---
title: "Liu Zhengdong of GLP Finance: Joining Hands with Warehouse and Distribution Enterprises to Create an Innovative FMCG Financial Warehouse"
description: "The 3rd 'FMCG + Internet Conference', co-hosted by New Distribution and GLP Finance, was held on November 8-9, 2017 at the Yuelai International Convention Center in Chongqing, attracting over a thousand distributors, manufacturers, and internet companies from across the country. The following is the speech delivered by Liu Zhengdong, Head of GLP Warehouse and Distribution Supply Chain Finance, at the conference, compiled by New Distribution for readers."
author: "普洛斯金融"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2017-11-11"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/JFg6YG6H1pFpPyX64EqmSg"
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# Liu Zhengdong of GLP Finance: Joining Hands with Warehouse and Distribution Enterprises to Create an Innovative FMCG Financial Warehouse

> The 3rd 'FMCG + Internet Conference', co-hosted by New Distribution and GLP Finance, was held on November 8-9, 2017 at the Yuelai International Convention Center in Chongqing, attracting over a thousand distributors, manufacturers, and internet companies from across the country. The following is the speech delivered by Liu Zhengdong, Head of GLP Warehouse and Distribution Supply Chain Finance, at the conference, compiled by New Distribution for readers.

The 3rd 'FMCG + Internet Conference', co-hosted by New Distribution and GLP Finance, was held on November 8-9, 2017 at the Yuelai International Convention Center in Chongqing, attracting over a thousand distributors, manufacturers, and internet companies from across the country. The venue was packed, and the event was a grand success. The following is the speech delivered by Liu Zhengdong, Head of GLP Warehouse and Distribution Supply Chain Finance, at the conference, compiled by New Distribution for readers.

Good afternoon, distinguished guests. First, I would like to thank New Distribution for giving me this opportunity to speak. I also appreciate all of you for staying until this late afternoon.

For the B2B FMCG industry and for this conference hosted by New Distribution, GLP Finance is both a new participant and a long-time partner. It's just that yesterday was the first time we stood on this stage to introduce ourselves and explain what we can do for you.

First, allow me to briefly review GLP and GLP Finance: As a company managing $40 billion in assets, GLP's main business platforms are divided into four categories: **property development, operations management, fund management, and logistics ecosystem finance**. Property development: Undoubtedly, we are the world's leading provider of modern logistics infrastructure. So what does our logistics ecosystem finance mainly do? **In simple terms, we use finance + logistics to empower small and medium-sized enterprises.**

What are the results of our empowerment? As you can see, from August 2016 to the end of September 2017, we cumulatively extended credit of 4.5 billion yuan, disbursed loans totaling 2.8 billion yuan, served 1,000 customers, while maintaining a zero default rate. For a young financial institution, this is a remarkable achievement.

Through this chart, you can see that our empowerment is carried out through three consumption upgrade industries plus logistics finance support. In the process, we leverage our multi-financial license advantages to provide customers with as diversified financial services as possible. On this basis, **we use the dual F (Finance and Facility) as a lever to gradually form a production-finance ecosystem with GLP characteristics.**

Some of GLP Finance's customers

**Our mission is: to empower small and medium-sized enterprises with logistics and financial services. Our vision is to become a leading comprehensive logistics and supply chain financial service provider in China.**

Having said that, you may still have some questions. How do we empower SMEs through logistics plus financial services?

First, let's take a look at the pain points of distributors in the FMCG industry. There are mainly two major issues: **money problems and logistics problems.**

Where do money problems come from? Mainly two aspects: First, the financial pressure caused by advance payments at month-end, quarter-end, and ordering conferences. In FMCG, A-category products, or hard currency, still account for the vast majority of sales. Almost all brand owners of A-category products require distributors to pay in advance, and they encourage distributors to stock up in advance. So, does a distributor of a certain brand need to meet its sales targets? Actually, that's a rhetorical question—there's no question of whether to meet them, only how to meet them better. If you are a distributor here today, you must have completed your performance to sit here so calmly. Otherwise, you'd be at home trying every way to boost sales and couldn't sit still here.

So, after solving the sales of A-category products, distributors have only solved their survival problem. Once survival is solved, how do we develop? In other words, how do we survive better? How do we make more money? This is a very real question. To quote one of my customers: If a businessman doesn't think about making money, he's not living up to his professional ethics, and a person with questionable professional ethics is very scary.

**For distributors, solving the development problem is nothing more than expanding channel types, such as cinemas, restaurants, or B2B platforms.** Or expanding product categories—using A-category products to open channels and then adding high-margin B and C category products to boost profits.

Then the second question arises: In the FMCG market, distributors have most of their money tied up in A-category products. Where does the money come from to develop B and C categories? If you don't have A-category products and want to directly push B and C products, there's no capital problem, but the difficulty of opening the market increases sharply. Without a door opener, you can't even knock on the door, so you have to find ways to climb over the wall, which is much more laborious than opening the door.

