---
title: "Giving Up Agency for First-Tier Brands Like Red Bull and JDB, Transforming into Unified Warehousing and Distribution, Now Listed on the NEEQ: Who Says Distributors Can't Do B2B!"
description: "In March 2017, Jiangsu Huashang City Distribution Network Co., Ltd. was listed on the NEEQ, becoming a pioneer among FMCG city distributors entering the capital market. Previously, Huashang was one of Wuxi's largest distributors, representing brands like Mengniu, JDB, C'estbon, Nongfu, and Red Bull. However, in 2015, Huashang proactively de-emphasized its agency business to focus on logistics distribution for FMCG, a move seen as incredible by others but considered by Huashang as seizing future development trends. Recently, New Distribution exclusively interviewed Wuxi Huashang's Chairman and General Manager, Rong Jun."
author: "新经销100人"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2018-06-06"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/hSdV6MABbtfMQlYUmbaZqQ"
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---

# Giving Up Agency for First-Tier Brands Like Red Bull and JDB, Transforming into Unified Warehousing and Distribution, Now Listed on the NEEQ: Who Says Distributors Can't Do B2B!

> In March 2017, Jiangsu Huashang City Distribution Network Co., Ltd. was listed on the NEEQ, becoming a pioneer among FMCG city distributors entering the capital market. Previously, Huashang was one of Wuxi's largest distributors, representing brands like Mengniu, JDB, C'estbon, Nongfu, and Red Bull. However, in 2015, Huashang proactively de-emphasized its agency business to focus on logistics distribution for FMCG, a move seen as incredible by others but considered by Huashang as seizing future development trends. Recently, New Distribution exclusively interviewed Wuxi Huashang's Chairman and General Manager, Rong Jun.

