---
title: "In 2017, Every Business in China Is Worth Starting Over From Scratch!"
description: "This article, selected from 'The Peak of the Times,' argues that despite widespread pessimism, China is undergoing a major transformation where all business logic is being rebuilt. The author believes this presents the best opportunity to invest in the real economy, as the shift from production-driven to consumption-driven growth will create numerous new opportunities."
author: "水木然"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2017-01-06"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/in-2017-every-business-in-china-is-worth-starting-over-from-scratch-d0258e0b/"
markdown: "https://xinjignxiao.com/en/articles/in-2017-every-business-in-china-is-worth-starting-over-from-scratch-d0258e0b.md"
original_source: "https://mp.weixin.qq.com/s/6bKByXtmerU7nUz7VhQREg"
translation: "https://xinjignxiao.com/zh/articles/2017%E5%B9%B4-%E4%B8%AD%E5%9B%BD%E6%89%80%E6%9C%89%E7%94%9F%E6%84%8F%E9%83%BD%E5%80%BC%E5%BE%97%E4%BD%A0%E4%BB%8E%E5%A4%B4%E5%86%8D%E5%81%9A%E4%B8%80%E9%81%8D-d0258e0b.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/in-2017-every-business-in-china-is-worth-starting-over-from-scratch-d0258e0b/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# In 2017, Every Business in China Is Worth Starting Over From Scratch!

> This article, selected from 'The Peak of the Times,' argues that despite widespread pessimism, China is undergoing a major transformation where all business logic is being rebuilt. The author believes this presents the best opportunity to invest in the real economy, as the shift from production-driven to consumption-driven growth will create numerous new opportunities.

**This article is selected from "The Peak of the Times"**
Some people think that China has entered an era where no business can make money, but my view is quite the opposite. I believe that from now on, every business in China is worth starting over from scratch!
When everyone else realizes the danger, you must see the opportunity! The most terrifying thing in this world is blind despair. In times like these, we need to keep a clear head even more.
Now is the best opportunity to buy the bottom of the real economy! Why do I say this? China is undergoing a great transformation, and all business logic is being overturned and rebuilt. For those who see the changes of the times, the real opportunity has arrived!
For example: In martial arts novels, when a person is unconscious, the only way to wake them is to open their Ren and Du meridians. The Ren meridian governs blood, and the Du meridian governs qi. These are the eight extraordinary meridians. When Ren and Du are open, all meridians are open. If the person is lucky, their Ren and Du meridians can be opened in reverse! Then when they wake up, they have become a peerless master.
**The structure of China's economy is similar; it is undergoing a real major upgrade! And this will give birth to numerous great opportunities, but to discover these opportunities,** you must understand the logic of the changes. Today, Shui Muran will give you a systematic analysis!
From an economic perspective, there are only two types of people in society: **"producers"** and **"consumers."**
"Consumers" and "producers" are not opposites; they transform into each other. If you are a worker in a garment factory, first you are a producer, and your product is clothing. But when you go to a restaurant to eat, you become a consumer. At that time, the chef is a producer, but the chef also needs clothes, so he buys clothing, and thus he is also your consumer.
So: **Everyone serves others while being served by others. This is the continuous transformation of "production" and "consumption," and this is how the economy is driven.**
**"Production" determines "consumption"**
When production and consumption cooperate and complement each other, society moves forward and the economy grows healthily. Conversely, when production and consumption are disconnected, and one cannot keep up with the other, economic growth stagnates, meaning an economic crisis arrives.
In the past, products were scarce. As long as you could produce a product, it would be consumed. At that time, all products could be counted as "social wealth," and of course, they were created by "producers."
Today, products are abundant, but producers still swarm in, even falling into blind, disorderly, and homogeneous production, resulting in a large number of unused products. At this time, only products that meet consumer needs can be counted as "social wealth." The rest are like garbage, not only consuming our resources and energy but also taking up space.
From another angle:
During Mao Zedong's era of "planned economy," China implemented the principle of "planned production and planned consumption." Since everything was planned, economic crises never occurred, but people had little production enthusiasm, and the level of economic development was too low, so it was not worth advocating.
