---
title: "Li Haotian: Resource Sharing under the Tobacco System"
description: "Li Haotian, Executive Director of China Tobacco New Commercial Alliance, discusses how the company leverages tobacco's monopoly distribution network to build an open B2B platform for non-tobacco FMCG products, sharing resources such as customer data, logistics, and financial services with regional distributors and e-commerce platforms."
author: "李皓天"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2018-03-31"
language: "en"
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# Li Haotian: Resource Sharing under the Tobacco System

> Li Haotian, Executive Director of China Tobacco New Commercial Alliance, discusses how the company leverages tobacco's monopoly distribution network to build an open B2B platform for non-tobacco FMCG products, sharing resources such as customer data, logistics, and financial services with regional distributors and e-commerce platforms.

△**Executive Director of China Tobacco New Commercial Alliance** Li Haotian
China Tobacco New Commercial Alliance was established in 2014. It is the only company authorized by the China National Tobacco Corporation and jointly established with the tobacco monopoly, specializing in B2B business for non-tobacco FMCG products.
First, let me share a statistic. It is both embarrassing and harsh. After years of anti-smoking campaigns, China's smokers have finally reached 316 million. However, our platform does not sell cigarettes; they are under monopoly. According to China's Tobacco Monopoly Law, tobacco is the only FMCG product that cannot be sold online.
Among these 316 million smokers, apart from many bosses who might have secretaries or drivers buy cigarettes for them, the vast majority must personally walk into one of over 5 million tobacco retail stores to make a purchase. This offline traffic will persist long-term under legal regulations.
Another set of numbers: In 2017, national tobacco sales reached 1.4 trillion yuan, with tobacco profits and taxes at 1.1 trillion yuan. At the 'Two Sessions' held on March 18, one hot topic was that China's military spending increased by 8% in 2018, reaching 1.1 trillion yuan. It can be said that China's military budget is contributed by over 300 million smokers. If you are a smoker, give yourself a round of applause—you have contributed to China's military spending.
In 2017, 11 cigarette brands, including Zhonghua and Liqun, each had annual sales exceeding 50 billion yuan. There are over 5 million active cigarette retailers with tobacco monopoly certificates who order cigarettes weekly, not including those without certificates who also sell cigarettes. On average, cigarette sales account for 40% of a single store's revenue.
Nationwide, there are over 100,000 tobacco customer managers and logistics personnel serving more than 5 million cigarette retail terminals.
**Support from the Tobacco Joint Venture**
First, because small stores sell cigarettes, over 300 million smokers nationwide must visit these places to buy them, ensuring offline traffic. Whether in terms of payment or cultivating online habits among store owners, the wholesale and retail process for cigarettes is essentially 100% online! Store owners order cigarettes once a week on the tobacco ordering platform.
The image above shows the login page of the cigarette ordering platform. The top-left corner is the interface for cigarette store ordering, originally only with username, password, and ordering functions. Now, the bottom-right corner has a button for non-tobacco ordering, which leads to our non-tobacco mall. Currently, the majority of tobacco B2B merchants still order cigarettes via PC.
Second, the State Tobacco Monopoly Administration helps us post announcements about non-tobacco business on the cigarette ordering platform. Since this platform is unified, cigarette retailers will definitely see these announcements and pop-ups. Through our cooperation with tobacco, they can directly notify cigarette retailers about our non-tobacco business, including our non-tobacco platform and financial services, on the ordering interface.
Third, tobacco logistics assists in distributing promotional flyers and platform advertisements. Tobacco logistics delivers cigarette packs to each retailer weekly. The advertisement shown here is from our colleagues working with tobacco logistics staff to include our promotional and DM flyers with the cigarette packs delivered to each retailer. Retailers typically order once a week, so our flyers can achieve 100% coverage of cigarette retailers within a week.
Finally, we have the physical business information of over 5 million cigarette retail merchants. We know each retailer's address, rating, contact information, and how long they have been in the cigarette retail business. We currently possess this information.
**FMCG B2B: National vs. Regional**
From the perspective of retail merchants, especially regarding tobacco coverage, there is currently no national FMCG B2B company. For example, tobacco has full coverage of over 1.01 million cigarette retail stores in 500,000-600,000 rural administrative villages. I have discussed with Retail Link's Cloud Connect (Marketing Center General Manager) and Wang Chaocheng (Founder of Yijiupi): Is there any B2B platform that can cover all 5.6 million cigarette retailers? No! Huidanxia has reached townships in Hebei, which is already impressive, but truly reaching villages is very difficult.
The New Commercial Alliance ordering platform has conducted in-depth analysis in Hebei. Some administrative villages are larger and may consist of two or three natural villages. Who can reach stores in natural villages? So we do not believe there is currently a B2B e-commerce platform that can achieve nationwide full coverage. However, the tobacco channel provides such a resource that everyone can develop together.
Whether in rural markets or third- and fourth-tier cities, we have full coverage and all physical information. The profiles of cigarette retailers are accurate, and channel data management is clear, including weekly ordering data. How can we leverage the cigarette retail system to achieve deep distribution?
New Commercial Alliance hopes to become an open platform. In each region, we aim to utilize the tobacco channel to provide regional distributors, e-commerce companies, and logistics institutions with a system we can build together.
Tobacco resources can be shared. China Tobacco New Commercial Alliance has the endorsement of tobacco, access to tobacco information, and tobacco promotional channels. Through B2B, we empower terminals, which tobacco also needs. How much inventory does tobacco have? Can we accurately grasp it and feed it back? This is crucial for tobacco to guide its entire industrial chain, including logistics, inventory, production, and even tobacco leaf procurement. While we conduct this business, tobacco also has such needs. We can jointly leverage tobacco resources to build this platform together.
China Tobacco New Commercial Alliance also offers financial services. We have officially obtained approval for Yunlian Financial Services and Yunlian Micro-loans. We are willing to open our financial platform to e-commerce B2B platforms, distributors, and logistics companies that handle unified warehousing.
We have not built our own logistics. Except for self-operated business in a few provinces, most provinces do not have self-operated logistics. We are willing to work with platforms, distributors, and unified warehousing and distribution logistics companies to serve B2B business and national FMCG sales.
This year, regional distributors and logistics companies are having a tough time. With JD.com and Alibaba entering the FMCG e-commerce field, other companies must answer one question when attracting investment: How will you face competition when giants arrive? China Tobacco New Commercial Alliance plans to establish an equity investment fund based on the ecosystem of 5.6 million cigarette retailers, working with other institutions to jointly build this ecosystem.
Logistics for unified warehousing and distribution involves heavy goods and urban delivery. The most important thing is to ensure that a logistics vehicle is efficient when it leaves. Tobacco retail customers are sufficiently dense; there may be no denser channel than tobacco. We are willing to share this information with our partners, whether manufacturers, distributors, or logistics companies, so that more stores can sell our partners' products.
China Tobacco New Commercial Alliance is very willing to make this platform an open one. Let us work together to build it into a national platform.
Note: The above content is excerpted from Mr. Li Haotian's live speech at the 4th FMCG + Internet Conference, organized by New Distribution for readers.
Click **Read Original** to see more highlights from the 4th FMCG + Internet Conference...
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