Another issue is logistics. I've visited several wholesale markets in East China and found that many shops are warehouses with an extra desk, while warehouses are shops without desks. Some even pile goods at the shop entrance covered with tarps. This easily leads to a problem: because they are not professional logistics operators, to improve warehouse utilization, many distributors stack goods very tightly—so tightly that they are airtight. As a result, goods that enter later always say to goods that entered earlier: 'Brothers, I'm off first,' while the earlier goods don't even get a chance to be the rearguard and simply expire. When people discover them, their production dates tell the tale of time's butcher knife. Additionally, if the product categories are relatively single, the warehouse utilization rate during peak and off-peak seasons and the full-load rate of delivery routes throughout the year may become obstacles to reducing logistics costs.

So what are the usual solutions for distributors? In terms of money, there are several sources: **1. Multiple credit cards or bank loans. 2. Borrowing from relatives and friends.** Let's talk about the first method: credit cards or bank loans have limited amounts. The cost is high—here, cost refers not only to capital cost but also time cost. Moreover, the entire operation process is complex. This is because banks, due to their inherent model, offer very universal products. FMCG distributors are just a tiny fraction of their vast customer base, and large banks find it hard to customize products for what they see as a small customer group. Borrowing from relatives and friends is very common, but those who have borrowed know that the stability of the funding source is about as stable as the sales of B/C category products for distributors.

What about logistics? Some distributors are smart and use product mix optimization to smooth out warehouse efficiency issues caused by seasonality. Some gradually standardize their warehousing and transition to warehouse and distribution companies, while others directly outsource logistics. However, if distributors build their own logistics, they must have sufficient goods to achieve scale in order to reduce costs. This is something that distributors with self-built logistics need to try.

What are the pain points of warehouse and distribution companies? For them, if they serve only one or a few FMCG distributors, the better the distributor's business, the less the logistics company may want to serve them. Why? Because FMCG is characterized by speed—goods come in today and go out in a few days. Summer water comes in and goes out in a few days. Shelving, unshelving, picking, loading, delivery, and sometimes even breaking bulk. Moreover, the high-volume FMCG products are mostly A-category, and everyone knows the gross margin of A-category products—it's all tears, so there's nothing to say. Since everyone knows the gross margin, the share that can be given to logistics companies is even smaller. Do logistics companies want to do unified warehousing and distribution? Of course! But planning the warehouse and routes is the second step. The primary issue is how to get customers in and keep them from leaving, locking them into the warehouse, and quickly forming a customer base scale. The warehouse of a warehouse and distribution company can be a high-speed turnover warehouse, but the customers should ideally be relatively fixed.

How do traditional logistics companies do it? Before achieving scale, they try to avoid highly fragmented markets as much as possible. They prefer supermarkets and CVS with high delivery concentration. This also brings problems: **long payment cycles and being held up with trucks.** Everyone understands the long payment cycle, and there's an expected time. But being held up during delivery is completely uncontrollable. The worst part of being held up is that you can't just stop and wait; you have to keep moving—the yellow line on the roadside doesn't allow you to stop, and if you stop for more than a few minutes, the electronic police will catch you.

So, can distributors and warehouse and distribution companies cooperate? How? The answer is yes. But how should warehouse and distribution companies serve distributors? The key is still how to quickly form scale and achieve true centralized warehousing and distribution.

**Now all warehouse and distribution companies are talking about centralized warehousing and distribution. So how can we achieve the attraction of customers for centralized warehousing and distribution more quickly and reach scale as soon as possible?** This is a matter of time and efficiency. Whoever stands firm first and forms local scale makes it extremely difficult for newcomers to enter the market—due to advantages in unit cost, route familiarity, and, in some places with truck entry restrictions, entry permits. This is a first-come, first-served, even winner-takes-all market.

GLP Finance is trying to propose an idea: Can GLP Finance join hands with warehouse and distribution enterprises to create an FMCG financial warehouse? In simple terms, find a good warehouse and distribution company, and as soon as goods enter the warehouse, money is given—this money is given to the distributor whose goods enter the warehouse. We have given this financial warehouse product a name: G-Huo Tong. G-Warehouse, G-Distribution, G-Huo Tong. The essence of G-Huo Tong is that GLP Finance provides it to its customers—warehouse and distribution companies—so they can use this product to serve their customers—FMCG distributors—as a financing product. Through financial empowerment, GLP Finance helps warehouse and distribution companies attract customers, thereby helping them achieve their goal of centralized warehousing and distribution as soon as possible, and also enabling them to better serve distributors.

**GLP FMCG Finance**
**No need to wait for a 'loan'—it's fast**
**2017 Chongqing Autumn Sugar and Wine Fair**
**GLP Microfinance Pavilion**
**Up to 100,000 yuan in concessions**
**You deserve to 'loan' forward**
**Click 'Read Original' to participate in the event and receive a gift pack!**

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