The 3rd 'FMCG + Internet Conference' hosted by New Distribution was grandly held on November 8-9, 2017 at Chongqing Yuelai International Conference Center! It attracted over a thousand distributors, manufacturers, and internet companies from across the country, with a full house and unprecedented scale. The following is the speech by Li Qian, founder of Hetun Youqingxu, at the conference, organized for readers.

Li Qian: Good morning, everyone! I am Li Qian, founder of Hetun Youqingxu. Today I bring you a new topic: from channel power to brand power. This topic differs from the supply chain efficiency perspective mentioned by other speakers; I want to discuss from the brand angle, the market's demand for brands, and the consumer's perspective: what products do we need in this era, and what product-side innovations should we undertake? Today I also bring our brand connection ideas and plans.

I am a stranger in this venue; this is my first time at such a conference like Qiutang, and my first time at New Distribution's event. Over the past decade plus, my work has been internet-related, with seven or eight years at Tencent, then at an early-stage investment firm focusing on internet and consumer sectors, until April this year when I officially started my own venture in the snack brand space.

Throughout my career, I've been exposed mostly to the internet. People ask me what internet thinking is; I say I don't know, I have no feeling for it. If I had to define it, true internet thinking is open-minded, practical thinking—when you encounter a problem, you find the fastest solution to solve it. That's my definition. From April to now, six months of entrepreneurship, I've been constantly on the move, visiting places worldwide where good leisure snacks can be found. Why travel so far? Simply to know how many good snack products exist in the world, and how many good ones we have in China. That's my wish and purpose after half a year of running.

We often say the next 5-10 years are the decade of consumption upgrade, and in this decade, all businesses in China are worth redoing. This is also a view mentioned by renowned Chinese investor Wu Shichun. Many speakers have shared common points, such as change is always happening, and different roles need to do different things in the industry chain. These views together reinforce that in change, all industries have opportunities for re-innovation.

Why did I enter the leisure snack field? After long observation, I found that in China's leisure snack sector, there is a massive lack of truly upgraded, brand-powerful products. All previous speakers talked about efficiency, how to make the industry faster and more efficient. I want to discuss another aspect: the product side, how to make products better. Because ultimately, we all gather here to serve consumers, to let them buy better things. That's the ultimate goal of our efforts. So, what is true consumption upgrade and brand power? Let me elaborate.

What is true consumption upgrade? I've mentioned this in my columns, forums, and courses. Since last year, many have talked about consumption upgrade. What does it truly mean? I have a simple idea: the ultimate state of consumption upgrade is spending the same money but getting better things. Some say it's price upgrade, selling more expensive; others say it's prettier packaging. But in reality, for leisure snacks, true consumption upgrade must meet at least three points: delicious, good-looking, and good value. These three are also the slogan and selection criteria of our channel brand 'Hetun Youqingxu'. First, the product must be good enough; second, it must look good, with beautiful packaging; third, it must be a good deal. Because when consumers get it, they hope that with 10 yuan they used to spend, they can now buy something better. Someone asked me if IKEA counts as consumption upgrade; I said of course, and to some extent, IKEA sparked the budding awareness of consumption upgrade among Chinese people. Many young people realize that with not much money, they can buy better, nicer home goods at IKEA. Now more people are willing to shop overseas because those products are better and packaging is prettier. I returned from Japan yesterday; I saw everyone frantically grabbing leisure snacks at the airport, with chips priced at what we'd consider sky-high being almost snatched up. That's our purchasing power. In the past, in our country, any product could sell; our capacity wasn't overflowing, and money was easy to make. Our consumption aesthetics and standards hadn't risen. Now with overseas shopping and outbound tourism booming, more Chinese have seen good things and know what 'good' means. If you don't provide them with good products, they'd rather go abroad to buy better ones. So, I have a firm feeling: in our FMCG sector, it's time for a flood of 'good things'; people will increasingly care about 'good'.

Now the second key point: brand power. What is brand power? In the past, we thought about a brand and a product in a full-chain logic: after a product is produced, distributors distribute, promote, get feedback, improve the product. We simply treated a product as a fixed entity; it's a product, we put it there and sell it. With channels and distribution, you can move volume; channels rule! But now the logic is gradually changing. Many small but beautiful new food and beverage brands are rising. They start from demand research: who in the market needs such a brand, in what scenarios, are the flavors carefully selected, are the brands positioned and designed, is packaging carefully designed and planned, and is online marketing power combined with offline experience?

You might think this is too vague; you might be more eager to know about efficiency. But sorry, I must talk about this thing that everyone ignores and thinks insignificant. It's because of our past understanding of brands that we haven't made many good things for so long. We pay too little attention to brand power, the soft power; we focus on 'hard power', studying efficiency and speed. But when it comes to brands, have we really studied what consumers choose when faced with two options? As I said, Chinese consumers' aesthetics are gradually improving. With massive overseas shopping and travel, too many Chinese have seen good things. In the past, not-so-good products could sell; in the future, they may not.

From production to market, there's a gap I call the brand connection link. In the past, taking a product from the factory, as long as the price was right, we sold it. This simple, crude process actually lacked a link: what do consumers really need, and how do we give them the most thoughtful things? We often can't figure out why some things go viral, or how some e-commerce or internet brands grow huge overnight. Actually, it's simple: they did something right, and that something was studying consumer needs. If we need to satisfy one need, the core should be consumer needs, then profit needs, partner needs, investor needs. We must all understand our role as servers; whether in the efficiency chain, production chain, or brand chain, we ultimately serve consumers. So, research on consumers and insights into consumer brands should be done by someone.

