"The most intense competition is war, and the key to victory is speed, from early clubs, swords, and bows to modern guns and missiles. The purpose of organizational restructuring is to enhance flexibility and rapid response to frontline markets. ——Nie Biquan, General Manager of Shaanxi Baihui Trading Co., Ltd." Shaanxi Baihui is a comprehensive trading company with six branches located in Ankang and Xi'an. Baihui manages nearly 4,000 SKUs, employs 700 people, and achieves annual sales of nearly 300 million yuan. Recently, New Distribution interviewed Nie Biquan, General Manager of Shaanxi Baihui Trading, to see how this traditional FMCG professional implements an internal partnership mechanism and how he thinks in the face of the internet. 01 Survival Depends on the Boss, Long-term Growth Depends on the Team Nie Biquan entered the FMCG field in 2000, starting as a frontline salesperson and rising to sales director within seven years. He started his own business in 2008, initially as a paper product distributor. Nie told New Distribution that from the beginning, he never thought of the company as belonging to one or two people; it belongs to everyone. To grow bigger and stronger, it is necessary to unite the strength of all. Soon after starting the business, Nie launched a partnership incentive plan: invest 20,000 yuan to become a partner and enjoy year-end dividends. Nie recalls that at the time, only one person was willing to invest; others were skeptical, even when told that the company would achieve over 60% compound growth in five years, that employees would have houses and cars, and that the company would expand from Ankang to Xi'an. By 2009, Baihui's sales had doubled, and some proactively proposed to "join the partnership." The investment amount increased to 50,000 yuan. By 2012, the company had six partners. In 2014, the distribution environment changed significantly with the rapid development of the internet and rising labor costs, making trading increasingly difficult. Nie told New Distribution, "What allows the company to continue and go far? Besides professionalism and focus, it relies on people. If employees are just workers, why should they be focused, even working for ten years to think about how to sell more products? Who doesn't need management? Only shareholders don't need management." Nie believes that the key to enterprise transformation is people; all internet and B2B initiatives are determined by people. In 2015, Nie took the lead in piloting the transformation of the food department, establishing a branch company. Business departments were asked to invest: 8 people, of which 5 invested 900,000 yuan, the supervisor invested 600,000 yuan, and the remaining others invested a total of 300,000 yuan, while Baihui invested 2.1 million yuan. The branch's functions included product selection, distribution, promotion, and ordering. In terms of equity distribution, Baihui held 70%, and the branch held 30%. Additionally, Baihui lent 7 million yuan to the branch, totaling 10 million yuan as operating capital. At year-end, regardless of profit or loss, the branch first repaid the interest on the 7 million loan to Baihui, and the remaining profit was distributed proportionally. Why pilot the food department? Nie told New Distribution that food was not yet Baihui's core business at the time, so failure could be directly eliminated, with relatively lower trial-and-error costs. If successful, other departments would follow. In 2016, although the branch's sales did not grow, it cleared up past legacy issues. Previously, damages and near-expiry products were Nie's concern, but with the role change, the leader began to worry. Over the year, the originally planned 10 million yuan operating capital was actually only 5 million yuan used. Nie said, "In the past, the person in charge would ask the company for money whenever short; now independent, if they sign, it means borrowing with interest. The leader won't casually sign, but instead thinks about whether they can reduce inventory or collect advance payments, and only as a last resort come to the company." In 2017, the food branch's sales increased by 30-40% and became profitable. After verifying success, Nie gradually spun off other departments. Baihui took on backend functions such as warehousing, distribution, finance, systems, and capital, with branch companies sharing operating costs. Nie told New Distribution that Baihui adopted financial software early on, making internal operating data very clear, including the proportion of costs for warehousing, distribution, personnel, and office expenses. To motivate employees, Baihui also tried a cost reward system. For example, the distribution department was given 2% of costs; at year-end settlement, if only 1.8% was used, the saved 0.2% would be shared with the department, which would receive 70% as a cost reward. In a recent New Distribution Open Class, Nie, as a guest speaker, mentioned that one way of organizational transformation is "platform + small organizations." Small organizations liberate human nature, and the platform's value is empowerment. Small organizations with independent accounting and profit/loss responsibility can maximize their work enthusiasm and improve front-line efficiency. Baihui, as a platform, provides necessary ammunition and becomes a supporting platform. 02 Not Just a Distributor, but a Category Operator Nie told New Distribution that after organizational reform, Baihui's business logic also adjusted. Baihui no longer solely pursues sales growth for a single brand but strives to increase category share in specific markets. He said, "Currently, Baihui holds rich category resources. We need to deepen and thoroughly penetrate. When seizing the market, other distributors may think about how to get orders, but Baihui thinks about how to strategize and increase share." Nie gave an example: entering Ankang's chain convenience store systems, Baihui's goal is category supply, with related categories accounting for 60-70% of the convenience store's product structure. Therefore, Baihui invests heavily in personnel, capital, and policies, even not considering profit in the early stage. When other distributors are "eliminated," Baihui then sorts out product items, adjusts structure, and finally achieves profitability. Currently, Baihui has nearly 60 salespeople and 200 full-time promoters in Ankang. In Xi'an, there are 20 salespeople and nearly 300 promoters. Nie believes that in the past, people thought anyone with some money could be a distributor. We need to raise the bar, not only to make manufacturers and outlets take us seriously but also to PK out other "small traders," making Baihui stronger in the regional market. Nie revealed to New Distribution that besides using its own agency brands to attack outlets, Baihui also invests in and controls other distributors to increase market share in certain areas. In addition to increasing market share in downstream outlets, Baihui can "share worries" with upstream manufacturers, ensuring that products they want to promote are pushed out and markets they want to cover are covered. Nie believes that the distributor's function is not just capital and logistics; the most important is marketing and promotion, which is the core value of distributors. 