---
title: "Heavyweight | Zhongshang Group - The 'Hidden Champion' in China's FMCG Sector, Exporting 6 Billion RMB GMV Annually"
description: "Zhongshang Group, a name unfamiliar to many in the FMCG industry, is a hidden champion with impressive credentials: it is the largest brand operation agent for shampoo brand 'Ryo', covering 50% of its offline sales, and manages over 10,000 SKUs across 500+ retail channels, generating over 6 billion RMB GMV annually. The company has recently formed strategic partnerships with Japan's ARATA and China's Yunji, signaling its expansion into consumer brands."
author: "袁来"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2020-11-05"
language: "en"
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# Heavyweight | Zhongshang Group - The 'Hidden Champion' in China's FMCG Sector, Exporting 6 Billion RMB GMV Annually

> Zhongshang Group, a name unfamiliar to many in the FMCG industry, is a hidden champion with impressive credentials: it is the largest brand operation agent for shampoo brand 'Ryo', covering 50% of its offline sales, and manages over 10,000 SKUs across 500+ retail channels, generating over 6 billion RMB GMV annually. The company has recently formed strategic partnerships with Japan's ARATA and China's Yunji, signaling its expansion into consumer brands.

When mentioning Zhongshang Group, I think many FMCG practitioners may not know much about it, or perhaps have never heard of this company. But let me give you a few sets of data, and I think you will have an intuitive feeling.
1. Zhongshang Group is the largest brand operation agent for the shampoo brand "Ryo", accounting for 50% of its offline sales. Since taking over in 2016, it has grown from tens of millions to hundreds of millions in sales, an increase of nearly 10 times.
2. Zhongshang Group covers 500+ retail channels, including Watsons, Tmall, JD.com, FamilyMart, Sephora, Yunji, Xiaomi Youpin, etc., with a total of over 10,000 SKUs, covering cosmetics, personal care, household cleaning, daily necessities, food, and other fields. From product R&D to comprehensive operations, it provides society with over 6 billion RMB GMV of FMCG products annually.
3. In September this year, it reached a strategic cooperation with ARATA Co., Ltd., Japan's largest daily necessities and cosmetics wholesaler, to establish a joint venture factory in China and share resources. ARATA, as Japan's top 2 comprehensive trading company, holds a 20% market share in daily personal care, 40% in household cleaning, with an annual turnover of about 50 billion RMB, and its industry strength should not be underestimated.
4. In March this year, it established a joint venture with Yunji, China's first membership e-commerce stock, to jointly launch a series of co-branded products. In June, the "Huguo Li Silver Ion Beads Shower Gel" was launched, with single product sales exceeding 1 million RMB on the Yunji platform, occupying the top spot on the platform's real-time sales ranking.
Looking at the above data, it is no exaggeration to say that Zhongshang Group is a "hidden champion" in the consumer goods field. This enterprise, founded in 2006, currently has 1,500 employees (including subsidiaries), owns 3 self-operated factories, has built a self-owned South China logistics center covering 16,000 square meters, with a shipping capacity of 70,000 pieces per day, and possesses one-stop full-channel operation capabilities for FMCG.
Recently, "New Distribution" had the privilege of having an in-depth exchange with Ms. He Tinghua, founder and CEO of Zhongshang Group, to see how she led the group to its current scale. From today's position and perspective, how does she view innovation in the consumer goods industry?
Ms. He Tinghua, founder of Zhongshang Group
**-01-**
**"The fearless startup of a newborn calf"**
Talking about the original intention of starting the business, He Tinghua recalled that after returning from studying in Japan to live in Guangzhou, she noticed obvious differences between the two places. In Japan, an ordinary worker earns an average of 10,000 yen per day. At the 2007 exchange rate, 10,000 yen could be exchanged for 700-800 RMB.
At that time, an average lunch in Japan cost 800-1000 yen, and three meals a day were about 3,000 yen, which could already be very sumptuous. The average rent for the most ordinary apartment was about 3,000 yen per day. Most Japanese people could save 10%-20% of their income by working one day.
Whether it was the food they ate or the clothes they wore (Muji, Uniqlo), the quality was very good. Frankly speaking, whether ordinary workers or the wealthy, there was no obvious gap in their quality of life.
But in China at that time, this was not the case. Although the wealthy lived relatively comfortably, it was not truly good; they just spent enough money, and often spent "unjustified money" without enjoying quality equal to the price. Not to mention ordinary workers, who had no quality of life at all.
As someone who had lived in both places, He Tinghua saw this obvious gap and could not help but plant a "seed" in her heart: **How to let consumers, after earning effective income, also enjoy the same quality of life as Japanese people in eating, drinking, and daily necessities, rather than relying solely on wealth to measure whether they have quality of life.**
This was He Tinghua's vague entrepreneurial idea at the time. Looking at it now, it might not be an exaggeration to describe it as "a newborn calf is not afraid of tigers; the ignorant are fearless."
