---
title: "Deng Xia, Chairman of Wandian Yigou: Exploring Channel Transformation and Distributor Transition"
description: "At the 2017 (2nd) China FMCG + Internet Conference held on March 21-22, 2017, Deng Xia, Chairman of Wandian Yigou, delivered a speech without slides, sharing his insights on channel changes and distributor transformation. He emphasized that B2B is a tool for improvement, not disruption, and advised distributors to focus on survival rather than chasing growth."
author: "邓侠"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2017-03-27"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/deng-xia-chairman-of-wandian-yigou-exploring-channel-transformation-and-c12c5108/"
markdown: "https://xinjignxiao.com/en/articles/deng-xia-chairman-of-wandian-yigou-exploring-channel-transformation-and-c12c5108.md"
original_source: "https://mp.weixin.qq.com/s/6zWGSlEV07b1_LP76gMxKQ"
translation: "https://xinjignxiao.com/zh/articles/%E4%B8%87%E5%BA%97%E6%98%93%E8%B4%AD%E8%91%A3%E4%BA%8B%E9%95%BF%E9%82%93%E4%BE%A0-%E6%8E%A2%E8%AE%A8%E6%B8%A0%E9%81%93%E5%8F%98%E9%9D%A9%E4%B8%8E%E7%BB%8F%E9%94%80%E5%95%86%E8%BD%AC%E5%9E%8B-c12c5108.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/deng-xia-chairman-of-wandian-yigou-exploring-channel-transformation-and-c12c5108/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Deng Xia, Chairman of Wandian Yigou: Exploring Channel Transformation and Distributor Transition

> At the 2017 (2nd) China FMCG + Internet Conference held on March 21-22, 2017, Deng Xia, Chairman of Wandian Yigou, delivered a speech without slides, sharing his insights on channel changes and distributor transformation. He emphasized that B2B is a tool for improvement, not disruption, and advised distributors to focus on survival rather than chasing growth.

From March 21 to 22, 2017, the 2017 (2nd) China FMCG + Internet Conference was grandly held at the Chengdu Century City New International Convention and Exhibition Center, attracting over a thousand distributors, manufacturers, and internet companies from across the country. The venue was packed, and the atmosphere was unprecedented. Below is the speech delivered by Deng Xia, Chairman of Wandian Yigou, on March 21, which we have compiled for our readers. Deng Xia was the only speaker who did not prepare a PPT, but his speaking style and unique insights still received a warm response from the audience. Let's enjoy the pure dry goods together!

Having been immersed in the FMCG industry for nearly 30 years, I am what you might call a "old hand" who, at nearly 60, believed the lie that "even a pig can fly at the internet wind" and plunged headfirst into the B2B red ocean. After swallowing a few mouthfuls of seawater, I still refuse to give up, and I estimate I won't turn back until I drown.

"At the internet wind, even a pig can fly" is a basic common sense, but no matter how strong the wind, a pig will never be blown up. In 2014, with the buzz of "Internet+" and nationwide entrepreneurship, I was tempted and inadvertently founded Wandian Yigou. How have we done over the years? All the guests present are industry insiders, so you know the truth. We may look good on the surface, but inside we have mixed feelings. However, I believe some companies will laugh last, but it won't be me. The natural law of life will leave me dead on the beach. That's the truth.

I don't have anything new to say about the internet, but I believe the B2B industry definitely has a future. When we look forward, we must look back. Let me tell you about the history of the FMCG industry, because I believe that to know the future, you must review history. Only those who read history have a future. In 1983, the Wuan Road wholesale market in Shenyang opened, marking the first year of wholesale circulation in China. 34 years have passed. How is China's circulation industry? There are too many wholesale markets across the country, and 60%-70% of China's circulating goods are still penetrated and digested through these wholesale markets. But in China's circulation industry, Shenyang's Wuan Market is precisely a landmark event. In 1983, many of you may not have been born yet. When the circulation market emerged, we noticed that China truly began the dual-track system of planned economy and market economy. There were too many opportunities for opportunists to complete their primitive capital accumulation. What does the dual-track system mean? Value. Many people had resources, and many did not. In this process, those with resources naturally became winners.

