In 2015, Mondelez China encountered unprecedented difficulties. It implemented the 'Himalaya' plan to cut sales staff, converted its Shanghai factory to reduce costs, and reduced production of Ritz and Belin brands. Since the beginning of the year, Mondelez has been making frequent moves in China, falling into a situation of 'production cuts, layoffs, and SKU reductions.' At the same time, the biscuit industry is also facing sluggish growth. So, is the problem with Mondelez itself, or is the entire biscuit industry in decline? Recently, Mondelez's continuous adjustments in the Chinese market have made it a hot topic in the industry. Through in-depth investigation and interviews, reporters found that Mondelez's problems are not new this year; the 'Himalaya' plan is not just about layoffs on the surface. The well-established foreign management model has become a shortcoming for Mondelez. Additionally, in the past two years, Mondelez has faced other issues. The year 2013, after its glory days, became a turning point for Mondelez in the Chinese market. Overly optimistic market estimates, Two instances of channel stuffing in 2013 laid hidden dangers 2012 was undoubtedly Kraft's most glorious year in China. Not only did Oreo hold its centennial birthday party on the Shanghai Bund, but in the first half of 2012, Kraft's growth rate in the Chinese market reached 30%, far higher than the global rate of 5%, making it Kraft's best-performing market globally. In October 2012, Kraft's China business was split and officially renamed Mondelez China. With the success of the Chinese market and the business split came continuous expansion in personnel, categories, and production capacity. Optimism and confidence in the Chinese market filled the entire company. It was at this time that dangerous seeds were sprouting. Due to the excellent performance of the Chinese market in 2012, Mondelez set ultra-high targets for 2013 based on the previous year's growth. In March 2013, Mondelez China changed its leadership. Before leaving, the former president conducted a channel stuffing of distributors' warehouses. In May 2013, the new China president took office and, to achieve a good start, conducted a second channel stuffing. Coupled with the year's ultra-high sales targets, distributors spent the first two quarters of 2013 essentially dealing with channel stuffing. The severe consequences of frequent and massive channel stuffing quickly emerged. Mondelez's biscuits held a large market share in modern channels such as supermarkets and hypermarkets, which only accept products within the first third of their shelf life, leading to a large backlog of unsold products. Due to excess inventory, many distributors began dumping products at low prices on a large scale to clear near-expiry stock, launching promotions in supermarkets and hypermarkets, while the circulation channel saw rampant dumping and cross-regional selling, plunging the market into chaos. Thus, by the second half of 2013, Mondelez noticed the problems and began to adjust its pace, but as a foreign enterprise with a well-established management system and mature operations in Western markets, it was not easy to 'turn the ship around' in China. Foreign model fails to adapt, adjustments encounter setbacks In 2013, after two quarters of channel stuffing, distributors' warehouses could no longer bear more products. To sell off products, they used every means, and the market fell into chaos. However, Mondelez found it extremely difficult to rectify the situation, and that year became a turning point for Mondelez in China. As a foreign enterprise, Mondelez China's senior management were mostly from abroad, familiar with foreign corporate and market operating models but not deeply understanding the Chinese market. In other words, Mondelez's methods were not 'down-to-earth' when operating in China. First, the rules for setting sales targets. The Chinese biscuit market has changed rapidly in recent years, with the terminal changing by the minute. Some companies even set sales targets on a monthly basis, but Mondelez still set tasks on an annual basis. When the market changes rapidly, such performance-setting rules naturally make adjustments difficult and responses slow. Second, the issue of management hierarchy in China. According to distributors, Mondelez set up regional managers in each region. The problem was not the existence of regional managers but their excessive power. Hunan distributor Sun Guanbo told reporters: 'Mondelez's regional managers have great power; channel stuffing, payment collection, and negotiations all go through them. Sometimes when market problems arise, they don't report to superiors, causing a breakdown in information flow. Therefore, Mondelez's senior management is unaware of the Chinese market situation, and distributor and market issues are not addressed.' This view was corroborated by other distributors. Jiangsu distributor Yang Baodong said: 'Mondelez's regional managers and directors are well aware of the market situation. They knew about the problems in 2013, but the complex management hierarchy of foreign enterprises, coupled with underreporting, prevents superiors from understanding the true market situation, making adjustments difficult.' Finally, the issue of profit margins for foreign brands. Foreign enterprises have always been relatively strong in China, with high sales volumes but low profits. Coupled with current market changes, distributors' management and operating costs are rising, and profit margins are shrinking. Many small, weak distributors can no longer sustain their business. Product structure adjustment is imperative, but such adjustments are hard to achieve in the short term. During interviews, many distributors expressed that Mondelez, as a global food giant, has first-class product quality, industry reputation, and talent reserves, but its numerous management rules and strong theoretical approach are not suitable for the rapidly changing Chinese market. The well-established but complex management model makes Mondelez slow to respond to market changes. Consumer preferences shift, repeated new product launches fail Mondelez began adjusting after discovering market problems. In the second half of 2013, it reduced channel stuffing to distributors, but the market chaos had already been caused, and coupled with the complex foreign management model, the aftermath of this chaos lasted until 2014. However, what troubled Mondelez was not just the chaotic market; its repeated failures to launch successful new products in recent years also made its situation more difficult. In recent years, consumer preferences have shifted, and the market share of sandwich biscuits has gradually declined. To