" We have worked in FMCG brands for twenty or thirty years, and we have our own insights and observations about China's FMCG industry. We believe that distributors have great value, and that distributors scattered in every corner of cities at different levels in China are not easily replaced. ——Liu Miao, President of Huidanxia " This content is the theme of "Upholding the 'Four No's and One Adherence' to Assist Distributors in Transformation and Upgrading" shared by Mr. Liu Miao, President of Huidanxia, at the FDIC 2018 China FMCG Digital Innovation Conference. It has been edited and organized by New Distribution for the readers. My speech today is titled "Upholding the 'Four No's and One Adherence' to Assist Distributors in Transformation and Upgrading." Over the past considerable time, we have used this theme to communicate in many different occasions. This theme represents our company's business model, our original aspiration, and our original intention. We have said this in the past, and we will continue to say this in the future. We say this to distributors, to brand owners, to the media, and we will always say this. Why? Let me share with you again the basic principles of Huidanxia, which are also the core philosophy of our company, called the 'Four No's and One Adherence.' It may be a bit different from many B2B platforms you know. We are a service platform, not a trading platform. Because our company developed from SaaS services, our genes and strengths lie in providing technology and services. We cooperate with existing distributors to increase the quantity and quality of their store coverage, provide data-driven marketing solutions, and provide customer management and personnel management tools. We believe that by serving distributors who are willing to transform and upgrade, these distributors will contribute better value to brand owners, thereby enabling us to better serve brand owners. The 'Four No's and One Adherence' we adhere to, specifically, are: no self-operation, no self-built logistics, no disruption of the distribution system, and no disruption of market prices. No self-operation and no self-built logistics are commitments to distributors; we are not here to take away distributors' livelihoods. Not disrupting the distribution system and not disrupting market prices are commitments to brand owners; we do not destroy or cause trouble, but rather provide services and add value. Our role is that of a deep 'service cooperation' partner, empowering all roles in the FMCG market channel, providing value, improving distribution levels, enhancing management and marketing efficiency, and increasing data transparency and controllability. Why choose a service cooperation model rather than a self-operation model? Because the vast majority of people in our company, including myself, come from the FMCG industry. We have worked in FMCG brands for twenty or thirty years, and we have our own insights and observations about China's FMCG industry. We believe that distributors have great value, and that distributors scattered in every corner of cities at different levels in China are not easily replaced. The costs within the distributor system are also very effective. Many colleagues from brand owners present here know very well that we usually give distributors a gross margin of 5-6 percentage points, yet distributors can still survive and make money. Many colleagues in the B2B industry present here should also know very well that if you get a gross margin of 5 or 6 percentage points, can you be profitable with direct operation to stores? Can you survive without venture capital support? So distributors have considerable cost advantages. We chose the deep service cooperation model because we recognize that distributors have inherent value. Of course, they also need to upgrade, transform, improve, and enhance. Therefore, we hope to empower distributors to become leading comprehensive supply chain service providers locally. Currently, many distributors, from a certain perspective, are traders—they buy goods and sell them. Through our empowerment and our work, we hope to provide distributors with more value and help them become leading comprehensive supply chain service providers that are regional and localized. The FMCG industry does not need disruption. Many of the links accumulated over the years in the FMCG industry are very valuable. But it needs upgrading, transformation, and empowerment. In the FMCG industry, we talk about the role distributors play, mainly in traditional channels. Nowadays, many modern channels are gradually being operated directly by brand owners, so distributors serve more traditional channels. But traditional channels are still very important for FMCG products. The value of traditional channels to FMCG products is proven by the data in the chart, and everyone is an expert, so I don't need to repeat it. As colleagues from brand owners know, most digital distribution and the vast majority of store coverage are completed by distributors. Even in companies like Coca-Cola, where self-operation, distribution, and service are already deep, the vast majority of store service work is still completed by distributors at different levels within the Coca-Cola system. As times develop, every link in the entire consumer goods circulation faces great challenges. Whether brand owners, distributors, or retailers, they all face different challenges. I believe this is also the reason why everyone is willing to sit together to continuously discuss and research more effective new business methods, new platforms, new tools, and new technologies for the future. It is also the fundamental driving force that inspires and drives us to seek these new technologies and new models, because we all face enormous pressure and many challenges. Among these links, Huidanxia places more emphasis on the distributor as a hub, because it undertakes a very large business scale in the consumer goods industry and bears the service of the largest number of retail stores linked to the consumer goods industry. How to empower distributors' capabilities and help them transform and upgrade is the value that Huidanxia most hopes to present. Our view on B2B platforms: B2B is about empowering distributors, not replacing them. The starting point of our company is to let each role in the FMCG industry do its own job correctly in each link. Brand owners do brand owner things, distributors do distributor things, and retail stores do retail store things. We focus on empowering distributors, thereby contributing more value to brand owners and better serving retailers, to reflect our value to the entire FMCG industry. What value can Huidanxia provide to distributors? We have organized it into three aspects: 1. Empowering Distribution: Help distributors cover more stores more quickly, more efficiently, and with greater coverage. 2. Empowering Marketing: Provide one-stop digital marketing solutions, transforming traditional offline marketing methods into digital and online marketing methods. 3. Empowering Management: Manage sales personnel, warehouse, and delivery. For distributors, we empower their distribution capabilities, help them cover more stores, and provide a 360-degree approach to promotional and marketing activities for point-of-sale customers, all presented on our platform. We also help distributors add management functions, such as personnel management, order management, delivery management, payment collection management, and data management. On our platform, distributors can easily and digitally complete all these tasks. We hope to empower distributors to strategically transform and upgrade, becoming leading comprehensive supply chain service providers in the region. This is our value, and it is the value our company hopes to contribute to the industry. Over the past three years, we have adhered to this philosophy and continuously cooperated with more and more distributors and brand owners in the industry. We have also gained recognition from more and more institutions and industry peers. Kantar is our important strategic partner, and we have extensive and deep cooperation with Kantar in data and models. At the same time, we cooperate with top brand owners in the B2B platform, from Coca-Cola to P&G, Mengniu, and a series of clients. In May of this year, based on the same 'decentralization' concept, we reached a consensus with Tencent, and thus received strategic investment from Tencent. Tencent is a very important shareholder of our company. Ultimately, we hope to contribute value in multiple aspects such as network coverage, digital marketing, and efficiency improvement. Our goal is to become the world's largest B2B service platform for the FMCG industry. Click Read Original to see more highlights of the 2018 FDIC China FMCG Digital Innovation Conference... -END-