting closer to consumers, enhancing experience, and improving life convenience. The platform is in its early construction stage and will accelerate the integration of strong chain franchise companies in various regions, i.e., integrating high-quality offline retail franchise enterprises to expand terminal network coverage.

**(III) Logistics Platform Business Operations**

The logistics platform is a platform formed by separating logistics businesses from various business segments, transforming and upgrading from enterprise logistics to logistics enterprises, and building socialized platform services for the logistics resources involved in Eternal Asia's operations. The organizational structure has been upgraded to an independent platform operation model. Currently, the logistics platform manages and operates over 30 wholly-owned logistics subsidiaries nationwide, uniformly managing and operating the logistics business involved in Eternal Asia's overall supply chain services. The logistics trunk network covers over 30 provinces across China, with 532 warehousing points in over 300 cities, supporting business team acceleration through resource sharing. As a carrier platform, the logistics platform has seen significant business volume growth, leveraging resources within Eternal Asia's massive supply chain system while actively integrating external logistics teams and existing business resources, expanding business scale as a foundation and increasing returns through scale effects.

(IV) Yushang Financial Control Platform Business Operations

The Yushang Financial Control platform is positioned based on Eternal Asia's carrier business, serving the B2B enterprise service market in vertical industries nationwide, providing professional supply chain information management, information matching, technology solutions, and comprehensive services. The platform's business development aligns with national government macro-policy guidance, vigorously developing industrial chain financial products and services. Centered on Eternal Asia's "1+N" business model ("1" represents core enterprises, "N" represents suppliers, distributors, channel providers, and retailers upstream and downstream of core enterprises), relying on core enterprises in the manufacturing industry chain, it actively carries out various forms of industrial chain financial services such as warehouse receipt pledge loans, accounts receivable pledge loans, bill discounting, factoring, and international and domestic letters of credit, effectively meeting the financing needs of upstream and downstream enterprises in commercial transactions.

**(V) Internet Platform Business**

Xinglian is an S2B2C open internet technology service platform in China's new distribution industry. With a "supply chain + internet" ecosystem, it integrates, links, and empowers small and medium-sized retailers and individual entrepreneurs, promoting the transformation of the circulation industry to new distribution. Xinglian builds a circulation internet empowerment system centered on "shared products, shared distribution, shared marketing, and shared traffic," comprehensively linking brand owners, distributors, terminal stores, and consumers, supported by supply chain big data, promoting all-channel efficiency optimization and upgrading in the circulation industry, achieving flattening, sharing, and community-based circulation channel resources.

**Analysis of Main Business in 2017**

**1. Overview**

In 2017, the company achieved total operating revenue of 68.515 billion yuan, a year-on-year increase of 17.54%; total annual profit was 764 million yuan, a year-on-year increase of 15.19%; net profit attributable to the parent company was 595 million yuan, a year-on-year increase of 14.74%.

(1) Breadth Platform Business Operations

During the reporting period, the breadth business platform achieved operating revenue of 14.275 billion yuan, a year-on-year decrease of 10.69%; business gross profit was 638 million yuan, a year-on-year decrease of 2.71%. The main reason for the decrease in operating revenue was that the breadth business continuously optimized and shut down non-performing business projects, seeking healthy and innovative development, shifting core key businesses to industries benefiting from national macro-policy and future emerging potential industries, focusing on high-profit industries and business models. Among them, the business profits of the Shanghai, Shenzhen, Beijing, and Guangzhou war zones all increased to varying degrees compared to last year. In breadth business development, Eternal Asia actively seeks world and China Fortune 500 major clients, continues to explore the potential value of the "1+N" business model, and has established strategic partnerships with Fortune 500 partners such as Philips, Bosch, Netgear, and Haier, expanding high-quality business scale and deepening the upstream and downstream of core enterprises. Using "procurement execution + distribution execution" to connect core clients' upstream and downstream partners, it increases the added value of supply chain services.

(2) Global Procurement Platform Business Operations

During the reporting period, the global procurement platform achieved operating revenue of 13.114 billion yuan, a year-on-year increase of 33.86%, with business gross profit of 389 million yuan, a year-on-year decrease of 22.86%. The increase in operating revenue was mainly due to the chemical business increasing by 3.476 billion yuan compared to last year. The main reasons for the decrease in gross profit: first, the sale of a subsidiary (Yihai Nengda Company) during the reporting period reduced gross profit by 37 million yuan; second, the computer business subsidiary Zhuoyi Computer's gross profit decreased by 21 million yuan compared to last year; third, the apparel business's Yiyahui Company's gross profit decreased by 25 million yuan compared to last year; fourth, the chemical business's gross margin decreased by 0.5%.