recover the market, Mondelez began launching more new products. In 2008, Kraft completed the acquisition of Danone's biscuit business, bringing brands like Prince, Uphol, and Ritz under Kraft's umbrella. Subsequently, Kraft carried out drastic reforms on these brands. Prince biscuits introduced various new packaging, and Uphol raised prices. Unfortunately, these changes did not expand the market share of Prince and Uphol; instead, multiple packaging specifications dispersed their promotional efforts, and their market share began to decline. As a representative of savory biscuits, Ritz performed well in the market, especially its chive-flavored biscuits, which were popular in many northern regions. However, after Kraft took over, it cut this popular flavor and introduced new flavors like beef and tomato. This proved to be a mistake; the new flavors never achieved the glory of the chive flavor and remained on the fringes. After repeated new product failures, Mondelez finally turned its attention to the super brand Oreo, launching Golden Oreo and Oreo Thins. These two new products finally brought a brief spark to Mondelez's biscuit business, but the halo came at the expense of other brands' sales. Yang Baodong told reporters: 'Golden Oreo did help Mondelez recover some of its decline, but it damaged the classic image of the original black Oreo in consumers' minds, causing confusion. Additionally, Golden Oreo's appearance is very similar to Prince biscuits, and after its launch, Prince's sales were greatly impacted. The company's own products competing against each other harmed both.' With market chaos and failed new product launches, Mondelez gradually couldn't hold on. Data shows that from 2012 to 2014, Mondelez's market share in China's biscuit market dropped from a peak of 15.1% to 13.6%. To recover the market, Mondelez began even larger adjustments. Layoffs, factory relocation, and the implementation of a major distributor system: Mondelez enters a comprehensive reform period With market performance deteriorating, Mondelez headquarters finally couldn't sit idly by and began drastic reforms in the Chinese market. In July 2014, Ma Ruchao, who had rich FMCG management experience, became the president of Mondelez China. Irene Rosenfeld, CEO of Mondelez International, also hoped that Ma Ruchao could bring the Chinese business back to a growth track. Ma Ruchao did not disappoint Irene Rosenfeld's trust and took a series of measures shortly after taking office to save the Chinese market. First, the 'Himalaya' plan implemented from the second half of 2014. There were rumors that the purpose of the Himalaya plan was to cut sales staff to reduce company expenses. During interviews, Yang Baodong, a distributor from Jiangsu who had already executed the Himalaya plan, told reporters the real situation. According to Yang Baodong, a large portion of the sales staff cut in the Himalaya plan were not Mondelez's own employees. 'In fact, Mondelez only has two business managers in each city who are its own employees. This Himalaya plan will cut one of them. This is a good move because there's no need for two; they might have conflicting ideas and cause conflicts, and in some regions, there have been cases of corruption. Firing one avoids multiple management, which helps regulate the market and save costs,' Yang Baodong said. As for the rumor that Mondelez transferred sales staff to distributors, Yang Baodong told reporters: 'The salespeople transferred to distributors are basically not Mondelez's own employees but people previously hired from third parties. Now the company wants to reduce costs, so they have to return these people. If distributors need them, they can keep them and provide office and dormitory, working together on the market. If not, they are returned to the third party.' Alongside the Himalaya plan, the relocation of Mondelez's Shanghai factory was also underway. In early August this year, media reported that Mondelez's Shanghai factory was 'facing closure.' In response, Mondelez stated: 'This is to optimize the company's supply chain. Some production capacity from the Shanghai factory will be transferred to the Suzhou factory, and the required labor will be correspondingly reduced.' According to Mondelez, the Shanghai factory relocation was only for resource optimization. Reporters also received confirmation from industry insiders. Chen Yan, sales director of Shanghai Sanhui Maifeng Food Co., Ltd., said: 'Mondelez's Shanghai factory has older equipment and higher production costs. Transferring it to the Jiangsu factory with newer equipment and stronger production capacity can not only save costs but also increase capacity. This adjustment is correct.' In addition to adjustments in sales staff and production lines, Mondelez also focused on distributors. It is understood that in 2015, Mondelez formulated five plans for market improvement: adjusting sales targets, strengthening market control, clearing advance payments, maintaining product freshness, and implementing a major distributor system. The first four tasks focus on closely monitoring distributors' warehouses. After the market chaos of 2013 and 2014, Mondelez began to address distributors' inventory and advance payments to bring the market back to a healthy track. The purpose of the major distributor system is to solve the problem of low product profits. As a first-tier brand, Mondelez also faces the issue of high sales volume but low profits. In the previous two years, Mondelez had developed county-level distributors, attracting many customers from city-level distributors. However, due to rising distributor operating costs, many weaker county-level distributors could no longer handle the products. Mondelez began to adjust its pace, canceling the agency rights of weaker distributors and instead supporting stronger distributors to radiate to a broader market. According to Guangdong distributor Liu Dongwen, this is not unique to Mondelez; it is also a method many first-tier brands adopt to respond to market changes and adjust product structure. After 30 years in China, Mondelez is facing unprecedented challenges, both from its own management issues and from industry decline. After rapid development in previous years, with consumer preferences shifting, the biscuit industry's growth has slowed. However, even in this situation, the biscuit industry still has new driving forces. Editor's PS: The editor has selected 1,067 featured articles from nearly 1,900 published in this official account, categorized into 14 major categories and 57 knowledge points, systematically compiling frontline marketing management content into a library for everyone's learning. 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