---
title: "In H2 2022, Holding the Fort and Pragmatic Management Are the Way to Win"
description: "Amid recurring COVID outbreaks and economic downturn, the article analyzes H1 2022 financial data showing a surge in household deposits and weak loans, reflecting stressed consumer confidence. It shares insights from industry leaders on navigating uncertainty, emphasizing the need to stabilize core business, adapt strategies, and for distributors to evolve their capabilities to survive intensifying market competition."
author: "赵波"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-07-15"
language: "en"
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# In H2 2022, Holding the Fort and Pragmatic Management Are the Way to Win

> Amid recurring COVID outbreaks and economic downturn, the article analyzes H1 2022 financial data showing a surge in household deposits and weak loans, reflecting stressed consumer confidence. It shares insights from industry leaders on navigating uncertainty, emphasizing the need to stabilize core business, adapt strategies, and for distributors to evolve their capabilities to survive intensifying market competition.

********Click to read the original text for details********
**0****1**
Recently, the epidemic has been recurring and spreading across the country, adding more uncertainty to an already sluggish market. On July 11, the central bank released financial data for the first half of the year, with two points worth noting:
**First, facing downward economic pressure, Chinese households' "financial management methods" showed a stress response in H1, with deposits surging and loans declining.**
**Second, June financial data continued to recover, indicating that the most difficult period for the economy is passing.**
Let's first look at residents' stress response. The so-called stress is an emotional state caused by dangerous or unexpected changes in the external environment. Reflected in H1 financial management methods, it manifests as rapid growth in household savings deposits and sluggish growth in household loans.
Source: Liu Xiaobo on Finance
It can be seen that among the last four first halves, the first half of 2022 saw the largest increase in household deposits, reaching 10.33 trillion yuan, far exceeding the same period in the previous three years. **Compared with the same period last year, it increased by nearly 2.9 trillion yuan.**
This is **"stress savings," or "revenge deposits."** Due to economic downturn and rising unemployment, people dare not spend or borrow, and have increased their savings.
The first half of 2019 was the last normal year before the epidemic. In that first half, national household deposits only increased by 6.82 trillion yuan. In the first half of 2020, due to the outbreak of the epidemic, stress savings appeared for the first time, with household deposits increasing by 8.33 trillion yuan. By the first half of 2021, as the economy recovered and confidence rose, deposits declined. In the first half of 2022, household deposits rebounded strongly again, with astonishing force.
It can be said that compared with the impact on the economy, the epidemic has had a greater impact on consumer confidence.
Of course, it is not only due to the epidemic. The overall macro situation worldwide is not good: the Russia-Ukraine war, Sino-US confrontation, high raw material costs, cyclical US interest rate hikes, the euro hitting a historic 1:1 against the dollar, and foreign exchange reserve depletion in some South Asian countries like Sri Lanka and India. Uncertainty worldwide has greatly increased.
Under these multiple impacts—declining consumer confidence, inflation, and the epidemic's various effects—the overall consumption outlook for H2 is not optimistic.
**02**
The author also exchanged views with some corporate executives. Their judgments on the H2 economic situation are basically consistent: be cautious, not optimistic. However, in exchanges with well-known entrepreneurs, their basic judgments on the current environment are worth learning from and reflecting on:
**Hou Xiaohai, Chairman of China Resources Beer:**
Overall, the first half is about protecting the basic market, and the second half is about striving for growth. In H2, the basic market is the primary task for companies in difficult times. Without a stable basic market, a company cannot resist major external risks, let alone develop new businesses in difficult times. Stability of the basic market is the most fundamental business priority, and basic work with customers, consumers, and employees must be consolidated.
In the current market environment, to grow from existing volume, we can only change from within, seek incremental space in the market, deeply study the epidemic, research new growth models, and find new competitive strategies to achieve growth. Breakthroughs should also be considered in new consumption trends and new consumer groups.
From a macro perspective, the external environment will not ease in the short term; the global economic environment will not change significantly; and the Sino-US struggle will not fundamentally reverse. The Russia-Ukraine war is a short-term factor causing commodity shortages and rising costs, which are short-term changes. The Sino-US struggle is a long-term process that will gradually become rational, with cooperative confrontation.
Therefore, under such circumstances, Mr. Hou suggests corporate strategy: **not conservative or aggressive, but contingency-based.** Some aspects should be conservative, but for certain new things that are clearly identified, one should attack. **Everything should have a limit; defense should not be overly conservative, and attack should not be reckless.** Reasonably design your own range, red lines, and bottom lines, and strive for a stable basic corporate situation. Try not to touch the high line or do things beyond your capabilities.
In the long run, regarding China's economic situation and development, we believe the 20th Party Congress will provide a relatively stable economic environment and expectations.
**Lu Xiuqiong, Global Partner at Bain & Company, believes:**
The key to surviving crises and achieving resilient growth requires "five hearts" capabilities:
**1. Don't forget the original intention.** Soul-search: What was your original intention when starting the business?
**2. Focus on the core.** Focus on core products. Less is more; learning to subtract is actually the hardest.
**3. Ambition for omni-channel.** The reshaping of channel and traffic structures gives brands that truly create consumer experience and trust the opportunity for omni-channel growth.
**4. Craftsmanship in supply chain.** Controllable R&D material selection, deep equity participation, and aggregation of multiple factories continuously iterate the supply chain.