(3) 380 Distribution Platform Business Operations

During the reporting period, operating revenue was 40.12 billion yuan, a year-on-year increase of 24.35%; business gross profit was 3.107 billion yuan, a year-on-year increase of 25.43%. The reason for the sustained and stable growth of the 380 distribution platform business is the continuous layout in the circulation field integration strategy, expanding the provincial joint venture alliance system, with maternal and infant, home appliances, daily chemicals, and alcohol and beverages contributing significantly to profits among covered industries. At the same time, the platform fully promotes refined management, leading the "increase revenue and reduce expenditure" work to improve per capita output and optimize resource allocation.

(4) Chain Franchise Platform Business Operations

During the reporting period, the platform had high-quality brand chain franchisees such as Hunan Jinhele, Liaoning Jinkaida, and Chongqing Chuanyu Beauty. Through cooperative development, franchisees have leveraged Eternal Asia's brand and product resources, capital layout, team support, supply chain and logistics services, finance, marketing, and other value-added services to achieve rapid expansion, integrating more than 8,000 terminal stores, realizing the community-based layout of the company's upstream 400,000 product categories, getting closer to consumers, enhancing experience, and improving life convenience. The platform is in its early construction stage and will accelerate the integration of strong chain franchise companies in various regions, i.e., integrating high-quality offline retail franchise enterprises to expand terminal network coverage.

(5) Logistics Platform Business Operations

During the reporting period, the logistics platform achieved operating revenue of 540 million yuan, a year-on-year increase of 22.36%; business gross profit was 99 million yuan, a year-on-year decrease of 2.74%. The platform fully promotes the construction of nationwide unified warehousing and distribution capabilities, forming a national operation network, covering a comprehensive logistics service system from international logistics, import customs clearance, domestic warehousing, trunk transportation, and urban distribution capabilities.

(6) Yushang Financial Control Platform Business Operations

During the reporting period, the Yushang Financial Control platform achieved excellent results, with both total operating revenue and business gross profit growing significantly. Among them, total operating revenue was 551 million yuan, a year-on-year increase of 42.69%; business gross profit was 343 million yuan, a year-on-year increase of 31.33%. Business development remains strong, with mature operating models accumulated over years and the application of fintech risk control systems bringing innovative business development.

**Revenue Composition:**

**Business Strategy Analysis:**

**1. Innovative Development of Basic Business and New Value-added Business:**

(1) Fully Promote Borderless Development and Innovation of Breadth Business

In the future, the breadth business will continue to establish supply chain service platforms for various industries with the "platform, sharing, integration" development model, integrating resources and sharing them with upstream and downstream clients in various industries, helping partners grow stronger. The platform will strengthen business expansion efficiency through the platform + partner model, focusing on "procurement and procurement execution, sales and sales execution, marketing services," integrating effective resources with supply chain service models, and using Eternal Asia's marketing resources to drive breakthrough development in breadth business. The platform will continue to expand into new industry fields (such as new energy and new materials, optoelectronics, industrial raw materials teams and resources), and in the "supply chain operations + marketing" business, reach strategic cooperation with more brand clients. The platform aims to establish 100 industry business units by the end of 2020, with a business volume target of 100 billion yuan.

(2) Continue to Promote the Implementation of the "Distribution + Marketing" Strategy in the 380 System

In the future, the 380 distribution platform business will fully integrate marketing resource layout, enhance the distribution capabilities of subsidiaries within the 380 system, and create an all-round "distribution + marketing" integrated development. The marketing platform empowers the carrier business by integrating external high-quality marketing resources; through brand management and marketing planning, terminal media, and self-operated media, it achieves marketing empowerment for brands in the 380 system; provides one-stop brand promotion, distribution coverage, and product promotion services for brands, enabling the marketing platform to truly empower brand owners; provides cognitive transmission between brand owners and consumers, adding value to the 380 distribution carrier.

