---
title: "Major Release | 2018 China FMCG City Distribution Alliance Officially Established!"
description: "At the \"2018 China FMCG City Distribution Logistics Conference\" hosted by New Distribution on October 24, 2018, Mr. Ren Xiaodong, Secretary-General of the FMCG Association and partner of New Distribution, delivered a keynote speech on the \"2018 China FMCG Logistics City Distribution Alliance Plan.\" He shared his seven-year journey in the B2B industry, insights on the future of distribution, and announced the official launch of the China FMCG City Distribution Alliance."
author: "任小东"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2018-10-27"
language: "en"
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---

# Major Release | 2018 China FMCG City Distribution Alliance Officially Established!

> At the "2018 China FMCG City Distribution Logistics Conference" hosted by New Distribution on October 24, 2018, Mr. Ren Xiaodong, Secretary-General of the FMCG Association and partner of New Distribution, delivered a keynote speech on the "2018 China FMCG Logistics City Distribution Alliance Plan." He shared his seven-year journey in the B2B industry, insights on the future of distribution, and announced the official launch of the China FMCG City Distribution Alliance.

**New Distribution Note:** At the "2018 China FMCG City Distribution Logistics Conference" forum hosted by New Distribution on October 24, 2018, the following is the keynote speech by Mr. Ren Xiaodong, Secretary-General of the FMCG Association and partner of New Distribution, titled "2018 China FMCG Logistics City Distribution Alliance Plan."

It's been seven years, seven years in the B2B industry! Tomorrow, the 25th, is also my 36th birthday. Taking this opportunity today, I want to tell you a seven-year story related to B2B.

Around 2012, as the sixth-largest distributor of Yili nationwide, I received Yili's highest honor, the Golden Bull Award. The prize wasn't cash but a system—a POS system to manage distributors and sales staff, covering common processes like the eight-step visit, route management, inventory management, and check-in. The POS system controlled everything. I used to be quite good at sales—no bragging—our company achieved a continuous growth rate of about 30%.

But there was a problem: was this system successfully promoted? To my shame, it was a slap in the face—very unsuccessful. When I worked for a brand, all of you here were distributors, and it was easy to talk; if you didn't execute our strategy, we'd fine you. When I became a distributor myself, the tables turned, and I was fined 100,000 yuan. I was very upset and almost got into a fight with Yili's leadership over dinner.

Yili's general manager told me that the distributor in Chengdu had implemented this system particularly well, growing from 300 million to 600 million in sales using it. So we sent our entire team to Chengdu for a week to study, reviewing the whole process and found it was indeed true. For example, in Changsha, we had 6 Yili products in stores, but in Chengdu, they had 25. So we discovered that through digital empowerment of the channel, efficiency could be improved like this. That was the opportunity—starting B2B in 2012.

Doing this in a single city wasn't enough. Later, I joined Lakala's national e-commerce system, where we launched B2B matching platform businesses in 36 cities simultaneously, with both 2C and 2B businesses. Using capital tactics, we subsidized heavily—6 points, 12 points—and reached a scale of 2 billion in about 8 months. We could have grown bigger, but our pain point was no warehousing, no distribution, leading to very poor stickiness with terminals. Internally, we said, "It's like throwing a meat bun at a dog—never coming back."

Terminals had almost no loyalty to the platform. Later, we learned our lesson: we had to go self-operated, with warehousing and distribution, a platform, and franchising. So I went to Xin Gaoqiao as vice president to see how the self-operated + franchise model worked. Working under Tang Guangliang and with colleagues' efforts, we reached the forefront of B2B in Central China within two or three years.

Seven years have passed, and we've found that, especially in the last year or two, B2B—whether self-operated or matching—has encountered problems. You've seen some platforms in the second half of last year and first half of this year didn't do well, closed down, or whatever. So the seven-year itch is real. Along the way, I've experienced a lot, stepped on many pitfalls, and gained some insights.