We see ugly, crude things still rampant in stores, or 'fake consumption upgrade' prevailing. When someone presents a new product as consumption upgrade, with a beautiful box, scary price, layer after layer of packaging, and little inside, that's fake. True consumption upgrade must generate repurchase intention to last. The market first lacks the emergence of good products, which include packaging design, demand research, quality, creativity, and marketing planning. You might still think this is vague. Simply, if you go to Korea, Japan, Germany, or world food exhibitions, observe how many seats Chinese food brands occupy. When our products are compared with theirs, you'll understand the phrase 'immediate contrast'. Our production capability is not bad; China has hundreds of thousands of snack production factories with massive capacity, but packaging capability is too poor, selection capability too poor, allowing ugly, crude, and fake upgrade products to prevail. The market's eyes are always sharp; consumers always welcome good products. That's why Chinese consumers must shop overseas at all costs. That's what consumption upgrade is for; we must produce better things to sell to consumers.

The channel side is also undergoing earth-shaking changes. New channels are rising; in the future, all new channels will have brand connection power. New channels with brand connection power are definitely the future direction. We know the e-commerce era gave rise to certain food and beverage brands, and the traditional distribution era launched others. There's a saying: times create heroes. Each generation's trends create that generation's popular brands; they are mutually reinforcing, mutually achieving. Good channels achieve good brands, and good brands will definitely boost good channels. In the end, winners stand with winners. While discussing efficiency and how to spread channels wider and faster, I also propose how to do things better. Because consumers need better service, more thoughtful service, and more suitable products. So, when good products have brand connection power and good channels also have brand connection power, can we truly advance consumption upgrade.

In this era, allow us to boldly attempt this innovation. We see more and more small but beautiful snack brands rising, and countless food factories in China are worried about not being able to create their own food brands. So we do one thing: strictly select all snack production factories and emerging brands, cooperate to incubate and transform these snack brands, and connect and share them with all channel parties. That's what we do. We've made several transformations, which I call Hetun transformations. Hetun is our corporate logo and will become a mark of strict selection in the future.

First, change the past classification method. In the past, entering a supermarket, you saw shelves neatly classified by production process. But from the consumer's perspective, they don't care about such classification; they care about being richer, better, and having things for specific scenarios. So the first thing Hetun did was reclassify leisure snacks by scenario and emotion. For example, what to eat in class, what to eat in meetings, what to eat while watching TV at home, what to eat when happy or unhappy. This classification is more scientific on the consumer side. On the backend, with the integration of OEM factories, we no longer need to classify purely by production process.

Second, brands start positioning from users. For example, there's a brand called 'One Person Drinks Alone'. Its positioning is definitely not 15-40-year-olds; that's like no positioning. What is user positioning? For 'One Person Drinks Alone', it's precise: those who are mediocre but happily live life, 'the world is yours, go succeed; I just want to drink alone'. Too many brands like to endorse success and chicken soup; no one pays attention to those who say, 'I'm willing to be mediocre, live a plain life'.

Third, product manager-style division of labor: each person is responsible for one line, following the entire cycle, from user needs to final feedback, tracking the whole chain. We study consumers with a microscope.

Fourth, brand sharing plan: in the future, the brands we incubate and select, we hope to share with all B2B platform channel friends, distributor friends, and manufacturers here. We hope to take them out as a basis for shared cooperation. These are Hetun's transformation suggestions and logic.

Next, let me show you our products. This is 'One Person Drinks Alone', a snack for drinking; it was test-sold online and sold out in 30 minutes. 'Fake Fries' is our fries brand. 'Hand-Torn Ghost Bread', 'CET-4/6 Must-Pass Sweet Potato Chips'—these brands may feel different from traditional products, and consumers can feel it too. The most defiant brand is 'Fan Jianwen', which is our colleague; we turned it into a product, brand, emoji pack, and sent it to variety shows. This is a three-dimensional brand marketing and packaging, from the moment of brand discovery, directly tracking how a brand ripples in consumers' minds until it's deeply rooted.

After visiting so many factories and discovering so many good foods, we have now reached cooperation with dozens of factories and brands. Based on different scenarios and emotions, targeting different groups, we launch Hetun brands. We hope to discuss the topic of products with all friends here. I know everyone is focused on efficiency and wider distribution, so I also appeal: let's jointly pay attention to product issues. Because ultimately, products are the terminal that reaches consumers, and the terminal's performance determines the results of our entire chain's efforts. That's my elaboration on products today.

Next, we will launch a brand open platform, sharing brand plans with all channel partners. If you need details, my colleagues and I will connect with you in detail over these two days. Our WeChat public account: Hetun Youqingxu, with colleague contact info in the backend.

Finally, as an internet practitioner, in my years of internet work, I particularly love change. Whenever change comes, there must be opportunity; it's a state of survival. Stagnation is not a human state; people live in change. Also, in change, cooperation is the way to win. Professionals do professional things; we must always believe this. No one can do everything alone. I believe every link has professionals doing things to the extreme. When we connect extremes, we achieve our ultimate goals. When channels become increasingly crowded, let's change perspective and move forward together. Thank you!

Click Read Original to view the 3rd FMCG + Internet Conference highlights.

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