On December 25, 2006, He Tinghua originally planned to use 50,000 RMB borrowed from her family to wholesale Japanese products to the Chinese market. However, after a series of tasks such as renting an office and registering the company, she found that the initial funds for starting the business were almost spent.
The origin of entrepreneurship mostly comes from beautiful imagination, but when it comes to landing, one finds that the real market is so real and cruel.
With insufficient funds, the wholesale trade path was no longer viable. Fortunately, at the Canton Fair, by helping Japanese companies with translation, He Tinghua unexpectedly discovered the business opportunity of "cosmetic bags".
As Zhongshang's first business, it purchased 100,000 exquisite cosmetic storage bags at the Canton Fair, which ultimately earned Zhongshang 260,000 RMB. In He Tinghua's words, she "inexplicably" earned the first pot of gold.
With ample funds again, He Tinghua continued to return to her entrepreneurial original intention, importing tissue paper from Japan to China. But what she did not expect was that consumers at that time did not think they needed high-quality tissue paper.
Later, she represented other brands, but the result was the same; the market did not accept them. This made He Tinghua deeply realize that if you simply move products across regions, it is difficult to change consumers' existing consumption cognition due to differences in life and culture.
What to do? She chose to return to the "cosmetic bag" business.
He Tinghua, who is deeply interested in product design, devoted her passion to disassembling products, participating in everything from raw materials to design to assembly. From raw material purchase, sorting, to product processing, packaging, and other procedures, Zhongshang handled everything in one go, presenting the best products to customers. Frankly speaking, Zhongshang's business start began with the disassembly and reconstruction of the product chain.
This was the first stage of Zhongshang's entrepreneurship.
The second stage came in 2009. Zhongshang officially represented the Japanese national brand "Chifure" with a 52-year history. A 69 RMB bottle of civilian facial cleanser had quality no less than brands costing hundreds of RMB.
At the same time, Zhongshang also opened manufacturing factories to do OEM production for major brands like Watsons and Sephora. It implemented a dual-line development strategy of brand agency and product OEM.
As the business gradually improved, He Tinghua's ideas became bigger: **To become a company that can truly influence Chinese consumer goods brands.**
Because in He Tinghua's view, starting from Chifure, Zhongshang, through careful operation, planted many brands that were not well-known in the domestic market in China, achieving development from 0 to 1, and 1 to 10. Currently, Chifure's repurchase rate on Taobao has reached 47%, and Zhongshang already has mature brand operation capabilities.
Starting from 2013, in order to become a company that can influence Chinese consumer goods brands, He Tinghua believed that Zhongshang must reset, start a new business, lie low, store up momentum, and root itself at the bottom of the product.
In 2014, Zhongshang Daily Chemical was established, officially entering the field of cosmetics product R&D; in 2015, the self-owned beauty factory "Huachujian" was established; in 2017, it reached a strategic partnership with Shiseido and strategic cooperation with Tencent; Japan's Houben's joint venture factory in China was established as "China Resources Houmu"; in 2018, the self-operated cotton products factory "Cotton Life" was established; the self-operated oral care factory "Qianxi Health" was established...
Of course, during the process of operation and development, Zhongshang also represented many well-known foreign FMCG brands, such as Korea's well-known hair care brands Ryo and Mise-en-scène; Japan's well-known personal care brands Kao, Biore, and Kai; Japan's first original liquid brand Fracora; one of Japan's largest food brands Nissin, etc.
At the same time, Zhongshang also began to grasp the rhythm, step by step, launching its own brands or co-brands, such as personal care brand Huaguoli, functional skincare brand Percy, toothpaste brand Daxiangle, and cotton products brand Ziran Miyu, etc.
Seeing this, you may be curious: What exactly does Zhongshang want to do? It does agency distribution, builds its own factories, and launches its own brands. It feels like Zhongshang wants to do everything and can do everything. Can doing all this really make it a company that influences Chinese consumer goods brands?
**-02-**
**Not a single-brand, single-category consumer goods group**
Why do so many things?
He Tinghua told "New Distribution" that understanding all this is not complicated. As mentioned before, Zhongshang Group started from the dream of "creating a high-quality, equal lifestyle for people," managing the entire process from product planning to product creation. At the same time, in this process, Zhongshang chose to cooperate with the champions in the world's top niche tracks, achieving the only cooperation in China, continuously growing and expanding.
Zhongshang gradually made us understand that **a good product not only needs marketing, but also attention to the entire process from product manufacturing to market and contact with consumers.** Therefore, Zhongshang built a full-process industrial supply chain to support product planning.
Of course, Zhongshang also considered whether this product can be created by Chinese people themselves, so Zhongshang got involved and reserved capabilities in the manufacturing sector.