Later, it transitioned to Deng Xiaoping's era of "market economy," implementing the principle of "production according to will, distribution according to profit." At this time, because the power of "production" was open, as long as a "product" was needed, someone would "produce" it, which could stimulate economic development to a certain extent.
But at a certain stage, because the power of "production" was not restricted, producers of the same product over-multiplied, and then they competed with each other. Moreover, to pursue profits, producers expanded production and adopted low-price strategies. When the quantity of products exceeded consumer demand, products became surplus, and profits were infinitely compressed. As a result, everyone could not survive. This is the current state of China!
President Xi Jinping's advocacy of "supply-side reform" and "eliminating outdated production capacity" is actually about controlling the disorder of production and eliminating backward and overproduction enterprises.
The above is just the external change. What is the internal mechanism of this change?
In traditional production methods, the product is decided by the "producer," and the "consumer" only needs to decide whether to buy or not based on their needs. For example, manufacturers often cannot understand each customer's needs at low cost, so they often adopt a one-size-fits-all approach, combining the most demanded features into one product.
This kind of production does not deeply understand, count, or integrate consumer needs. That is to say, the needs of "consumers" are separated from R&D and design. Producers only care about the batch size and scale of orders; the sales link only cares about sales volume and does not pay much attention to consumer needs.
Since it is disconnected from consumer demand, inventory and overstocking are inevitable. Inventory and overstocking are the black holes that devour manufacturers' profits and the obstacles that prevent prices from falling. Overstocking and inventory are the natural enemies of profit. The retail price of Chinese retail goods is often 5 times the cost, and the retail price of glasses, jewelry, and luxury goods is often 100 times the cost. Such a huge price difference is caused by layers of inventory, overstocking, price increases, and high terminal retail costs.
Take the clothing industry as an example. Traditional enterprises like Septwolves, Qipai, and Li-Ning could achieve sales of several billion in their heyday. Their advantages were reflected in production capacity and channels. Once the production line started, it could produce 100,000 pieces. Their channels were also strong. After production, products were distributed to retailers through distributors, and with the advertising effect on CCTV, they could quickly occupy the national market. This is the traditional advantage.
In the past, if we saw someone wearing a beautiful branded dress, we would ask where they bought it and go buy one too. But now, if a girl buys a new dress today and happily wears it out but finds someone else wearing the same one, she will feel depressed: "Why is he wearing the same as me?" So she goes home and throws the dress away! That is to say, consumer needs have changed. Now is the era of personalized needs.
The times are different!
This change begins with people starting to find themselves. Personalization is the beginning of the next era!
**Consumption determines production**
Everyone's individual needs are amplified, and people increasingly like personalized things. But the demand for personalized things is not that large, which requires industrial enterprises to achieve small-batch rapid production. The technological innovation represented by Industry 4.0 (including big data, IoT, cloud computing, 3D printing, etc.) exactly conforms to this change. It is realizing the high integration of "manufacturing" and "informatization," giving birth to the C2F (Customer to Factory) model. It can quickly, in small batches, and customized produce what each consumer needs!
So, this is a great liberation of "consumer relations." The future consumption relationship is: whatever consumers need, producers must produce. This is a reverse production process. The supply relationship of the entire society is destroyed and rebuilt, and the Ren and Du meridians of the economy are being opened in reverse.
The supply relationship of China's economy has also undergone a great reversal. Therefore, production, marketing, channels, and profit models have all changed. That is to say, traditional consumption theories and experiences are all invalid!
So, this round of economic crisis is actually a social reshuffle. China must eliminate those backward and extensive production enterprises. These traditional enterprises are not facing a winter, but a dead end!
**New Economy, New Atmosphere**
China will also enter a "**new planned economy**" era, that is, all production will be carried out according to consumer demand. In the future, for every product, before production, it will be known who its consumer is and what the standard of the product is. And the competition among producers will no longer be on price, but on who can first connect with consumer needs and the precision of meeting those needs. At this time, there will be no inventory, no vicious competition, and the industry will be further subdivided. A new supply relationship is forming!
Why is it called the "new planned economy" era? Because the "traditional planned economy" is macro-regulated by the state, while the "new planned economy" is macro-regulated by consumers, just like another invisible hand!