Chinese distributors emerged between 1983 and 1993. During these 10 years, Chinese distributors could turn the market upside down with a flip of their hands, and they were called "profiteers." China's circulation industry, including logistics, and even today's GDP, should thank these profiteers, because they facilitated the smooth flow of goods from north to south and east to west, allowing people in Harbin to wear fashion from Guangzhou's Baima Market. It was an era of "product is king." Distributors only needed to get products, even if they placed a steel wire bed in a wholesale market with some plastic slippers, they could make a fortune. Over the past 20 years, I have often dealt with Chinese distributors. I asked them, if they were to recall their money-making methods in a song, the one they would most like to sing is Zhang Haozhe's "If We Could Go Back to the Past."

In 1996, the first foreign chain retailer, Makro, opened in Guangzhou, with first-day sales exceeding 4 million yuan. The foreigners never imagined that daily sales could reach 4 million, and their servers crashed. Originally planned to close at 9 PM, they had to close at 4 PM due to the server crash. That year became the first year of modern chain retail in China. The entry of foreign retail into the Chinese market meant that Chinese distributors began to face a competitive model of bargaining with retailers, rather than the single sales model of the past wholesale markets.

After 1996, a large number of foreign retailers represented by Carrefour and Walmart entered the Chinese market. Distributors faced bargaining with these retail giants. Fees they had never heard of before, such as entry fees, shelf fees, barcode fees, and more importantly, payment terms, suddenly appeared before distributors. From 1999 to 2001, Chinese distributors established many chambers of commerce, and the sole reason for their establishment was to unite against the rules of modern retail. In the struggle against modern retail, Chinese distributors ended tragically. They are definitely not a group that can unite. The genes of distributors who completed primitive capital accumulation through small calculations, small-mindedness, small cleverness, and small businesses make it impossible for them to unite. Many distributors obediently paid entry fees, anniversary fees, promotion fees, and accepted 45-day, 60-day, or 90-day payment terms. Some speakers earlier suggested that distributors should dominate their regions and unite for warmth. I have always been skeptical of this. If they don't cheat you, it's already good. You have to guard against them, and it's entirely possible that you cheat me. This deep-rooted culture is hard to change, so unity is a false proposition. Why? Because this group cannot unite. To put it bluntly, Chinese people cannot unite, let alone distributors.

We noticed that when Chinese distributors faced bargaining with large retailers, companies began to try deep distribution. The first was Master Kong, which built distribution down to the county level. Motorola's Blue Star Plan, Coca-Cola's 101, etc., all aimed to slim down large distributors. The store bullies the customer, and the customer bullies the store. Deep distribution meant direct operation of terminals, which began in 1998 and died out after three to five years. The idea of making distributors serve as warehouses and banks was a one-sided wish of brand manufacturers. The diversity of China's retail formats and the complexity of its channels inevitably mean that no single model can dominate. During this period, a phenomenon emerged: many brand manufacturers established KA departments. Why KA departments? I once worked for a multinational company. In 1999, I went to negotiate a national contract with a multinational retail giant. We agreed on 3 PM. I went in at 2:15 and waited obediently. They came out and said the previous client hadn't finished, please wait. I waited for an hour. When I went in, he asked, "Do you have your materials?" I had no materials; isn't it just negotiation? He said, "This is your product's global sales," and printed out a thick stack of data. At that moment, I felt like dying. Why? Because they knew you inside out, with detailed data on product sales worldwide, while you didn't even bring a notebook. Why are you always at a disadvantage when negotiating with retailers? It's about information symmetry and asymmetry. Today, the internet is so developed because we are in an era of information symmetry. After 2003, large distributors began to emerge in China because, during brand differentiation, many Chinese distributors, unable to adapt to new market rules, chose to leave or switch industries. Brands began to concentrate on large distributors with capital strength and the ability to cooperate with large retailers, leading to the emergence of distributors with 500 million or even 1 billion in sales.