In March 2017, Jiangsu Huashang City Distribution Network Co., Ltd. was listed on the NEEQ, becoming a pioneer among FMCG city distributors entering the capital market. Previously, Huashang was one of Wuxi's largest distributors, representing many first-tier brands such as Mengniu, JDB, C'estbon, Nongfu, and Red Bull. However, in 2015, Huashang proactively de-emphasized its agency business to focus on logistics distribution for FMCG, a move seen as incredible by others but considered by Huashang as seizing future development trends.
Recently, New Distribution exclusively interviewed Rong Jun, Chairman and General Manager of Wuxi Huashang, to learn why this veteran in FMCG distribution gave up his agency business to turn to logistics distribution. During the current transformation period in channel distribution, how does he view the topic of distributor transformation?
01
**Logistics revenue has grown over 50% annually for the past three years**
Starting as a distributor for Mengniu in 2001, it seemed a profitable business to everyone, but for Rong Jun, although it made money, it wasn't a career—something he could control and strive for. Rong Jun told New Distribution that besides not being a career, distributors often feel constrained by strong upstream manufacturers and strong downstream terminals. Where is the path for middlemen?
Rong Jun realized early on that the position of distributors as middlemen was awkward. As early as 2006, he began experimenting with transformation: he opened convenience stores (up to 23 at peak), ran an OEM factory, and provided logistics services. Rong Jun said, "After years of trying, I took many paths, some detours, and paid a lot of tuition. Through six years of exploration, around 2012, I basically settled on the direction of logistics distribution. After another three years of business refinement, by 2015, Huashang accurately defined its business logic: spare no effort to do well in FMCG city distribution."
To dispel other distributors' concerns about warehousing, even at the peak of his distribution business in 2014, Rong Jun resolutely shifted his focus to logistics distribution. Rong Jun told New Distribution that although Huashang built a B2B platform, it is only positioned as a tool for online listing of existing stock and order aggregation. In the past, Huashang also rebranded many stores, but eventually stopped because rebranding caused resistance among distributors, who feared control over stores and then goods.
For Huashang, being a golden supporting role in FMCG distribution is fine; it doesn't aim to replace anyone but focuses on being a professional logistics distributor.
Currently, Jiangsu Huashang has three warehouses in Wuxi totaling about 20,000 square meters, with nearly a thousand delivery vehicles. Besides its home base in Wuxi, it covers ten other cities nationwide. Jiangsu Huashang is also a partner of Alibaba Retail Link in Jiangsu. In 2017, Jiangsu Huashang's total revenue was over 80 million yuan, with logistics and warehousing income accounting for about 60%.
02
**In about 10 years, 80%-90% of distributors will die**
Rong Jun told New Distribution that even after 12 years, Huashang hasn't fully covered everything. If Huashang does well, it's only because it started a bit earlier, had a bit more failure lessons, and felt a bit more pain. Huashang doesn't dare call itself an expert, but regarding the current transformation paths for distributors, Huashang has some insights.
Distributors should view transformation rationally and position themselves well. Human energy, time, and funds are limited; distributors must put limited resources into limited projects to maximize benefits. Don't do everything; even if you have money, you don't have time to toss around. Excelling in one area is already good.
For distributor transformation paths, Rong Jun believes there are four options:
**First, continue to strengthen the core business.** Focus on product restocking, new product communication, and display promotion at outlets, build a professional field execution team, gradually transform into true agents, and do business outsourcing. Rong Jun believes that currently distributors still have functions like advance payment, warehousing, and distribution, but these won't be needed in the future; distributors only need to focus on business outsourcing. In fact, this model already exists in Hong Kong: when a new product lands in a regional market, agents handle negotiations and display communication, with standardized fees.
Rong Jun believes that in about 10 years, 80%-90% of current distributors will disappear, while 10%-20% will grow stronger and do well.
**Second, extend upstream and transform into OEM manufacturers.** In the FMCG field, standardized products have been sold in the past, but the future will definitely sell personalized products. From the current perspective, market conditions are mature; consumers are no longer keen on mass-produced, "same-face" products. For example, a product might sell billions, or even tens of billions, for over a decade, but such phenomena are rare now. Consumers' personalized consumption trends provide good soil for OEM.
**Third, extend downstream and open convenience stores to become retailers.** The key is whether you have retail genes; you need to shift from business thinking to retail thinking, as the users you face are different. Also, opening a convenience store isn't just choosing a good location and decorating; the product structure, placement, promotions, and customer flow design are all professional sciences.
**Fourth, transform into a logistics distributor.** In the future, there won't be many FMCG city distribution businesses in a regional market; they will concentrate among 2-3 players. Rong Jun believes there are many transformation paths, but certain people are only suitable for certain paths.
All the above paths are viable and can succeed, but the prerequisite is that distributors must clearly position themselves: which path suits you.
03
**Unified warehousing and distribution is just a model, not a standard**
In the future, Huashang will continue to focus on FMCG city distribution. On one hand, it will intensively cultivate the Wuxi home market to enhance competitiveness and profitability. According to Rong Jun's plan, to fully occupy the Wuxi market, the total warehousing area needs to reach 100,000 square meters. Besides the central warehouse, each town should have a forward warehouse of 500-1,000 square meters.
On the other hand, it will expand to other cities. Huashang will seek more distributors and manufacturers with "similar values" to cooperate in setting up local FMCG city distribution platforms, jointly building warehouses, establishing independent logistics subsidiaries, and inviting distributors of different categories to join. Huashang will also provide free system services, necessary capital investment, and standardized business processes for partners.
Rong Jun believes that the current transformation of distributors, especially multiple distributors jointly doing unified warehousing and distribution, is the right idea, but it shouldn't be done by the original team; a new team should be formed to ensure focus and dedication. Additionally, distributors should maintain an open mind. Many are not professional in transforming into logistics distributors; their imagined models and methods may be mostly wrong. Distributors should learn more from outside, not work behind closed doors. Also, don't limit yourself to intra-city integration; cooperate with national platforms to learn mature technical and operational experience and improve yourself.
The channel is in a period of change and still in the exploratory stage. Many distributors are easily confused by concepts, thinking that unified warehousing and distribution means unified warehousing and unified delivery to outlets. This understanding is biased. Rong Jun told New Distribution that unified warehousing and distribution must be judged based on multiple dimensions of existing resources, such as category frequency (high/low), broken case vs. full case, outlet density, average order value, and delivery vehicle type, to decide whether to use direct distribution (direct to outlets) or co-distribution (via forward warehouses to outlets). Even different seasons and cycles matter: more winter sales categories may suit co-distribution, while more summer sales categories may suit direct distribution. You can't make a one-size-fits-all decision; you must use backend data to calculate which is lower cost and higher efficiency. Also, in warehousing, there are two picking types: "order picking" and "batch picking." Neither is better; it depends on suitability. There is no standard answer in the exploratory stage.
**Final Thoughts**
The above are the transformation thoughts of Wuxi Huashang City Distribution. In New Distribution's view, many distributors are somewhat blind in transformation, even following trends—if others transform, they do too—without starting from their own strengths and positioning clearly. Such transformations are more likely to fail. Rong Jun told New Distribution that many distributors during transformation always think, "I haven't eaten pork, but haven't I seen pigs run?" In fact, eating pork and seeing pigs run are two different things. There is no better model or accurate judgment in transformation; only what suits you. Without trial and error and real data analysis, you have no right to speak.
The above are New Distribution's observations on distributor transformation practice. During actual transformation, distributors may encounter various specific problems due to different local conditions. Feel free to add the author's WeChat to discuss and exchange ideas.
**Extended Reading: Review the exciting reports of New Distribution's 100 people [Click to view]**
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