That is to say: in the future, it is the "consumer" who determines production, not the "producer" (including factory owners, designers, etc.)!
For example, many factories have begun to take orders before production. Xiaomi phones, Smartisan phones, various pre-sales, and crowdfunding models all follow this logic. There are two benefits:
First, before each product is produced, it is known who its consumer is, and it is customized production, so the product will better meet consumer needs;
Second, all products are produced after orders are placed, so there will never be inventory in the future.
Therefore, the saying "first-class enterprises set standards" will no longer hold. In the future, all products will have only one standard: whether the product meets the needs of the consumer it belongs to!
In the future, all "social wealth" will be driven by consumption. China is entering the stage of "production on demand." The saying "the customer is God" has been popular in the world for nearly 200 years, but it is only now truly realized.
At this time, let's look at the essence of e-commerce.
**The Essence of E-commerce**
Some people attribute the root of the physical retail crisis to the rapid development of e-commerce, but this is a big mistake!
In the Internet era, people's needs are increasingly personalized and diversified, and brands and styles tend to be more numerous, newer, faster, and more cost-effective. Many e-commerce brands are increasingly fitting this need. For example, the e-commerce brand "HSTYLE" has more than 200 suppliers across the country, because there are many small processing enterprises now, and it is acceptable to start with 100 pieces. So it is equivalent to having more than 200 production and processing lines nationwide, with 2 million SPUs online at the same time. This adaptability and response capability is very strong. The supply chain is shifting from "placing orders, assembly line, planned production" to "taking orders, multiple styles, batch production"!
Under personalized demand, even for a single item, traditional enterprises still start with 100,000 pieces! But many e-commerce brands can start with 100 pieces for a single item. If this item does not suit consumer tastes, the loss for an e-commerce brand is 100 pieces, while the loss for a traditional brand is 100,000 pieces!
Shui Muran believes: "The essence of e-commerce is customization and outsourcing!" Consumers begin to guide the supply chain. The starting point of this chain is the consumer initiating demand, thus forming customization, and then going through layers of outsourcing and decomposed production. Then logistics and express delivery send the product to the consumer.
When the traditional clothing industry is declining, many e-commerce brands are growing against the trend. This is the fundamental reason. So, I really want to ask those extensive production enterprises: What are you still insisting on?
**Pre-sale and Trial Sale**
**In the traditional era, it was "production" first, then "consumption." Now it is "consumption" first, then "production."**
In the traditional supply chain, there is a lack of real-time connection between various links, resulting in product information not being fed back in time, causing problems such as insufficient inventory for hot-selling products and overstocking of unsalable products. **The current supply chain is "reverse,"** that is, consumers first express their needs on the platform, then the platform places orders with manufacturers, and manufacturers organize suppliers to produce. In this way, the produced products are easily accepted by everyone.
Therefore, trial sales of products are also a good method. You can choose to conduct trial sales on an e-commerce platform. If the feedback from the trial sales is very successful, OK, immediately start mass production. Through consumption feedback, we can accurately calculate the market demand, and then place orders with your downstream supply chain. At this time, you have basically not made much investment. This is the so-called "asset-light" model. No one needs to tie up money in a certain link first. When the product enters a cyclical operation, then you do operational planning and enter normalization, and a new brand is born!
Shui Muran's comment: Moving from large-order models to small-batch production is the key to future enterprise success.
**New Retail, New Business**
Traditional retail is relatively complex, including direct sales, franchising, and online, which are mixed channels. To completely solve retail problems, it is necessary to achieve the integration of three stores, same style and same price, and break the layers of wholesale and different prices in different channels.
In the future, retail should be that manufacturers, according to consumer needs, coordinate suppliers to produce products, uniformly set retail prices, and prices must be unified nationwide, unified online and offline. Then after selling products to consumers through various channels, costs and profits are allocated according to the relationships of each link in the supply chain.
Now let's look at a new economic format: influencer economy.
**Influencer Economy**
Traditional business is indeed getting harder and harder. There are too many products, good or bad, some even flooding the market. It is really difficult to sell good products. Even if a product creates awareness, counterfeits will appear.