03 Being a Demonstration Point for Manufacturer Promotions The most headache-inducing issue between distributors and manufacturers is cost investment. Nie believes that often it's not that manufacturers are unwilling to invest, but they fear investment without results or being intercepted. So in cost investment, Baihui takes the initiative to invest first, and once results are seen, then asks manufacturers to invest. He told New Distribution that recently Baihui conducted a promotion activity in a KA store, a "health check center" for C&S. The manufacturer didn't even invest, but Baihui was willing to. Although C&S has already achieved market leadership this year, Baihui must think about next year and what to do this year to prepare for next year's goals. Now Baihui has become the marketing vanguard for manufacturers, piloting on a small scale, verifying results, and providing feedback to manufacturers for replication to other distributors. Nie recalled that when C&S upgraded its products, Baihui "bit the bullet" to cooperate, suffering a net loss of over 1 million yuan at the most painful time, plus investment in promoters. He believes that as long as the manufacturer's direction and strategy are correct, Baihui will fully support. Now, the C&S product upgrade war is over, with C&S's handkerchief paper accounting for 40% of the category share and 30% of sales in China Resources Vanguard. 04 Transforming to B2B: Assess Whether the Market Has Opportunities With the internet onslaught, many distributors think they must do B2B or unified warehousing and distribution. In Nie's view, distributors should first consider whether the market has opportunities. He told New Distribution, for example, in the Xi'an market, future outlets can be roughly divided into three categories: first, chain convenience stores; second, chain KA stores; third, mom-and-pop stores transformed by national B2B platforms like Alibaba and JD.com. So for Baihui, there is no opportunity to do B2B in Xi'an. Since there's no opportunity, they simply don't touch it, instead leveraging their strengths for category extension, actively cooperating with B-side platforms, supplying chain convenience stores and KA stores, and even controlling other distributors for deep category supply. But in the Ankang market, Nie believes Baihui still has a chance to overtake on curves. Currently, Baihui is actively preparing; warehousing and distribution infrastructure is ready, and salespeople have started ordering via mobile phones. Baihui is moving step by step toward a B2B model, but one step remains: opening the mobile app ordering to terminal outlets. Nie told New Distribution that the reason they haven't opened the ordering software to outlets is that online ordering in the Ankang market is not yet mature and needs market education. To reduce market cultivation costs and trial-and-error, Baihui will wait for Alibaba's Retail Link and JD's New Path to enter Ankang, letting big platforms cultivate the outlets. Many distributors, when anxious and confused, often focus on B2B, thinking only about how to transform into B2B. In fact, not all distributors and markets are suitable for B2B. Besides their own strength and advantages, they must also consider whether the market has opportunities. Even if there's no opportunity, stepping back to base themselves in the local market and deeply rooting as a category supplier is also a good choice. Nie believes that no matter which direction distributors transform or upgrade, they should start with a mindset shift. Don't cling to the past; past excellence doesn't guarantee future success. Also, don't fear the future; the greatest fear is not knowing what will happen, but if you know the trend of future changes, you won't fear. Go out to learn, change your mindset, and let new thinking in. Besides changing mindset, the organization must also change. The purpose of the organization is to respond flexibly and quickly to market changes and serve the market faster. The most intense competition is war, and the key to victory is speed, from early clubs, swords, and bows to modern guns and missiles. The purpose of organizational restructuring is flexibility and rapid response. Distributors should not doubt the leaders of small organizations. If a marketing campaign loses money, Baihui loses 70%, and the leader loses 30%. The leader will definitely feel more pressure than Baihui. Even if a wrong decision is made, it's a capability issue, and the company is willing to pay the price for growth. Final Thoughts The above is Nie Biquan's practical thinking on Baihui Trading's transformation and upgrade. Recently, New Distribution has received many inquiries from distributors about how to transform, how to do B2B, and how to do unified warehousing and distribution. Baihui's transformation practice may provide another perspective for distributors.

  1. Organizational transformation: upgrade to small organizations, let those who hear the gunfire make decisions. Before planning small organizations, clarify the company's internal operating data, including the cost proportion of each segment and link. When practicing small organizations, don't expect one-time success or one-time reform. Start with non-core brands or categories for piloting, trial-and-error, and optimization. Don't immediately establish non-branch companies with independent accounting; gain experience through pilots.
  2. As a category supplier, some industry insiders have expressed that in the next 8-10 years, 80-90% of distributors will disappear, and 10-20% will thrive. In New Distribution's view, the 10-20% are category suppliers, rooted in outlet marketing based on category supply.
  3. Distributors should have "strategic thinking." Although making a profit from price differences is the goal, the path is definitely not just selling products case by case. Baihui's full-category supply or investment and control forms are worth learning from for other distributors. The above are New Distribution's observations on distributor transformation practice. During actual transformation, distributors may encounter various specific problems due to different local conditions. Feel free to add the author's WeChat to discuss and exchange ideas. Extended Reading: Review New Distribution's 100 People精彩报道 [Click to View] -END-