Introduction: Flexible adjustment, active response. Over the past three years, China's FMCG industry has struggled through the pandemic. The China Consumer Index fell below 90 in April 2022, hitting a historic low. McKinsey's 2023 China Consumer Report highlights the 'era of resilience' as a key theme, reflecting the difficulties faced by the industry under the pandemic's impact. As a crucial link in the supply chain, FMCG distributors have experienced ups and downs with the macro economy over the past three years. Amid the three years of uncertainty, we have seen some distributors achieve growth against the trend, becoming market winners under uncertain factors; others have struggled, facing declining sales and profits; and some have completely exited the FMCG industry due to the pandemic. To this end, we interviewed Zhao Hu, founder of Xinjiang Bole City Jinbaili Commerce and Trade Co., Ltd. (hereinafter referred to as Jinbaili). Zhao Hu's distribution area is the Bortala Mongol Autonomous Prefecture in Xinjiang. 'Bortala' means 'silver grassland' in Mongolian. Bortala has a population of 480,000. In cities with populations of several hundred thousand, including Bole City, a vast number of distributors sustain the supply chain of China's FMCG industry. Jinbaili was established in 2009, mainly distributing Mondelez products (Oreo, Trident, Quaker), Yinlu products, Jinluo ham sausage series, Zhili instant products, and Feihe milk powder series. KA accounts for about 30%, and townships account for about 50%; annual sales are 18 million yuan. During the pandemic, Jinbaili achieved growth in sales against the trend, which is truly commendable. We attempt to review the past three years to see how distributors in representative cities like Bortala survived the winter on the 'silver grassland'. We see how they fought against the external uncertain environment as the times progressed, ultimately surviving through change and adaptation. Three years of pandemic, distributors faced difficulties The pandemic's impact on China's economy has been enormous, including sluggish investment, restaurant closures, and weakened consumer willingness due to slowed income growth. The increase in bank savings in recent years indirectly confirms residents' cautious attitude toward consumption, and the natural result of weak consumption is a reduced contribution and driving effect on the economy. Data shows that in the first three quarters of 2021, consumption contributed 62.1% to GDP, but in the same period of 2022, it dropped significantly to 41.3%. The pandemic's impact on the economy has transmitted to FMCG distributors who rely on logistics and channels, forcing them to continuously adjust their business strategies amid uncertainty. Overall, distributors have generally had a tough time. Although there is no large-sample statistical data, in interviews, Mr. Zhao told New Distribution that among the distributors he knows, business is generally not good, and the majority are losing money. Jinbaili's operations were affected during the pandemic in several aspects: First, product sales issues. For distributors, if products cannot be sold, they can only lose money. Mr. Zhao mentioned that pandemic controls led to many products, such as gift boxes, being unable to move during the Spring Festival, resulting in large-scale returns and exchanges, and unsold inventory. Inventory backlog put enormous pressure on the company, and the team began to take effective measures. Mr. Zhao mentioned that they actively expanded new channels, such as launching mini-programs to increase sales and cooperating with special channels. Through active adjustment, the team resolved the product backlog issue. Second, logistics impact. The impact on logistics almost ran through the three years of the pandemic. Travel restrictions directly led to logistics stagnation, preventing goods from flowing. In particular, obtaining passes was very difficult. Mr. Zhao told New Distribution that the pass issue left a deep impression on him. In July 2020, the company had to coordinate with multiple relevant units and departments to obtain a pass, making dozens of phone calls without resolution, causing great anxiety. When asked how the pass issue was ultimately resolved, Mr. Zhao mentioned that they had to find ways to apply, and finally the pass was approved, ensuring smooth logistics. Mr. Zhao also mentioned that in April last year, the company's financial data showed losses. At that time, products such as milk powder and eight-treasure porridge faced unsold inventory. Fortunately, May brought the tourism peak season in Xinjiang, and with the experience from the previous two years, the company made many preparations, ultimately turning losses into profits, with sales of many products increasing by 30%. During the pandemic, Jinbaili also adjusted its product categories, starting to do snack foods, but Mr. Zhao told New Distribution that after the adjustment, they encountered problems and sales results were not ideal. Affected by the pandemic, in lower-tier cities, second- and third-tier products were unsold, and terminal customers were unwilling to sell these products. In the end, they only did first-tier brands and directly cut third-tier products. Third, channel changes. The pandemic reshaped people's consumption scenarios and habits. People reduced going out, and staying at home became the norm. Policy restrictions on population density led to reduced foot traffic in large supermarkets. Mr. Zhao mentioned that in response to this issue, they actively developed new channels such as unit group purchases, expanded cooperation with units under closed management and with stable demand, such as factories and technical schools, and tilted resources toward main sales channels like community convenience stores. Adapting to changes, actively adjusting Jinbaili's region in Xinjiang has long winters and strong seasonal characteristics. The long winter undoubtedly increases the difficulty of doing business for distributors in Xinjiang. Combined with the pandemic's impact on Xinjiang, especially the over 100-day lockdown last year, it made things even worse for distributors. New Distribution specifically focused on the combined impact of off-peak and peak seasons and the pandemic in Xinjiang. How did Jinbaili achieve growth against the trend under such circumstances? Xinjiang is similar to the Northeast in that it has obvious peak and off-peak seasons. How to seize the peak season and utilize the