---
title: "Kang Shi Fu CEO Wei Junxian: Channel Promotion Strategies Must Adapt to Changing Times"
description: "In an interview with McKinsey, Wei Junxian, CEO of Kang Shi Fu, discusses how the company is adapting to China's diverse consumer market by upgrading products, leveraging digital channels, and partnering with multinational brands to maintain leadership in the FMCG sector."
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published: "2019-05-13"
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# Kang Shi Fu CEO Wei Junxian: Channel Promotion Strategies Must Adapt to Changing Times

> In an interview with McKinsey, Wei Junxian, CEO of Kang Shi Fu, discusses how the company is adapting to China's diverse consumer market by upgrading products, leveraging digital channels, and partnering with multinational brands to maintain leadership in the FMCG sector.

Source: McKinsey & Company
Authors: Daniel Zipser, Udo Kopka
**Wei Junxian:**
**CEO of Kang Shi Fu. He holds a bachelor's degree in electrical engineering from National Taiwan University and an MBA from the University of Chicago Booth School of Business. He has been CEO of Tingyi (Cayman Islands) Holding Corp. since January 2015, previously overseeing the company's food business.**
In China, few instant foods can match the delight of instant noodles. Add the noodle block, sauce, seasoning, and dehydrated vegetables, pour in hot water, and a simple, perfect meal is ready. The flavors of instant noodles are constantly being innovated. To increase economic benefits, companies are also developing new flavors to cater to consumers' taste buds.
Although China's instant noodle market is worth billions of dollars, the industry is under pressure due to changing consumption patterns, including the popularity of food delivery apps and faster travel, which reduce opportunities for people to eat instant noodles on the go. According to the World Instant Noodles Association, Chinese consumers ate 39 billion packs of instant noodles in 2017, but sales have generally declined over the past year or two, forcing market leader Kang Shi Fu to rethink its product strategy.
Under the leadership of CEO Wei Junxian, Kang Shi Fu (formerly known as Master Kong) has upgraded its instant noodle products to cater to Chinese consumers' growing demand for premium products.
The company has also cleverly enhanced its brand awareness among China's rapidly growing middle class. Not only did it become the exclusive sponsor of NBA China in June 2015, but it also has long-term partnerships with multinational brands such as Starbucks and Pepsi.
In a conversation with McKinsey senior partners Dr. Daniel Zipser and Dr. Udo Kopka, Wei Junxian shared Kang Shi Fu's efforts to meet the increasingly diverse and localized tastes of Chinese consumers, maintain its leadership position, and compete with local and multinational companies in the process.
**Understanding the Diverse Chinese Consumer**
As CEO of Kang Shi Fu, what changes have you seen in Chinese consumer tastes over the past few years? How have these affected Kang Shi Fu's business?
We often value the scale of the Chinese market, but it is also the most demanding market in the world. I often tell foreign friends that they should think of China as a continent. Several provinces have populations larger than some European countries. I also tell them that China has "5 Ds." **First, there is growing income disparity, not only between rich and poor, but also significant regional differences. The other four Ds are four types of diversity: weather, culture, and local cuisines, not to mention differences in food culture and taste preferences. The last is diversity in marketing strategies, including multiple retail channels such as e-commerce and physical stores.** Diversity is increasing, so there is no "one-size-fits-all" solution in the Chinese market.
**Attracting China's Affluent Consumers**
What trends have you seen in China's food and beverage consumption in recent years? What developments do you foresee?
Like other sectors, many in the food and beverage industry talk about consumption upgrading, but upgrading requires greater diversity, and companies need to offer products that cater to different income groups. In short, **affluent consumers are always looking for better, healthier ingredients; they crave natural foods. But the working class still values cost-effectiveness and product variety. However, everyone cares about food safety.**
**Kang Shi Fu's Channel Promotion Strategy Adapting to the Times**
How does Kang Shi Fu meet consumers' growing demand for premium products?
This can be understood from three aspects: **first, product development; second, marketing strategy; and third, communication with consumers.** In product development, we need to implement differentiated pricing for different product lines; we cannot offer one-size-fits-all products. The era of mass production is over. Today, it is crucial to provide the right product to the right consumer at the right time and place.
**We launched a new premium product, "Suda Noodle House," targeting affluent consumers, aiming to compete with food delivery. The consumer experience is almost comparable to a noodle shop, with similar beef sizes and noodle types, and even a wider variety. We collect consumer data: whether the noodle cake is big enough, whether the taste is too salty, etc. Previously, we had to conduct a series of studies before launching a mass-produced product. Now, with e-commerce channels, we can get immediate feedback, allowing us to understand customers and their needs faster and more precisely.**
**We also evaluate beverages. People used to prefer instant coffee, but now they prefer higher-quality coffee beans, so we launched Starbucks "ready-to-drink" coffee.**
The soup base seasoning packet gave us another idea. Twenty-five years ago, when we first entered China, people's daily diets were not very nutritious. So, when they saw meat made from palm oil, they said, "Wow, this is real food." Even the oil floating on the soup was considered authentic. Twenty-five years later, affluent urban consumers think, "Is the calorie intake too high? Is this a healthy lifestyle?" Now they want slowly simmered bone broth; tastes have changed significantly, and the soup is less greasy. But the working class still misses the past; they want to get calories from food to cope with heavy physical labor.
Specifically regarding channel promotion strategies, **we originally had only one channel: small retail stores. Now we have multiple physical channels: they can be dining venues, tourist attractions, entertainment venues, fast-food restaurants, theme parks, train stations, and restaurants.** In these places, people may not just pass through; they also sit down. Thus, fragmented channels have emerged. Additionally, there are e-commerce channels, such as B2B and B2C.
Third is communication. **We know that affluent people often want to show their status through high-end packaging. The emotional desires of the working class tend to focus more on family values.** With the help of technology, we are gaining deeper insights into consumer preferences, and new consumer types will emerge.
