On December 26, the National Health Commission announced that "COVID-19 pneumonia" was renamed "COVID-19 infection" and the "Class B management policy for COVID-19" was abolished. In just three years, the world has changed. Standing at the crossroads of bidding farewell to the old and welcoming the new in 2023, we may deeply miss the world before 2019. The past is gone, and we know nothing will be the same. The upcoming 2022 has been tough for us. Many brand managers and distributor owners say it has never been this hard; just to survive, 2022 has already taken all their efforts. Everyone who survived 2022 is a warrior. Now is the time to gather our thoughts and look toward 2023 together.
Difficulties remain, but opportunities abound
In 2023, we have arrived in a new world. We will witness the explosion of Gen Z new consumption, face the rise of more new channels, and need new marketing methods, new supply chain capabilities, new brand communication and products to achieve new growth and realize "New. Thriving." In 2023, the situation is improving, but the challenges we face have not fundamentally reversed. What kind of 2023 are we about to face? At the National Economic Work Conference on December 15, the state described the current situation as "triple pressures of shrinking demand, supply shocks, and weakening expectations." These triple pressures will persist in 2023, especially in the first half. Among the eight prescriptions the state has issued for the 2023 economy, three are directly related to our FMCG industry: "encourage and support the development and growth of the private economy and private enterprises from policy and public opinion," "optimize epidemic prevention and control measures according to the times and circumstances," and "prioritize the recovery and expansion of consumption."
"Encouraging and supporting the development and growth of the private economy and private enterprises" gives confidence to our enterprises and distributors. This is a correction of past misunderstandings and misinterpretations of the central economic policy direction, and a reaffirmation of firm reform and opening up and the market economy. Therefore, we can expect that in 2023, the business environment for our private enterprises is definitely improving; especially our FMCG industry, as a livelihood industry, may receive more and better policy dividends.
"Optimizing epidemic prevention and control measures according to the times and circumstances" gives certainty to the FMCG industry. Our brand companies and distributors are not afraid of difficulties, but of uncertainty. With this certainty, we can make basically certain business plans for 2023.
"Prioritizing the recovery and expansion of consumption" means that domestic demand consumption will become the main path for economic recovery in 2023. In the past three years, our country has released few policies on consumption stimulus, which also means we still have significant policy space. In 2023, there may be sustained, large-scale consumer voucher policies directed at the market, and the first to benefit will be the dividends of China's FMCG industry.
In summary, 2023 is a year with persistent difficulties but great opportunities. However, how many of these dividends and opportunities fall on our brands and our companies still depends on the specific actions of each of our enterprises and distributors in 2023.
Seize the "Four News" to Thrive!
New Distribution believes that the three-year pandemic has brought about many profound changes in China's FMCG market. Facing the challenges of 2023, we believe there are the following "news" that every brand and distributor must seriously confront, carefully consider, and effectively act upon.
The rise of the Gen Z new consumer group. China's Gen Z population is currently about 264 million, accounting for less than 20% of the total population, but they already contribute 40% of consumption. In the next decade, Gen Z consumption will expand fourfold. Missing Gen Z means missing the future.
The rise and victory of new brands and new products. Fickleness and brand loyalty together become the mainstream of the market. Consumers tend to prefer brand consumption on one hand, but on the other hand, they are absolutely loyal to their own preferences. Once they no longer like you, they will immediately abandon you without hesitation. Future profit growth comes from the premium consumers pay for what they like, not from paying for necessities. Missing the creation of new brands and new products means missing profits.
New channels are rising faster and in a wider range. In the past few years, the number of new channels has exploded exponentially, and this will continue in 2023. Diversified, fragmented, and various expected and unexpected new channels are rapidly rising, taking away almost all market increments. Missing new channels means missing growth.
New supply chain capabilities become the key force for winning the future. Without world-leading supply chain capabilities, China's e-commerce could not have become the global e-commerce hegemon. In the increasingly complex omni-channel system of the future, without strong new supply chain capabilities, it is impossible to complete omni-channel fulfillment and delivery with low cost and high efficiency, and it is impossible to cope with the rise of new channels. Missing new supply chain capabilities means completely becoming a traditional company and missing the entire era.
New people, new products, new channels, new supply chain capabilities—all these new changes require us to understand, research, think, and act. All opportunities are hidden in new changes; all difficulties lie in unchanging traditions. How can we seize Gen Z? How can we seize omni-channel? How can we build new supply chain capabilities that adapt to the future? How can we successfully develop new products that consumers truly like and are willing to pay a premium for? Old experience is unreliable; what will we rely on to forge ahead in 2023? What can our distributors rely on to survive and develop?
From 19:00 on December 31, 2022 to 00:00 on January 1, 2023, the third New Distribution New Year's Eve Live Broadcast "New. Thriving" will, as always, spend the New Year with you.
We have invited Ding Jiachuan, Managing Director and Global Partner of Boston Consulting Group; Zhang Jixue, Founder of Xinchao Media; Zhang Li, Chairman of Xiamen Jianfu Chain Management Co., Ltd.; Wang Junfa, Vice President of Baixiang Group; Chen Shaojun, General Manager of Marketing at Huitouke Food Group; and Li Feng, mentor for distributor growth and host of [Li Feng New Distribution] , to stand up together from the ruins after the pandemic smoke, explore and start 2023 together, and thrive together!