But why is the influencer economy so popular? Because a new "consumer relationship" is forming a tripartite relationship:
1. Producers refer to those who operate the production link, with product production as the core, such as factories.
2. Distributors refer to those who operate the product circulation link, with channels as the core, such as express delivery companies.
3. Consumer merchants refer to those who operate the consumer link, with guiding consumer purchases as the core, such as self-media, internet celebrities, stars, online influencers, and models.
Influencers are born in this way. They actually replace traditional distributors.
Now, every producer is thinking about this: How to own and lock in consumers? The focus of economic activity has entered the consumer end. Who can own and lock in consumers has become the most critical thing.
In the past, this relied on traditional distributors. Although they once dominated and operated the market, they also needed large funds to take goods. Now they have been eliminated. Those with a large number of fans only need to share the effect of using the product with more people to influence consumption. Even bigger, they can unite fans to customize products with manufacturers.
They have become a channel to lock in consumers.
In the final analysis, it is because: **Consumers have more initiative!**
**Develop Your Own Products**
As an ordinary person, developing your own product sounds incredible. Indeed, in traditional business, it is difficult for us to become a "producer," but in the future, each of us will have this opportunity.
"Suppose you have a design idea. You are excited to draw the new design. What should you do next? If you have enough fans, you can share it and let them marvel. Even if you don't have that many fans, there are more and more online design communities or creative malls where people with ideas and creativity can register, communicate, and discuss, forming a cluster. You can also put the product image on your personal homepage.
Then, when fans or netizens see a work they like, they can directly place an order. At that time, you can contact those factories with customization capabilities!
This is a **fashion brand with customization as its core**, which will become more competitive as the post-95s gradually become the main shopping force. At the same time, if a consumer really likes it, they can click one-click share and send it to their WeChat, Weibo, QQ space, etc., attracting more purchases. The purchases generated after sharing should give them a corresponding share, which is also the core value of mobile e-commerce. Your brand can also grow.
This is the process from creativity to product. The Internet helps us solve the problems of information and channels. This will inevitably lead to a liberation of personality and interest, including the realization of our personal value.
**China's Economy Begins to Counterattack!**
In summary, we can find that in the past, China's economic growth mainly relied on investment. Investment means expanding "production," which is pushing. At this time, the focus of China's economy was concentrated on the "producer" end.
In the future, China's economic growth must rely on consumption, making people's "consumption" fission, which is pulling. At this time, the focus of China's economy moves forward to the "consumer" end.
**Shui Muran's comment: The traditional consumption relationship is push-type, pushing from the back link to the front link. The new consumption relationship is pull-type, needing to rely on consumer demand to lift the entire industry chain.**
Now, this "reverse" consumption relationship has fully entered our lives. Relying on the development of mobile Internet, many supply relationships have moved to mobile phones. Consumers can place orders without being limited by time and place. They can effectively improve management efficiency anytime, anywhere through mobile phones, such as hailing a taxi, ordering food, washing clothes, getting a manicure, booking a hotel, booking train tickets and air tickets. It is all about consumption first through the platform placing an order, then the platform responds, and the "producer" (in a broad sense) provides us with services.
For enterprises, the question they used to think about was: "Do what I can do." In the future, the question will be: "Give him what he wants."
So, this "counterattack" of economic structure is rewriting business rules. It is like opening the Ren and Du meridians of China's economy in reverse, awakening China into the next spring! The era of "people-oriented" has truly arrived!
I have said so much with great effort. Did you understand?
-END-
**Click the image to read directly**
**The most professional and practical knowledge base in the FMCG industry**
****[ Reply with the yellow number in the background to view the corresponding keyword content ]****
| **001** Excellent article selection | **002** Distributor market operation | **003** Terminal visit management | **004** Sales supervisor skills | **005** Sales improvement techniques | **006** Channel expansion | **007** Managing distributors | **008** Distributor development | **009** Distributor internal operation management | **010** Team management | **011** Efficient distribution techniques | **012** Sales manager's eighteen skills | **013** KA operation methods and strategies | **014** The first lesson for new sales | **015** Internet, brand | **016** Distributor B2B transformation |


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671