(ID:JingyanLab) This article is based on the account of a senior distributor, focusing on the path of M&G Stationery's rise. The text is somewhat obscure, but full of insights. First, the data: Since its listing in 2015, M&G Stationery's stock price has soared at a rate of doubling each year, with a cumulative increase of over 844%, and now has a market value of 80 billion yuan. In 2019 alone, M&G sold 2.3 billion pens, averaging 13 pens per student among the 180 million students in school. With nearly 85,000 retail terminals, M&G Stationery has built a powerful stationery dynasty over more than 20 years of hard work. Since the establishment of its factory in 1995, the red-and-black "M&G" logo can be seen at almost every school gate in China. Ten years ago, the stationery industry was in a chaotic era, with a disordered market. At that time, issues like unpaid debts and returns were severe, and there were low-level competitive practices such as cross-regional selling and price undercutting, forming a vicious cycle that was hard to cure. M&G Stationery acted as an industry innovator, relying on 50 salespeople to integrate a distributor team of over 4,000 people, taking an unremarkable small category to the extreme. Product: Creating Differentiation In recent years, traditional Chinese manufacturing has faced threats from rising costs of various factors, and more competitors have entered, making the market fiercely competitive with counterfeit and fake products. In 2007, while domestic stationery manufacturers were still in a chaotic period for gel pen design, M&G Stationery took the lead in defining the concept of "student stationery," positioning its products for middle school students, with designs specifically targeting the female middle school segment. This differentiation strategy was already considered wise among manufacturers who were just making stationery without much thought. M&G Stationery put effort into renovating gel pen barrels and refills, even deliberately catering to users. Learning that many students liked the works of comic novel author Ming Xiaoxi, M&G launched a series of gel pens featuring the male and female protagonists of her works on the pen barrels. That year, gel pens also saw a diversification in mold styles and design colors. Product differentiation has always been a highlight for M&G Stationery. When the "technical" True Color stationery began to shine in the industry, M&G Stationery came from behind, initially using the "style faction" label to attract many trend-following consumers. For example, they turned the base of the signature pen, which was originally all black, into a yellow cartoon smiley face; launched "exam-specific pens"; and created the "Confucius Temple Blessing" series. Among these, the "exam-specific pens" alone boosted sales by over 20%. Now, M&G Stationery has begun collaborating with internationally renowned anime brands, focusing on IP licensing production. It has obtained stationery licenses for brands such as Miffy, Snoopy, Dongji, and Picasso, and has also engaged in cross-industry collaborations with Han Han, EF Education, well-known illustrators, and Tongji University for industry-academia-research, using internet thinking to understand users and becoming a leader in multiple market segments. According to the 2015 annual report, revenue from student stationery products exceeded 1.15 billion yuan, a year-on-year increase of 26.55%, and office stationery products revenue was nearly 1 billion yuan, up 43.28% year-on-year. Among the more than 200 new products launched each year, M&G Stationery also applies for patent protection for its designs. For example, its best-selling and pillar products like the K35 retractable pen, GP-1111 office pen, and MG-2180 conference pen have achieved great sales success, supported by patent protection barriers. To complement design innovation, M&G Stationery has also systematically implemented a series of national price controls, as well as reforms such as caravan brand promotions for second- and third-tier partners and 4S store management for distributors. Channel: Partner Pyramid In 2015, M&G Stationery had 30 first-level (provincial) partners, nearly 1,200 second- and third-level partners, and nearly 70,000 retail terminals nationwide. It is this channel strength that has allowed it to maintain a revenue growth rate of about 25% per year over the past three years, creating the "M&G miracle" in the stationery industry. Initially, like its peers, M&G Stationery's products reached consumers through traditional intermediate channels with layers of markup, and only by giving distributors high returns could products achieve high sales. However, when actually dealing with large distributors across regions, M&G Stationery discovered that the chain was full of demands and kickbacks. If other manufacturers offered good conditions, large distributors would require even better conditions to represent M&G Stationery. Moreover, beneath the large distributors were second- and third-level distributors. If they continued to win loyalty by giving away profits layer by layer, they would eventually drag themselves down. A healthy business model requires a different approach. Also in 2007, M&G Stationery began to cultivate first-level market distributors at the provincial level, investing heavily in training, guidance, and support to gradually turn them into single-brand exclusive distributors. Once the first-level market was stabilized, they arranged for first-level distributors to develop second- and third-level markets at the city and county levels. But each level could only have one exclusive agent, with layers guiding down to the terminal stores. This model is like a combination of the insurance direct sales model and the FMCG distribution model, vividly called the "M&G Partner Pyramid." The core competitiveness