" Second-generation distributors should observe more, do more, and change less. Don't think that upon taking over, you can make drastic changes and find everything unsatisfactory. We must maintain a respectful attitude towards our parents' distribution business. —Xu Zhouming, General Manager of Taizhou Haoxiang Trading Co., Ltd. " The first generation of distributors who ventured into business in the 1990s have been around for nearly 28 years as of 2018. If they started at age 30, they are now 58. As China's first-generation FMCG distributors enter middle or old age, the succession of distribution businesses has become an unavoidable topic now and in the coming years. In the 1990s, hard work, opportunity, and luck were all indispensable. But for the second generation to continue and develop the business, they can no longer rely on luck; instead, they need to explore distribution with new thinking, new methods, and new models. Recently, New Distribution interviewed Xu Zhouming, general manager of Taizhou Haoxiang Trading Co., Ltd. As a standard "second-generation businessman," how does he position his role in his parents' distribution business, and what possibilities has he explored while practicing it? 01 It's Hard to Surpass the Distribution Business, So First Do Things That Add Glory "Taking over the family business seemed natural; I didn't think much about it." As the only son, Xu Zhouming was not averse to doing business, and it was also his parents' expectation. Unlike other second-generation distributors, he didn't hesitate, struggle, or even argue about taking over. In 2010, Xu Zhouming graduated with a bachelor's degree and immediately went to intern at Anjoy, a brand his family distributed. He told New Distribution that the purpose of the internship was mainly to learn and see how a formal enterprise operates. As an A-share listed company, Anjoy's distribution model, business operations, management systems, and assessments are worth learning from, and these are what traditional distributors lack. The era of individual businesses is over; to elevate the distribution business, formalized management is necessary. After nearly half a year of training and learning, at the beginning of 2011, Xu Zhouming returned home and officially began to follow his parents in managing the family business. In Xu Zhouming's view, although second-generation distributors take over their parents' business, it doesn't mean completely taking over and leading the business according to their own ideas. Parents have been in the distribution business for many years. Although we call it the "traditional distribution model," relying entirely on personal experience to do the market and lacking modern marketing logic, we must admit that traditional distribution has its efficiency and cost advantages. Second-generation distributors should not think about drastic reforms in the traditional distribution business; that's unrealistic. The professional experience, social savvy, and trust relationships accumulated in the traditional business can be said to be the core competitiveness of the older generation of distributors. Only after delving into his parents' business did Xu Zhouming realize the complexity of distribution. Since he couldn't surpass it, he decided to do "icing on the cake" things first. Clarifying job responsibilities was the first thing Xu Zhouming did. He told New Distribution that without changing the original distribution methods, he first divided employees' responsibilities, listing them clearly according to actual needs, so that employees have a basis for their work, replacing the previous verbal division of labor. Undoubtedly, in the process of adjustments and optimizations, it's inevitable to encounter inconsistencies between new and old distribution thinking. At such times, Xu Zhouming would propose holding a "family meeting." He told New Distribution, "If my ideas are recognized by the family, we will continue to discuss along that line; if there are many opposing voices, I will put it aside for the time being, prioritizing stability." 02 Exploring New Business, Diverging from the Main Business, and Making Small Mistakes While operating the frozen food business, Xu Zhouming also actively tried new business externally. He told New Distribution that since 2013, he had been continuously exploring: he tried crowdfunded barbecue restaurants, opened community fresh food experience stores, and co-invested in projects like smart community butlers. Although these efforts and explorations ultimately did not achieve substantial success, they revealed new opportunities. Xu Zhouming told New Distribution that in the smart community butler project, they planned to provide various household and life services to residents around the community. But as the project progressed, they found pressure in operations. If they tried to be all-encompassing, providing one-stop butler services to residents, the operational demands would be too heavy. After a year of the project, at the end of 2017, Xu Zhouming changed his approach: since being big and comprehensive didn't work, he would do something small and refined, turning the established community owner groups into sales channels, doing "community-based micro-commerce." Leveraging Haoxiang's supply chain resources such as frozen food and pastry, they used frozen food as an entry point for community micro-commerce. Xu Zhouming told New Distribution that in the past, they had accumulated many owner WeChat groups from community fresh food stores and smart community butlers. They developed the more active group members into the first batch of community "group leaders." These leaders are relatively idle, outgoing, and willing to share in their respective communities, typical examples being mothers. Additionally, frozen food and pastry are high-frequency, essential products, and high repurchase rates ensure the stickiness between group leaders and owners. High stickiness facilitates building stable trust relationships, which can then introduce high-value-added products such as daily necessities, cosmetics, fresh fruits, and children's toys. It's worth noting that in the product structure of the community micro-commerce project, frozen food and pastry are just traffic-generating products, but they maintain daily relationships. For example, for a certain frozen product, the factory price is 6 yuan, Xu gives it to the group leader at 7 yuan, and the group leader sells it at 10 yuan, but the real profit comes from other high-value-added products. Xu Zhouming told New Distribution, "Currently, the project has over 100 community group leaders, and the best ones can earn a net income of over 10,000 yuan per month. We now treat this project as a serious business, with more than 10 ground promotion staff." 03 How Should Second-Generation Distributors Take Over Their Parents' Distribution Business? Xu Zhouming told New Distribution that currently, apart from the community micro-commerce project, in the traditional distribution business, he positions himself as the "spokesperson" for Haoxiang. Starting from Haoxiang's frozen food business, he seeks more social resources based on the local market, as well as external manufacturer resources. Regarding how the younger generation should take over their parents' distribution business, Xu Zhouming told New Distribution that the experiences of the parents and the post-85s generation are different. Now that the business has reached this point, with the market environment changing rapidly, they consider more: preserving the business and seeking stability. But for the post-85s, who are internet natives, the information they receive is massive. Every day, they see cases of internet subverting traditional business and rapidly rising distribution cases. These cases give us new inspiration, but for the older generation, they might feel somewhat ethereal and not a business model they recognize. Besides age, the key is the difference in thinking and cognitive awareness, which often leads to communication barriers. In Xu Zhouming's view, for "newcomer" second-generation businessmen, the most important thing is not to reform or adjust anything, but to first go deep into the front-line market to understand why they do things this way. The parents have come a long way, and their distribution logic and methods have been validated by the market. After fully understanding the traditional distribution business, one can then consider using new knowledge and ideas to help them do better. Young people always have many ideas; having ideas is good. If ideas are implemented and done well, it's a "good story"; but if done poorly, it might become a disaster. In fact, there are many opportunities and trends now, especially with the resources accumulated by parents. Don't think you have to try every trend. Even if a project is really good, you should try and adjust based on the ability to bear the cost of failure. Final Thoughts Xu Zhouming told New Distribution that from another perspective, parents should also have an open attitude to accept their children's new ideas, not thinking they will never grow up or that their ideas are all fantasies. Whether good or bad, they can communicate and discuss, or allow them to try in a low-cost way; maybe there is another possibility of success. As Xu Zhouming said, in the internet era, the younger generation receives a huge amount of business information and naturally has a "sense of the internet." Skillfully using internet technology and tools to achieve rapid information transmission is a skill the older generation of distributors lacks, but the younger generation should also maintain a respectful attitude towards the so-called traditional distribution. Since it exists, it has its rationality. In the view of New Distribution, the best way for the younger generation to take over the business is: while learning and practicing the parents' business, try to find a new path, leveraging the parents' social resources, manufacturer resources, and even network resources, and use new thinking, new methods, and new models to explore new distribution business. Extended Reading: Review the exciting reports of "New Distribution 100 People" [Click to View] -END-