Finally, for consumers, Zhongshang established a TO C channel. Here, there are three core key points that Zhongshang pays most attention to: **First, understand consumers' consumption needs in real time; Second, deliver products to consumers quickly; Third, continuously meet consumption needs.**
In solving the problem of real-time understanding of consumption needs, Zhongshang not only has a BA team of over 1,000 people communicating one-on-one with consumers at retail terminal stores, but also operates 18 Tmall flagship stores, using brand agency as a carrier to directly connect with consumers and continuously gain insights into consumer needs.
In terms of product reaching consumers, Zhongshang heavily invested in warehousing and distribution to achieve drop shipping; in meeting needs, Zhongshang established a cross-category, multi-brand matrix through both self-operated and agency methods.
For some mature brands that have already gained brand momentum in Asia, Zhongshang will directly obtain the China agency rights, striving to provide consumers with more choices.
Zhongshang Group's strategic choice is a combination of punches, not along a single category or single brand.
In one sentence: **From user insights to product R&D, from supply chain selection to high-quality manufacturing, from brand building to user operation, integrate these links to form a powerful and complete operation system, ultimately achieving the goal of becoming China's leading comprehensive FMCG operation service provider.**
Of course, to achieve such a goal, Zhongshang Group chose to stand on the shoulders of giants—cooperating with Japan's ARATA Group. ARATA has a hundred years of operating history, covers more than 45,000 stores, has more than 100,000 SKUs, and an annual turnover of about 50 billion RMB. It is Japan's second-largest comprehensive FMCG trading company.
Zhongshang believes that the industrial resources, brand resources, and management capabilities it has accumulated can help Zhongshang Group go further.
**-03-**
**Only brands, no products, cannot go far!**
**"In China's beauty, personal care, and skincare markets, product R&D and brand building are often separated," said He Tinghua. "Brand owners often focus on brand building and marketing, leaving product production to OEM manufacturers. But when supply-side enterprises with formulas and production capabilities start to enter the market with a comprehensive capability and exert force from multiple ends, it is possible to create very powerful brands."**
The above statement well explains why Zhongshang Group positions itself as a comprehensive FMCG operator. Behind comprehensive operations is the ability to grasp the entire industry chain.
He Tinghua told "New Distribution": **If you only do a single brand, you may understand marketing and have traffic to launch it. But without industry empowerment, without supply chain, without high-quality manufacturing, without R&D data, it is impossible to truly control the entire chain, which means you cannot serve consumers on a large scale.**
However, brands exist to serve consumers, so product quality must be strictly controlled, and the entire chain from consumer insights to product production must be controlled to truly establish a long-lasting, invincible consumer goods brand.
We once always thought that we are currently in an era of overcapacity, and innovative consumer brands can use the back-end shared supply chain and just do the front-end brand well. But in He Tinghua's view, the so-called overcapacity does not belong to the overcapacity of good products; it is just the overcapacity of products that have just reached a passing level.
Truly good products and brands that can create value are always scarce and still in the hands of giants. **For the currently rising consumer brands, if they want to go further in the later stage, it is not enough to find a shared factory; this approach is absolutely not feasible. No matter how vibrant you are on social media, you still do not have the ability for sustainable development.**
**What is a good brand? The core judgment source is consumer repurchase. Consumers use it again and again, pay again and again, which is the real beginning of a brand taking root. The foundation of a brand is the product. Without unique and controllable product power, it is impossible to continuously create value for consumers.**
He Tinghua said that many current innovative consumer goods practitioners' ability in product innovation is essentially the ability to disassemble products. Having disassembly ability is a good thing, and the industry needs it. But often many practitioners, as they go along, lose their awe for this industry.
The FMCG industry can be compared to a biotech science industry. It is not enough to just stir-fry potatoes into "shredded potatoes." Especially cosmetics, related to daily chemicals, it is an industry that needs to stir-fry shredded potatoes into "probiotics." It requires the power of science.
In the past, why did Zhongshang not do brands, only industry and agency? The core reason is that it had not made sufficient preparations and did not have enough ammunition. In the final analysis, this is also because Zhongshang is full of awe for the consumer goods industry. A brand is not just giving a name, shouting a selling point, and mixing some raw materials.
This is also why Zhongshang has cooperated with champions in many niche tracks for so many years, rather than doing it itself from the start!
Back in 2013, when Zhongshang reset its business, it was continuously reserving resources and accumulating capabilities. Today, after 7 years, it can be said that Zhongshang has basically made preparations. Whether it is the cooperation with Yunji, which is the beginning of entering the C-end consumer brand, or the cooperation with ARATA Group, both are evidence that Zhongshang has made sufficient preparations.
And from this year, 2020, it will be the beginning of Zhongshang Group's advance into the industry's depth. Of course, He Tinghua also told "New Distribution" that after we spent 13 years building the infrastructure and truly have the ability to provide consumers with high-quality, equal quality of life, we still need more allies to join.
Whether it is uniting more practitioners to create good brands together, or gathering everyone's strength to deliver better products to more consumers, these are Zhongshang's beautiful aspirations for the positive development of brands and the industry.
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