of the pyramid is the "layer-by-layer investment, layer-by-layer sharing" model. To stabilize the loyalty of single-brand distributors, M&G Stationery implemented a regional exclusive agency system, regional sales protection, and prevention of cross-provincial and cross-city selling from the start, establishing a "stable, win-win" business strategy with partners. During this period, terminal stationery store owners were confident in M&G's supply. "New products arrive on Monday"—within 7 days, M&G Stationery could get new products onto stationery terminals nationwide. This efficiency relied on the many distributor partners that formed the pyramid. Of course, M&G Stationery's distribution is not static. They regularly assess all subordinate channels internally, and if they fail to meet standards, they revoke the distributor's qualification. Stores: Retail Terminal Management M&G Stationery's standardized retail terminal brand management and franchise management have achieved a win-win situation for retail terminals, distributors, and manufacturers in the stationery industry. It develops and manages various retail terminals together with partners at all levels, allowing numerous ordinary stationery stores to develop step by step, moving toward model stores, brand stores, and franchise stores, ultimately driving product sales. 1. Model Stores Starting in 2007, manufacturers began to explore how to build brand image, willing to invest money and effort to transform grocery stores into "regular forces," and M&G Stationery was among them. Initially, M&G Stationery targeted stationery stores with advertising effects on the street or with strong customer business capabilities: using materials like spray-painted cloth and iron frames to help customers design, produce, and install signs, providing a one-stop service. To reflect brand effect, the ratio of the company logo to the customer's storefront area was generally 50-50 or 40-60. If there was a large blank wall inside the store, they would also put up company photo or KT board advertising patterns. In this way, a stationery store was considered "captured." Each sign, from start to finish, cost about 3,000 yuan. M&G Stationery's only requirement was that the store sell its products. At that time, small stationery stores mostly tried to save money, piecing together cabinets and stocking goods worth 10,000 to 20,000 yuan to set up a stall and become a boss. M&G Stationery's proposal was not a loss for small stores, so acceptance was high. 2. Brand Stores Starting in 2009, M&G Stationery began to upgrade the image of individual stores based on the early model stores. They transformed stationery stores that had no brand, no image, no lighting, no props, and looked like grocery stalls into brand stores with product displays, product structure positioning, decoration style, and lighting effects all conforming to M&G Stationery's unified image. The construction of signs using high-unit-price materials like aluminum-plastic panels and color steel, as well as partial interior decoration and display shelves, were all fully handled by M&G Stationery. Compared to direct cash subsidies, this had many constraints, but it greatly helped improve store image. Therefore, more and more stationery store owners began to actively join M&G Stationery brand stores. During this process, brand stores no longer just sold pen refills for M&G Stationery, but began to sell backpacks, stickers, and even toys. This step allowed M&G Stationery to surpass its peers and embark on a vigorous "street retail stationery store management revolution." 3. Chain Franchise Stores After tasting the benefits of brand store construction, M&G Stationery officially promoted chain franchising in 2010. M&G Stationery selected excellent stores from its 40,000-50,000 stores for upgrade and packaging to create chain franchise stores, which for merchants was like "old stores reopening." M&G Stationery's franchise stores use a "whole-store output" model, not only providing franchisees with M&G's own products but also outputting other brand products with good cost performance. For some franchise stores, in principle, 70% of the goods are supplied by M&G Stationery, and the remaining 30% are adjusted by the franchisee according to local conditions. By the end of 2016, M&G Stationery had over 10,000 chain franchise stores. 4. M&G Life Gallery Consumption upgrades should correspond to product upgrades. For a long time in the past, stationery was seen by consumers as low-value consumables. Now, the post-90s and post-00s generations, who grew up with the internet, have become the new main consumer group, and their purchasing power has risen sharply. At the same time, their demands for products are more diversified and overall higher. Therefore, in 2016, M&G Stationery established a high-value business unit, launched the M&G Life Gallery project, created a "one-stop, all-category" cultural and fashion shopping place, and began exploring new business models such as direct-operated flagship stores. With the combined advantages of products, brands, and channels, the M&G Life Gallery increased its store count by 168 in the third quarter of 2016, with revenue reaching 52 million yuan. In addition, the M&G Life Gallery is closely connected to M&G's e-commerce. The Life Gallery is not just an upgrade of the three terminal forms mentioned above; more importantly, it began to serve as the offline experience venue for M&G's e-commerce, becoming a platform for displaying its brand image. The internet's connecting genes began to scale up originally fragmented users. M&G Stationery, focused on products, began to use the platform to connect online and offline spaces, connect its focused user groups, and convert users, platforms, and even the imaginable big data into its core competitiveness. Are you "watching" me?