**Leveraging Technology to Tap China's Vast Rural Market**
Have you considered further improving distribution channels in rural areas?
Yes, we have. As China's economy grows, we see a new group of consumers in small and medium-sized cities in the north who can afford branded goods. This is a huge opportunity, but we also realize that the products we offer them must be highly cost-effective. In these small and medium-sized cities, we will compete with local competitors that are highly localized. **Although we are positioned as high-end, we also need to offer good quality at reasonable prices, and then carry out targeted promotions to reach these emerging consumers.** We must also find partners to develop infrastructure such as mobile technology platforms to provide information to people and collect data to better serve local stores.
**Using Big Data to Gain Deep Insights into Chinese Consumers**
China is the most digitalized country. Many innovations in the digital space are driven by Chinese tech companies. How do these innovations affect China's food and beverage industry?
Many people say e-commerce can help niche brands succeed. **But e-commerce companies are still more willing to cooperate with companies that have scale and the best ability to seize opportunities.** The key to product development is data mining. We cooperate with Alibaba or Tencent to analyze consumer preferences.
Of course, we also offer a wider price range for different segments, even niche brands, because if we don't, competitors will. In communication, besides data mining, we can combine big data with programmatic advertising to tailor messages to specific audiences.
**The biggest opportunity now is to fully connect content, media, purchase experience, and manufacturers, but few have achieved this.** No manufacturer or e-commerce company can do this alone. We must build an ecosystem and work together to satisfy consumers, so that we can provide the right product or information to the right person at the right time and place.
**Experience Sharing from Kang Shi Fu's CEO**
Now let's talk about you. You have worked at renowned multinational consumer goods companies like P&G and Beiersdorf. How is that different from being CEO at Kang Shi Fu?
I am fortunate that Asia's economic development has contributed to my career achievements. I went to the U.S. for an MBA in the early 1980s and then joined a multinational company. They valued me because China's economy was beginning to rise, and I am grateful for that opportunity. I feel that my generation was in the right place at the right time.
Now it's my turn to give back to society, so I joined an Asian company. **I hope to replicate two advantages of the "bottom-up" management model of multinational companies: first, systematic and standardized professional business management skills to enable the company to operate in international markets; second, a talent development framework that allows these companies to enter new markets and thrive.** I admire successful multinationals for this, but there are also shortcomings. Sometimes capital markets force managers to focus on short-term goals, managing on a quarterly basis. Chinese companies are often owned by entrepreneurs, so they can take a longer-term view and are more likely to make the right decisions.
If a local company adopts the right management systems and talent development measures, it can one day build international competitiveness. **I hope Kang Shi Fu can be more professional than local competitors and more localized than multinational companies.** We can interact more closely with consumers, allowing Kang Shi Fu to build a competitive advantage in this most demanding market in the world. That is our internal goal.
**Kang Shi Fu's Focus:**
**China, China, and China!**
Most Chinese companies focus on growing their domestic business. In your observation, are Chinese consumer companies preparing for global expansion?
Yes, I see many Chinese companies expanding globally, **but Kang Shi Fu is very pragmatic – our focus is China, China, and China.** There are several reasons: First, we are in the food and beverage industry, and Chinese consumers' tastes and culture are very local. I treat China as a continent; succeeding here means winning a huge market.
Second, we see opportunities to bring in multinational partners. So, instead of focusing on going out, we focus on cooperation with Pepsi, for which we are a bottler, and with Starbucks. We are willing to cooperate with more multinational companies to better serve Chinese consumers.
Third, we can source the best raw materials globally through global procurement. As I mentioned earlier, affluent middle-class consumers crave better ingredients. So, we will source coffee beans globally with Starbucks' help, the best pepper from Malaysia, and in the future, the best beef bones for soup from international markets. From a pragmatic perspective, this is an important task for Kang Shi Fu in the short term.
**Bringing Chinese Food Culture to the World**
Kang Shi Fu has already begun promoting Chinese food culture outside China. Can you tell us about that?
**Focusing on the Chinese market in the short term does not mean we will never expand globally.** **In our observation, large multinational companies often focus on one continent for the first 25 to 50 years.** Nestlé focused on Europe, P&G on North America, and Coca-Cola and Pepsi also focused on North America. You need a strong base.
This represents a cultural phenomenon on the international stage. I believe that with China's rise, the Chinese economy will become stronger, and more Chinese consumers will travel overseas. When they travel, we hope they will bring Kang Shi Fu instant noodles. We also sponsor events such as marathons in Germany and "pasta-throwing parties." But what is China's pasta? Kang Shi Fu instant noodles. When we participate in NBA events in the U.S., what do NBA legends drink when celebrating Chinese New Year? Kang Shi Fu iced tea.
If we continue to develop the domestic market and cooperate with multinational institutions like the NBA, international marathons, and sports teams, we will become business partners, and I believe we are also spreading Chinese culture. We also cooperate with Tencent and Alibaba – sometimes we buy programmatic ads. Our goal is to launch internationally popular products that cater to consumers' tastes. For example, in Africa, when people watch Chinese TV dramas, they see Chinese people eating instant noodles and drinking Kang Shi Fu iced tea. Over time, this lays the foundation for our future global expansion. **But all this is premised on first winning the Chinese market, getting the systems right, and building a talent pool, so that we can achieve sustainable development.**
Tips will be paid 400-2000 yuan once published.
**China FMCG + Internet Professional New Media**
**Committed to FMCG manufacturers' transformation and upgrading and channel digital solutions**


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