Growth Is Poison

This article, I have held in my heart for two full years. Several times in between, I opened the document, wanted to write, but finally closed it again. I know too well what the word "growth" means to people in the FMCG industry. It is faith, it is a totem, it is the driving force that has supported us through decades of struggle in this industry. If I blurt out "growth is poison," it would not only be arrogant, but almost blasphemous. But standing at this juncture of 2026, we are witnessing a collective, tragic collapse: brand-side price systems are essentially crumbling, tens of thousands of distributors are calculating their razor-thin profits late at night, and countless retailers, after various chaotic actions, are finally closing their doors. It is time to systematically explain the concept of "growth." I think. Why say growth is poison? Because for many enterprises, continuing to use yesterday's growth mindset to guide tomorrow's survival is not operating; it is accelerating suicide. Today, I want you to first put down the reports in your hands, turn off those KPI numbers that urge you on, and stand with me at a higher dimension to tear away that veil we have sanctified—the one called "growth." First, I want to ask the simplest question: What exactly is growth? You might say, do you even need to ask! Growth is revenue, profit, and increase in market size. Indeed, in most people's concept, growth is the increase in various business numbers. But these are only manifestations of growth, not its essence. To understand the essence of growth, we must first clarify what an enterprise actually is. Let's start with the coldest, most unfeeling law from physics and information theory—the Law of Entropy. The Austrian physicist Schrödinger once proposed a startling view in "What Is Life?": "Life feeds on negative entropy." (Here, "entropy" is not a precise physical quantity, but a framework to explain the失控 of organizational complexity.) It sounds profound, but the principle is simple. A living organism's sole purpose is to counteract external "chaos" (entropy increase) by establishing internal "order" (negative entropy). An enterprise is actually a living organism: the growth of an enterprise is the overflow of internal "order" and the replication of "matching" on a larger spatiotemporal scale. What does "overflow of order" mean? Imagine the enterprise as a water cup. "Order" is your control over the internal. Is management smooth? Are costs controlled accurately? Are products competitive? If the internal is a mess, it's a leaking cup that can never be filled, let alone grow. But if internal processes are orderly, efficiency is extremely high, and energy utilization has reached its limit—that is, the cup is full and starting to overflow—you will achieve growth! What does "replication of matching" mean? You precisely solve a pain point for a group of people through a unique product or service; that is completing a high-quality match. You go from serving one customer to serving ten thousand; from selling in one city to selling across the province, across China. This process is essentially continuously replicating such matches in larger space and longer time. Now you understand: growth is a result! It is not something you desperately "grab" from outside, but the result of your internal energy "overflowing." Growth is an explosion from within, not a forced acquisition from without. Today, no one explores the essence of growth; we only know that every year there must be higher targets, every month we must complete the numbers broken down from top to bottom, and every day we must rack our brains to complete tasks. If we don't grow, it means we didn't work hard enough. If we don't grow, we absolutely cannot let ourselves off the hook. In the past thirty years, the entire Chinese FMCG industry has collectively fallen into a political correctness of "growth is justice." Why? Because the Chinese market once experienced an extremely rare, two-to-three-decade-long "low-entropy vacuum period" (1990-2015). What does that mean? Imagine a room with no air at all—an absolute vacuum. At that point, if you just drill a small hole in the wall, the outside airflow will swirl in. You don't need to fan it; the laws of physics will do everything for you automatically. The market used to be like that airless room. People had just gotten money in their pockets, but the shelves had pitifully few goods. At that time, enterprises didn't need profound "internal order" or extreme "matching efficiency." As long as