off-season? Mr. Zhao told New Distribution that in Xinjiang, April to September is the peak season for beverages; October to March is the peak season for dairy products; snack foods are relatively stable. Jinbaili prepared corresponding products according to seasonal characteristics to adapt to peak and off-peak changes. At the same time, the pandemic caused changes in consumption scenarios and transaction channels. Traditional channels were restricted, and channels began to shift online. Mr. Zhao mentioned that flexible use of mini-programs was very helpful to the company. During the first pandemic period, the company purchased a mini-program, which was very helpful in digesting large inventory. After the pandemic was lifted, the company shifted focus back to offline, and the mini-program served as an emergency tool, adjusted according to specific circumstances. In business adjustment, on the one hand, focus on key customers. In lower-tier cities, customer relationships are very important. During the pandemic, Jinbaili followed the principle of key customer visits, treating normally operating stores as top priorities for cooperation and service. Jinbaili also maintained active communication and coordination with relevant departments after obtaining passes, entering the municipal and county-level supply guarantee systems to ensure normal business. On the other hand, mobilize employees for all-staff sales, including promoting on WeChat Moments and having employees invite friends and family groups. This was to increase sales channels, avoid unsold products, and also allow employees to better understand the company's products, increasing sales without reducing staff. In addition, in terms of personnel stability, Jinbaili adopted a minimum unit system, where a small team of 8 to 9 people, consisting of warehouse keepers, drivers, and clerks, could ensure the company's normal operations. Jinbaili also provided subsidies to employees who worked during the pandemic, with a daily pandemic subsidy of 50 yuan in the form of bonuses, while employees who could not work had their basic living needs guaranteed. In fact, what Jinbaili did was simple: actively adapt and adjust according to changes. The effect of this change was obvious. Mr. Zhao told New Distribution that in the first year of the pandemic, sales decreased by 30%, but with subsequent active adjustments in categories and business methods, 2021 saw a 15% year-on-year increase, and in 2022, some products even saw growth of 15%-30% above normal years. Be prepared to welcome spring Jinbaili's mindset adjustment is worth learning for distributor friends. Mr. Zhao told New Distribution that during the pandemic, the whole company was continuously learning and summarizing. During the 2020 pandemic, New Distribution had many online live streams. Mr. Zhao listened and took notes until the end, then held an all-staff online meeting to share helpful viewpoints with employees. In Mr. Zhao's view, unifying the thinking of all staff during the pandemic was very important because everyone was anxious at home under lockdown—more discussion and feedback can enhance everyone's confidence, and in the process of communicating with employees, it is also an opportunity to review problems and adjust direction. Jinbaili later retained the habit of more feedback and communication, and many problems were resolved in a timely manner. In terms of mindset, Jinbaili believes in long-term value, faces the uncertainty of the pandemic with a positive attitude, and becomes a long-termist and a friend of time. Mr. Li Feng, the host of 'Li Feng New Distribution', also mentioned multiple times in his live streams that one should face market changes with an optimistic attitude. First, change one's cognition. No matter what time, one should actively run the market, because the current market has oversupply. Complain less and be more proactive. At the end of the interview, New Distribution asked Mr. Zhao a question: In the three years of the pandemic, what do you think was the most difficult part? Mr. Zhao smiled and told New Distribution that the most difficult was still the pass issue mentioned above. Jinbaili's warehouse had up to 4 million yuan in inventory. Inventory backlog, plus the need to pay employee wages as usual and complete manufacturer tasks, brought great pressure to the company. Of course, these problems were eventually resolved. Regarding future plans, Jinbaili plans to expand more categories and move toward omni-channel operations. Mr. Zhao told New Distribution that white-label products are a category the company is considering for the future. In addition, they are also cooperating with Tianshan Dairy to form a team for nationwide operations. Organizationally, Jinbaili plans to establish a new operations center and select categories with product strength for operations across Xinjiang. In terms of specific categories, they will expand in functional beverages. Mr. Zhao told New Distribution that Red Bull's sales in Xinjiang exceeded 1.5 billion yuan in 2022, ranking first in per capita consumption nationwide; Heika (a functional beverage) sold over 400 million yuan; Nestlé coffee accounted for 12% of national sales in 2019. It can be seen that what Jinbaili did during the pandemic was simple: flexible adjustment and active response. In the future, Jinbaili will also steadily move forward in the changing market, as Mr. Zhao said, facing it with an optimistic attitude. Final thoughts: During the three years of the pandemic, issues like the difficulty of obtaining passes may have plagued distributors. Over the three years, most distributors faced increased pressure and continuously adjusted strategies to adapt to external market changes. Although we also see many distributors facing losses and declining profits, as McKinsey's consumer report states, China's consumer market is resilient. Now, pandemic policies have been lifted, and logistics and channels affected by the pandemic are no longer issues. In the future, distributors will face more challenges. With social and economic development, consumer preferences will continue to change. Distributors need to strengthen their understanding of consumers to maintain service competitiveness; at the same time, they need to use new technological tools to improve operational efficiency to meet new market demands. When spring arrives, be prepared to welcome new opportunities and challenges, and face the future with a more positive attitude. Recommended reading