Throughout this process, I never gave up observing and thinking about the industry. Especially since this year, when I co-founded the China E-Commerce Association FMCG Branch with Zhao Bo, we've interviewed a large number of brand owners, distributors, B2B platforms, and IT service providers. Gradually, we've formed some clear judgments. Today, taking this opportunity, I'd like to share our insights and views.

First judgment: What will the future endgame look like?
Second judgment: What is the essence of the 2B field? Where is the engine?
Third judgment: How long is the strategic window for 2B?
Fourth judgment: Opportunity—from channel digitalization to industrial digitalization.

These are the four challenges or propositions I want to share.

**First Judgment: What will the future endgame look like?**

In September, at the FDIC2018 conference organized by New Distribution in Shanghai, themed "Finding New Engines for Growth," I personally interviewed many corporate executives. The general consensus was that in the future, we want to build such a platform—a digital version of deep distribution.

But one signal cannot be ignored: from the brand owner's perspective, they will never hand all orders to one platform as the mainstream. Many brand owners are also developing their own B2B, hoping to achieve expense allocation, promotion execution, marketing activities, sell-through policies, and consumer communication through their own B2B platforms. That's the brand owner's thinking.

In this process, the existing distribution system or warehousing and distribution system cannot fully support such digital transformation. This will require local unified warehousing and distribution platforms to support it, because social division of labor is always the most efficient.

The first order integration might be through distributor B2B, retail-initiated B2B platforms, or manufacturer B2B platforms. Therefore, **the second order integration must be through third-party urban warehousing and distribution platforms. Only with both commercial flow integration and logistics integration can we have a standard efficient system and true network synergy.**

This is the overall judgment from many industry leaders, experts, and my own seven years of experience, roughly forming this picture. That's our first judgment: in about five or ten years, the final direction will look like this. From the perspective of the US and Japan, the industry chain and supply chain are also like this.

**Second Judgment: What is the essence of the 2B field? Where is the engine?**

B2B platforms started in 2014. After four years of development, 2B platforms have reached a scale of about 2 billion, but in regional markets, they've basically stalled. What to do next?

We've digitized the offline first-tier and second-tier business, but we haven't considered the driving process of manufacturers, brand owners, or C2B. We believe B2B should move from the supply side to the supply chain, and from the supply chain to the supply network, requiring network synergy. What drives network synergy? It must be brand owners. **Because the order allocation power and marketing allocation power are in the hands of brand owners. In the past, B2B platforms wanted to become the overlord of the entire chain, which is wrong.**

Second, in the past year, where has capital been heavily invested? Community group buying e-commerce. **Community group buying e-commerce can instantly solve the problem of non-standard products or inventory backlogs that you couldn't sell before. At the same time, it has a strong ability to push new products, leveraging community and social marketing to move consumers, which in turn drives B2B development. I have a viewpoint: community e-commerce will definitely become a standard feature of all brand B2B platforms, especially regional ones.**

Therefore, from this perspective, we are not doing consumer internet; we are doing industrial internet. Only by considering the integration of production, supply, and sales can the entire industry move forward.

**The essence of 2B is industrial internet, which is the integration of production, supply, and sales. It's not the logic of consumer internet; consumer internet logic is new retail, where scenarios determine the future. Industrial internet logic is new marketing, where sell-through determines the future.**

**Third Judgment: How long is the strategic window for 2B?**

I think at least five years. Unlike consumer internet, which might form a national model in two to three years, traditional distributors start from single-brand agency, single-category agency, gradually to multi-brand, multi-category, and then full-category agency. This is the offline business model. Going further, they become a regional platform, become local infrastructure, and finally participate in the entire national network construction, becoming a crowdsourcing or subcontracting party in social and network synergy.