you could build a factory, send out trucks, and hire one more salesperson pedaling a tricycle through the streets, sales would skyrocket like crazy. In economics, there is a term called "increasing marginal returns." In the incremental era, Chinese FMCG was in the "increasing marginal returns zone" (left half), so all inputs could yield accelerating results. [But now it has entered the "diminishing marginal returns zone" (right half); continuing to run wild with the old logic will only create entropy.] Add one salesperson, and they might bring you ten new customers; open one more outlet, and you instantly cover the hungry demand within three kilometers. This state, I call it "adsorptive growth." During this period, the essence of growth was not how great you were, but the huge "suction" from the external environment that forcibly "pulled" your products from the factory to the market. Because the external suction was strong enough, it masked all your internal chaos and inefficiency. Messy processes? No problem, goods are in short supply anyway. Redundant staff? No problem, profits cover it. Rough strategy? No problem, as long as you're bold, the market is yours. The most fatal thing is that this "adsorptive growth" gave us a thirty-year illusion. We got used to the thrill of "effort brings results," and the linear logic of "input brings scale." We mistook "the dividend of the times" for "our own ability." This is not to say there were no excellent enterprises, but rather: at that stage, even with mediocre system capabilities, sustained growth was possible. This generation of FMCG people, through these thirty years of "adsorptive growth," has subtly welded a mindset into their brains: growth is理所当然, and not growing means I didn't work hard enough. All enterprises think this way, constantly pursuing higher numbers, everyone running wild, and we inevitably—entered an era of全面内卷 and全面过剩. I know you might argue: everyone is running, how can I not run! Besides, doesn't economics talk about "economies of scale"? Without getting bigger, how do we reduce costs and increase efficiency? Yes, most people believe that as long as revenue scale is expanding, the enterprise is healthy. But according to the "Penrose Effect" proposed by Edith Penrose in "The Theory of the Growth of the Firm," the expansion speed of an enterprise is limited by its "absorptive capacity of management resources." When an enterprise, to pursue a 10% numerical growth, forcibly piles up SKUs, frantically recruits inefficient salespeople, and injects inventory into channels far beyond what can be sold, it is actually creating huge "entropy increase" within the system. Many enterprises have internal processes so冗长 that they are suffocating, and information is distorted through layers of reporting. Industry internal research data shows that as organizational scale expands, the redundant costs of internal collaboration, communication, and reporting are growing rapidly; in samples of mature enterprises, such ineffective costs have become one of the main drivers of management expenses. This kind of growth is essentially cancer-cell-like division—volume increases, but the system disintegrates. You must understand: economies of scale have a premise: the marginal benefits from expansion must always be higher than the marginal costs created by the scale itself. Today, this premise has completely collapsed. Because the vacuum no longer exists! It's just that from around 2020, we felt it more strongly. I call this the era transition from "incremental" to "oversupply": information oversupply, channel oversupply, product oversupply. According to the Law of Diminishing Returns, in a combination of production factors, as the input of a certain factor increases, the marginal output it brings will eventually decrease. For example, in the past, hiring one more salesperson could bring you hundreds of thousands in sales; now, hiring one more salesperson might not even earn back their salary, and instead increases your internal communication costs of reporting, meetings, and bickering. Have you noticed? For every ten thousand yuan of revenue you add, you often need to invest twelve thousand yuan in "cost." The two-thousand-yuan difference is the "entropy increase loss" caused by an overly bloated system and an overly saturated market. But the scary thing is path dependence.

• Forcing new products: To occupy shelves, launching dozens of SKUs a year, not only do consumers not remember them, but you also blow up your own warehouse and tighten your capital chain.