In 2009, during Double 11, Taobao's total sales were 936 million yuan, marking the true entry of e-commerce channels into the Chinese market. At that time, no one realized that e-commerce would affect our business, or that Ma Yun's Taobao and Liu Qiangdong's JD.com would impact our current terminals. No one thought we might lose our livelihoods. If channel providers had paid attention to the 900 million yuan in Double 11 sales in 2009, they might have been alert until last year's Double 11, which reached over 90 billion yuan. If you had noticed six or seven years earlier, would you still be playing distributor? No, you would have taken all your wealth and bought houses in Shanghai. At that time, houses were 30,000 yuan per square meter; now they are 80,000. Because we lack insight, because our primitive capital accumulation and our entire rise were too simple and easy, we developed a long-term dependence on this path. Now that the wolf is really here, you don't even have the ability to resist.

In 2013, online payment became a trend, and O2O emerged. Without online payment, could O2O work? No. So the rise of mobile internet also meant the rise of mobile payment, and O2O began to divide channels. Why are hypermarkets declining now? The emergence of e-commerce and O2O is because all planned shopping can be done online. In fact, e-commerce did not initially have a major impact on distributors' business; on the contrary, the emergence of new channels brought greater business opportunities for distributors, but it was your lack of understanding and adaptation to this new channel. Before 2014, e-commerce was dividing the share of modern retail, not distributors' business.

In 2014, B2B emerged. When the O2O money-burning model in 2015 drove many to feel that this path was unviable and hope for a graceful turn, the B2B blue ocean of 2014 quickly turned into a red ocean in 2015-2016. The myths of "Internet+", nationwide entrepreneurship, and "pigs flying at the wind" drove too many internet elites into the B2B industry to share this pie. This time, internet e-commerce began to divide Chinese distributors' business. After more than 20 years, nearly 30 years of accumulation, Chinese distributors must truly make a choice: Is the future path B2B, or stick to your wholesale market, or continue trading with these hypermarkets? This is a multiple-choice question, not a mandatory one. Everything depends on your core capabilities, how many store resources you have, how many distribution channels, and how much brand manufacturers depend on you. I honestly tell traditional distributors that in the next five years, the opportunity to make a fortune is gone. You can only hold on to your existing stock; don't mention growth. Survival is the only hard truth. Chinese distributors, survival, staying alive, is more important than anything.

B2B is a means, a tool for channel operation. It simply tries to give traditional channels the ability to master information and improve efficiency. Wandian Yigou has been around for less than 3 years. I honestly tell you, because I am stingy, I haven't burned a single cent. Because I deeply understand business rules, I know how to let suppliers make money, and I know how to let brand manufacturers make money. If they both don't make money, how can you make money? Maintaining the ability of suppliers and brand manufacturers to make money means you also have the ability to make money. B2B is definitely not a disruption to traditional channels in China, but an improvement. Using price disruption to gain traffic, stickiness, and activity is nothing but a replica of O2O and is not advisable, because the small B you face is not someone easily fooled. Their decades of understanding and experience in retail categories are not built overnight. The B2B industry needs old drivers. Wandian Yigou has no fame, Wandian Yigou is not big, but Wandian Yigou is more solid and more prudent. Because competitors and other B2B companies have been burning money, I can only follow behind and watch. When they can't burn anymore, I'll raise my head. I always tell others that in the internet competition and B2B competition, Wandian Yigou must not enter the vortex of competition. Once you enter the vortex, you cannot laugh last. I am 60 this year, and I estimate I can live another 20 years. I cannot be the one laughing last, but I want to see how those who violate market price laws die. I have this right, right? The right to watch others die. I think I have this right. So I don't need to laugh last; I need to stay alive.

B2B is a process, not a result. B2B is a small wave in China's internet process. It cannot become a huge wave that washes all distributors and brand manufacturers onto the beach. That's impossible, just as the wind can never blow up a pig. That's a lie. So in these channel transformations, every time you face these changes, remember: stay calm, hold your ground, watch changes quietly, and no matter what happens, staying alive is the only hard truth!

As a 60-year-old man, this is my last speech on the B2B stage. I sincerely don't want to add more trouble to the young people. For over 20 years, I have been helping Chinese distributors. For over 20 years, I have had too many distributor friends across the country. In their growth and confusion, I always tried to help them. Unexpectedly, they are now helping me. I never expected that. In the past, I helped them without charging a cent, and now when I need money for this endeavor, they generously contribute. Because they understand that Wandian Yigou is doing something to help them. They are not stupid. Thank you!

-END-


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671