Five years, maybe longer. **Endurance will become a basic strategy.** To move faster, you must be empowered by brands and consumers to push forward. This is the supply chain thinking. Previously, it might have been based on job efficiency or job coordination efficiency within each B2B platform or distributor company—that's management coordination. **Later, through orderly market competition, the overall matching of association and industry resources, and industrial coordination, we can promote overall progress and shorten the window period.**

**Fourth Judgment: Opportunity—From Channel Digitalization to Industrial Digitalization**

Fourth judgment: Based on the above analysis, brand owners, retailers, and brand owners, through IT technology empowerment, can significantly reduce operating costs and greatly improve efficiency. Previously, growth was driven by logic or human decision-making; in the future, data will drive growth. This is a process of mutual integration, empowerment, and fission evolution.

In the 2C field, the development of consumer internet has created platforms like JD.com and Alibaba, and also a group of companies like "Four Links and One Reach" (STO, ZTO, YTO, Yunda, and Best). Applying the same logic to the 2B field, orders come from distributors, manufacturers, and retail platforms—they've done that part. Can we also seek opportunities for the "Four Links and One Reach" of the 2B field together?

**How to do it specifically?**

1. Build a China City Distribution Alliance Network, promoting the establishment of a supply network from supply chains among brand owners, retailers, and distributors. Become the industry's order-taking platform, subcontracting and crowdsourcing platform, and establish industry service standards. Establish a directory and detailed profile of third-party city distribution service providers, set industry service quality standards and service fulfillment capability standards, and create an industry matching website. Similar to the Air Alliance or aviation hub.

2. Everyone participates: joint initiators and regional major distributors co-build a three-level industry cooperation equity platform, seeking capital market empowerment. Solve participants' identity issues, ultimate benefit ownership, and value realization.

3. Match 2B commercial flow order business with warehousing and logistics business for resource matching, including national and local resource matching, local and national resource matching, brand owner and distributor resource matching, distributor and warehousing platform resource matching, retailer and warehousing platform matching, and cross-industry resource matching with warehousing platforms.

4. Leverage the power of New Distribution's 300,000 industry fans, hold 24 industry conferences with full force, and jointly discuss industry solutions with all units. Promote industrial capital, industry associations, and expert resources to empower the alliance, fostering win-win cooperation among regional warehousing and distribution resources and multiple companies, jointly opening the window of opportunity for the "Four Links and One Reach" of the 2B field.

5. Provide a nationwide distribution coverage network for 500 brand owners' channel innovation, provide the most feasible implementation plans for the transformation and upgrading of 800,000 distributors nationwide, and seek opportunities for the "Four Links and One Reach" of the 2B field together.

**Conclusion**

1. From the industry level, we need to establish the concept of an "ecological pool," widely attracting industry peers to jointly create momentum, promote, and integrate on the "China FMCG City Distribution Alliance" industry platform, becoming the industry's order-taking platform, standard platform, consulting platform, and capital platform. When conditions are appropriate, launch industry websites, apps, and official accounts, and hold annual industry development forums.

2. From the market level, we need to establish the concept of a "traffic pool," deeply explore the omni-channel, all-temperature, all-category warehousing and distribution service transfer for national brand owners and distributors, and operate the sources and conversion of traffic. We plan to establish the #National Brand Owner Digitalization Alliance#.

3. From the enterprise level, we need to establish the concept of a "crowdsourcing pool." We believe that in B2B, two key links are very important: the first is the first order integration, which can be handled by various OMS operators, whether national or regional platforms, whether initiated by manufacturers, distributors, or retailers. The second is the second order integration, which should be handled by regional unified third-party public transit city distribution logistics companies. Around these two infrastructures, marketing service promoters (retail brand promoters or marketing service promoters) and supply chain financial service enterprises will emerge.

**Friends, the journey is long and arduous, but now we start anew!**

At the scene, Mr. Ren Xiaodong announced the official launch of the "China FMCG City Distribution Alliance." He hopes to unite the strength of all participants to form a China FMCG city distribution network, promote brand owners, retailers, and distributors to establish an overall supply network, and become the industry's subcontracting and crowdsourcing platform.


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