• Violent inventory stuffing: To complete inflated annual targets, forcibly pushing goods onto distributors. You think that's sales, but it's actually "toxic inventory." Every day these goods lie in the warehouse, they dilute your brand value and corrode the trust between you and your partners. Of course, the continuous running is not only path dependence born of fear, but also hides the deepest dignity and helplessness of FMCG people: capital, shareholders, performance indicators faced every morning, rigid rent, wages, and loans—under pressure, stopping expansion is like suddenly releasing the accelerator on a highway; the fear of "being smashed from behind" is real. So, to achieve growth numbers, they have to maintain system inertia through high-frequency promotions and endless inventory stuffing. Today, many people are clearly giving their all, yet still feel powerless. Because they work harder than before, but their efforts still serve a growth logic that has already failed. But such "growth" is self-harming poison. How to solve it? I know the word you fear most now is "transformation" or "upgrading." I want to give you a more primitive, more fundamental word: evolution. In Darwin's evolutionary biology, the ones that survive to the end are never the largest, but those most fit (Fitness) to the environment. The three-to-four-decade incremental era masked the essence of growth, making us mistakenly believe that growth is the purpose of an enterprise, and that it is a result obtainable through continuous investment, continuous pursuit of higher goals, and continuous running. The truth is: an enterprise is a living organism; its sole purpose is to counteract external "chaos" by establishing internal "order." And growth is just the overflow of internal "order," then replicating "matching" on a larger spatiotemporal scale. So, I propose a new business paradigm: in the era of oversupply, enterprises should no longer aim for scale, but start with matching. The more accurate the match, the more stable the system, and scale may naturally emerge as the "overflow effect of matching." Scale should always be the result of matching, not the goal. Because in the era of oversupply, brands face not the question of "existence" but of "accuracy." Consumers have changed, channels have changed; if you don't change, how can you survive? We must replace the "scale logic" with "matching logic." What does that mean specifically? Let me share my thoughts from three dimensions: 1. Product: From standardized manufacturing to flexible supply Standardized manufacturing and the era of the big hero product are over. Through flexible supply capabilities, match products to different channels and scenarios. In the era of oversupply, pure low-price competition is unsustainable; find ways to break this deadlock through high-value products. Leverage your R&D and manufacturing capabilities; while competitors are engaged in price wars, can you improve brand gross margin by creating differentiated products? 2. Promotion: Push + Pull combination Use online (Douyin, Xiaohongshu, etc.) social media seeding to create pull, combined with offline deep coverage to create push. Embrace retail transformation: whether it's store remodeling, discounting, or front warehouses, actively embrace and seize new terminals. Offline business should "root downward," deeply cultivating county-level markets, while on the traffic side "break through upward," channeling online traffic into the channels. 3. Manufacturer-Distributor Relationship: From "upstream-downstream" to "left hand-right hand" Don't stuff inventory! Strictly adhere to the iron rule of inventory warning; don't let goods crush cash flow. The manufacturer's shipping rhythm must keep up with the distributor's turnover speed. Strictly investigate channel flow and price chaos, protect channel interests, and don't let distributors bleed; instead, ensure the channel's end has "hematopoietic function" through healthy inventory cycles and stable price systems. These three points are difficult for most enterprises; not to mention others, just not stuffing inventory and controlling flow-price chaos are hard to solve. It's hard because we are still in the old "growth" logic. But if we don't change this, continuing to use yesterday's growth mindset to guide tomorrow's survival is accelerating suicide.

Final Thoughts****

Writing here, I want to say it again: that "run fast and you win" era of the wild west has completely vanished as we have fully entered oversupply. Enterprises should not "not grow," but rather not use the method of "overdrawing system order" to exchange for numerical increases. Because enterprises do not "live by growth"; enterprises live by "order and matching," and growth is just a byproduct. Seek order internally, seek matching externally. The core considerations for an enterprise should be: whether entropy increase is controlled, whether the system is stable, and whether matching is precise. Guard internal order, truly achieve precise matching with the market, and that byproduct called "growth" will come. I know this article's viewpoint will surely provoke disagreement from many. Indeed, regarding the reconstruction of "survival order" and the practical implementation of "matching precision," there are still too many details that require us to sit down and dissect face-to-face. In March this year, I will bring the final results of my two years of "closed-door debates" to Chengdu. At the CFC 11th China FMCG Conference, I want to invite you to discuss: in the era of oversupply, how exactly do we initiate a transformation of "survival order"? If you also feel that "powerless diligence," if you also want to find that "survival map" to the future in this collapse. March, Chengdu, I'll wait for you. Be there or be square.