**5. Patience in scenarios.** The secret to FMCG growth lies in high-frequency, rigid demand. Find your most suitable scenario and quickly build consumer habits. Use core big products to create a deterministic growth flywheel.
More importantly, the more adverse the circumstances, the more awe entrepreneurs must have. The consumer track faces a major test, testing whether companies can respond orderly to change based on their basic market foundation. Successful companies persist in regular reserves, reform in crises, and balance long-term strategy with short-term tactics. All brands must return to the essence of business, treat this crisis as an opportunity for growth, and strive to calm down and survive.
**Cao Hu, Global Partner at Kotler Consulting, believes:**
The current market environment faces three uncertainties: first, the recurrence of the epidemic; second, a large number of new brands and channels are diverting traditional businesses' operations and traffic; third, the number of new customers is decreasing. Therefore, in such an environment, companies must pay close attention to their own business. The basic market is the source of stable cash flow, and it includes three levels: **core products, core customers, and core markets.**
**Lu Wenjin, Chairman of Hubang Chili Sauce:**
At this stage, companies must seek stability in strategy, but change in tactics! Avoid major moves; the macro environment is unclear, and there are no major economic growth points. However, within the organization and at the grassroots level, explore innovation and seek breakthrough opportunities. Our internal semi-annual meeting theme is eight characters: **Continuous advancement, accumulated feathers sink the boat!**
**Liu Xinhua, Executive Director of Uni-President China, also has his own judgment:**
The economic situation in H2 will be severe. People's wallets are empty, and the downturn across industries may last for a while (perhaps a not-short period).
Growth pressure mainly comes from three levels: market changes, environmental changes, and changes in consumer income and confidence. But precisely at such times, corporate endurance becomes very important. As Chairman Luo Zhixian said: **Running a business is like children holding their breath underwater: whoever surfaces first loses.**
**In the author's exchange with Jiang Nanchun, Mr. Jiang also has his own views:**
Mr. Jiang believes that **the current market environment is both a danger and an opportunity**: First, when crisis and winter arrive, it is also time to clean up the market. This is precisely a good time for strong brands to sprint on the track, because your opponents are already weakened and exhausted. Every crisis is a time when brand concentration rises. Strong brands need to seize the opportunity to launch a campaign to capture market share.
Compared with the economic challenges of 2020, raw material costs are rising, traffic costs are rising, consumer confidence is falling, and employment rates are falling. However, the scale of national economic stimulus will be larger, infrastructure investment will be larger, monetary easing will be greater, real estate will be more relaxed, the platform economy will recover, and epidemic prevention capabilities are strengthening.
Therefore, the success of large enterprises relies on ambition and determination. **A brand's steadfastness truly comes from the compound interest of persistently building the brand and from daring to make correct choices during crises.** Because management is not about managing results; it is about managing causes and effects.
**03**
After communicating with these entrepreneurs, one strong feeling emerges: the epidemic has increased market uncertainty. However, in such a market environment, we must become more cautious on one hand, but caution is not conservatism. The market cannot be defended by just holding on; defense essentially means consolidating and adapting.
The era of high growth has ended, and the market is full of uncertainty. We must pay timely attention to consumer iteration, consumption upgrade needs, and cost-performance demands. We need to invest more energy in judging changes in the current market situation, attach importance to basic business, protect existing volume, and find opportunities to increase volume.
Yesterday, I also posted a view on my Moments:
The epidemic recurs, the economy is down, and consumer confidence is insufficient. **If we want to give up today, there are countless reasons. But if we give up, our opponents are doubling their efforts. Undoubtedly, we will be the ones eliminated.**
IPA Databank, in a study on brand marketing effectiveness, found that: _When facing economic downturn, cutting brand marketing budgets may help protect short-term profits, but after economic recovery, brand strength becomes weaker and profits lower. Smart companies invest more in brand marketing, gain a greater voice, and thus can achieve longer-term profitability._
The logic of branding is somewhat consistent with market logic; it just depends on how we adapt, respond to defensive situations, and change at the right time.
**04**
So, what should distributors do at this stage?
First, we must affirm that the offline distribution chain, especially distributors, has irreplaceable advantages for brand owners. A recent report by Jiaziguangnian also validates this view: **The offline distribution chain is irreplaceable for brand owners.** New Distribution has also emphasized multiple times in previous articles that **for instant-consumption categories, the enterprise's barrier is the channel. One of the core tasks of the channel is to maintain the value chain and form a healthy business alliance with distributors.**
Source: Jiaziguangnian
But when the market is full of uncertainty, the economy is declining, the market is saturated, and the market enters the knockout stage of the second half, we must think: What exactly is the core competitiveness of our distributors?
For brands, the ability to distribute quickly, effectively, at low cost, and on a large scale is the basic prerequisite for evaluating whether a distributor is high-quality. Of course, there are also capabilities such as capital, warehouse logistics, cognition, marketing, and market operation management. But abstractly, **distributor capabilities have evolved from single-dimensional offline physical capabilities to diversified, personalized, and even modular capabilities.**
When external uncertainty increases and market choices become more stringent, distributors' ecological niches are also experiencing a Matthew effect of squeeze. The ability to cope with this pressure includes digital connection capabilities, adaptability to new retail formats, insight into new consumption and scenarios, and resilience to market uncertainty.
As market uncertainty and pressure grow, distributor evolution never stops and may even accelerate. Who can survive depends on natural selection and survival of the fittest.
Cover source: Panoramic Vision
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