Many distributors were anxious in 2023.
They expected business to improve after pandemic restrictions ended, but the recovery did not unfold that way. At the same time, snack discount chains expanded rapidly with support from capital and took business from traditional local retailers, adding pressure to distributors.
Those were the immediate effects. From a broader perspective, several structural changes were becoming clear.
Four Structural Pressures
1. Growth Is Shifting from Volume to Structure
China's economy has moved from rapid quantitative expansion toward slower structural growth.
Downward economic pressure and weak consumption were likely to persist. Companies could no longer assume that market expansion would automatically lift every participant.
2. Demographics Are Changing Demand
Lower birth rates, population aging, and negative population growth are changing the structure of consumption.
The effects develop gradually, but over five to ten years they can alter category demand, household spending, retail locations, and the economics of distribution.
3. Consumer-Goods Volume Has Reached a Limit
Traffic in physical retail continued to decline.
Competition was no longer confined to a local market. Local distributors and stores had to compete with digital platforms and businesses capable of reaching consumers across channels.
Intense competition would become a normal operating condition.
4. Labor Cost Is Rising as Marketing Efficiency Falls
Labor costs increased substantially while marketing efficiency declined.
Digital infrastructure became cheaper and easier to access, but building a defensible brand became more difficult.
The Long-Term Opportunity Has Not Disappeared
The outlook was not entirely negative. Several structural opportunities remained visible over a longer time horizon.
China would continue to be one of the world's largest consumer markets. Its size and depth still created countless opportunities.
Rising household income also created room for better products and services. The needs of both emerging middle-income consumers and the broader population were not yet fully met.
Efficiency across production, supply chains, and distribution in traditional industries remained low, leaving substantial room for improvement.
Data, new technology, near-field e-commerce, and interest-based commerce were also creating new marketing opportunities.
The end of easy volume growth does not mean the end of growth. It changes where growth must come from.
Protect the Core before Chasing Expansion
For distributors operating amid uncertainty, survival comes first.
The owner should reassess the business foundation:
- Which operation has the strongest competitive position?
- Which products and channels generate 80 percent of gross profit?
- What is the current condition of the team and organization?
- Where is there still room to improve efficiency?
A stable core business is the foundation for managing external risk and finding new growth.
The right strategy is not simply conservative or aggressive. It must adapt to circumstances.
The company may need to defend core products, customers, markets, teams, and distribution channels while investing decisively in a small number of opportunities it understands well.
Without stability in the core, the distributor cannot withstand a major external shock.
In a mature market, growth must come from two sources: changing the internal structure and finding incremental space within the market.
That requires four actions:
- Optimize the team, improve efficiency, redesign processes, and strengthen operating capability.
- Research new growth models and identify competitive strategies that can create a breakthrough.
- Understand new consumer groups, consumption trends, and occasions.
- Allocate resources according to structural opportunity rather than broad market optimism.
Focus, Focus, and Focus Again
When business becomes difficult, distributor owners often look for external investments.
But in a market with abundant capital, genuinely profitable opportunities can become harder to find. Operating the existing trading business with focus and discipline is already a demanding task.
The first recommendation is therefore concentration.
Focus on cost and efficiency. Focus on the market and the sales organization. Remove activities that do not create durable value or compound over time.
Only the priorities that the owner consistently follows will receive enough organizational attention to improve.
The owner must therefore concentrate personal energy on the company's core strategy.
Organization Is a Distributor's Core Advantage
As traffic fragments and channel operations become more complex, a strong team and organization become the distributor's most important competitive assets.
Organization building needs deliberate investment in culture, skills, communication, processes, and institutional support.
Markets are now too complex for success to depend only on the owner's relationships or a few experienced salespeople.
The distributor needs an organization that can repeatedly identify opportunities, coordinate execution, and learn from the market.
Keep Learning as the Market Changes
Consumption occasions, media, and distribution channels have all changed substantially.
Distributor owners need an open mind. They should learn, observe, listen, visit other markets, broaden their information sources, and remain sensitive to changes outside their immediate territory.
When the environment changes faster than internal experience, closed thinking becomes a competitive disadvantage.
Use Technology to Rebuild the Business
Technology is a primary productive force.
Distributors should invest in digital tools and use them to upgrade capabilities continuously.
The objective is not digitalization for its own sake. It is to move from being a company that merely transports goods toward becoming a platform and a marketing organization.
B2B ordering and related tools can automate more transactions and reduce the amount of manual participation required in routine trade.
That allows people to spend more time on customer development, market operations, product selection, and complex decisions.
The owner also needs the courage to become an entrepreneur again. That attitude is essential for survival in a complex and highly competitive environment.
Four Changes to the Business Model
1. Move from Volume Growth to Structural Growth
Optimize the product portfolio, profit structure, and channel mix.
Invest in businesses with high growth potential and strong gross-profit contribution. Exit marginal operations that cannot create a barrier or meaningful return.
2. Move from Scale for Its Own Sake to Quality Operations
Do not pursue shipment volume without regard to operating quality.
Concentrate on the most important products and channels, deepen execution, and improve the economics of the business.
3. Move from Brand Dependence to Proprietary Expertise
A distributor should not rely only on the resources granted by brand owners.
It needs scarce professional capability and its own competitive barriers.
That may mean building expertise in new retail, community group buying, short video, or another field relevant to the local market.
When the distributor has capabilities the manufacturer needs, the relationship changes from asking for support to negotiating as a valuable partner.
4. Force Competitors to Respond
The broader market may be oversupplied, but every local market contains relative strengths and weak points.
A distributor does not need to defeat China's largest digital platforms. It needs to outperform the peers competing for the same customers, brands, products, and channels in its territory.
That can still create meaningful growth.
Expand the Radius of Survival
Consumption was already diverging into different income and value segments, while long-term uncertainty and structural risk remained.
The practical response was to strengthen the foundation and protect the core business; improve efficiency and technology; keep learning and widen the field of view; reassess people, products, and channels; and define the realistic radius of growth.
At the same time, the distributor should reduce impulsive investment, unnecessary action, and excessive risk.
Survive first. Become more efficient than competitors. Learn beyond the local market. Then expand the business's radius of survival.
The headline's language is deliberately provocative, but the strategic point is not destructive price competition.
It is that in a mature market, distributors cannot control the macroeconomy. They can control focus, organization, technology, operating quality, and the strength of their local competitive position.