(3) Accelerate the Development Speed of the Chain Franchise Platform

In 2018, Eternal Asia will strengthen the development and coverage speed of chain franchise stores, expand terminal channels, and use Xinglian's internet O2O operations to increase channel circulation efficiency, thereby truly realizing new distribution leading new retail. For the initial existing nearly 8,000 chain franchise stores, it will strengthen the implantation of internet products, O2O finance, and marketing media businesses, and improve the procurement and supply operation management system through unified optimization management. In the next three to five years, the chain platform plans to build 300,000 new chain franchise stores, leveraging Eternal Asia's powerful offline carrier platform, warehousing and distribution systems, supply chain management technology, and distribution systems, as well as online internet technology advantages and supply chain resource integration advantages, to promote retail transformation and change with the "new distribution" model. Xinglian O2O services, smart store systems, and online-offline linked "Xinglian Sanhao Festival" create a brand United Nations, fully empower terminals, lead the transformation and upgrading of traditional retail to smart retail, and provide standardized support for terminal stores from six aspects: store image, procurement and distribution, Xinglian O2O cloud store operations, value-added services, marketing, and information systems, jointly achieving growth and strength.

(4) Fully Develop Supply Chain Cloud (Business Services Cloud)

The supply chain cloud is an intelligent supply chain service platform based on supply chain services, resource sharing as a platform, and internet technology as support to empower enterprises to develop and upgrade quickly. It is a comprehensive "supply chain resources + system technology + services" cloud output that integrates internal and external product resources, logistics warehousing services, value-added services (finance, marketing, capital, etc.), system technical support, and internet. With the purpose of comprehensive empowerment, relying on Eternal Asia's complete supply chain service system, strong resource integration capabilities, and big data service capabilities, and using internet technology, it provides full-process supply chain cloud services for commercial organizations (trade, retail, corporate clients, etc.) and individual entrepreneurs, continuously optimizing circulation efficiency, flattening circulation links, reducing circulation costs, and continuously enhancing enterprise competitiveness, helping China's circulation industry transform into a flattened, community-based, and shared new distribution.

In 2018, Eternal Asia's technical team will maximize the value of the company's resources through the R&D and creation of the supply chain cloud, linking resources between internal platforms for development, and opening externally to users in need. Whether it is product demand docking or ERP technology module docking, as long as it is connected to the supply chain cloud, all platform resources can be shared, coexisting and co-prospering with partners, sharing and winning together.

**2. Optimize Internal Organization Management to Achieve "Increase Revenue and Reduce Expenditure":**

(1) Iteratively Update the Partner Business Mechanism

1. Increase Efforts to Cultivate and Support Excellent Partners

In 2018, a new evaluation mechanism will be used to select the top 50 excellent partner enterprises from existing business partners as priority resource allocation partner enterprises, supporting them to grow stronger. As excellent partner enterprises, they will receive more resource investment and policy support, and partners will be encouraged to develop across industries and regions. To this end, a partner incentive mechanism will be formulated.

2. "Platform + Sales Partners"

Headquarters platforms will collaborate with subsidiaries to fully implement the "platform + sales partner" pan-Amoeba management model. Through evaluation and assessment mechanisms, outstanding employees with independent capabilities will be selected from the existing team to become sales partners, providing brand resources and capital support needed in the early stages of operation, activating partners' initiative and enthusiasm. At the same time, ensure that the backend support systems of each business platform effectively support frontline business teams, granting autonomous management rights, career encouragement, and return expectations through a win-win and risk-sharing cooperation model. Guided by the spirit of strivers, we will vigorously select, cultivate, and introduce strivers that meet business development needs, promote performance and profit improvement in each platform business segment, improve per capita efficiency, and actively introduce high-quality projects for Eternal Asia's sustainable and healthy development.

(2) Comprehensively Strengthen Refined Management and Risk Control

In the future, Eternal Asia will strengthen the efficient operation mechanism of multi-department linkage across people, finance, and materials, implement the core idea of "increase revenue and reduce expenditure," aiming to improve profitability. By strengthening internal management, sorting out organizational structures, and establishing a sound incentive mechanism to stimulate per capita efficiency. By optimizing accounts receivable management, monitoring payment cycles, and inventory clearance management to strengthen cost control; strengthening financial analysis and efficiency, producing financial expected investment analysis and plans, capital plans, and other measures to improve capital efficiency and turnover capacity, ensuring that accounts receivable, inventory, and capital turnover involved in the business are in optimal condition.

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