---
title: "Staying Local or Going Big? Decoding the Predicament, Strategy, and Breakthrough for Regional Brands"
description: "From 2011 to 2014, I spent three years at Yili Group accomplishing two major tasks: upgrading the packaging of Yili Yoghurt and launching Yili Ambrosial, a shelf-stable yogurt that achieved 1 billion yuan in sales in its first year. Since then, my work has focused on how regional brands and SMEs can survive and grow. This article explores three key concepts: predicament, strategy, and breakthrough."
author: "顾凡"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2023-05-13"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/staying-local-or-going-big-decoding-the-predicament-strategy-and-breakth-6ad8d1d8/"
markdown: "https://xinjignxiao.com/en/articles/staying-local-or-going-big-decoding-the-predicament-strategy-and-breakth-6ad8d1d8.md"
original_source: "https://mp.weixin.qq.com/s/qUvL437E6OLmnAXJ9Ud3cQ"
translation: "https://xinjignxiao.com/zh/articles/%E7%9B%98%E8%B8%9E%E4%B8%80%E9%9A%85%E8%BF%98%E6%98%AF%E5%81%9A%E5%A4%A7%E5%81%9A%E5%BC%BA-%E8%A7%A3%E8%AF%BB%E5%8C%BA%E5%9F%9F%E5%93%81%E7%89%8C%E5%B8%82%E5%9C%BA%E7%9A%84%E5%9B%B0%E5%B1%80-%E5%B8%83%E5%B1%80%E4%B8%8E%E7%A0%B4%E5%B1%80-6ad8d1d8.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/staying-local-or-going-big-decoding-the-predicament-strategy-and-breakth-6ad8d1d8/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Staying Local or Going Big? Decoding the Predicament, Strategy, and Breakthrough for Regional Brands

> From 2011 to 2014, I spent three years at Yili Group accomplishing two major tasks: upgrading the packaging of Yili Yoghurt and launching Yili Ambrosial, a shelf-stable yogurt that achieved 1 billion yuan in sales in its first year. Since then, my work has focused on how regional brands and SMEs can survive and grow. This article explores three key concepts: predicament, strategy, and breakthrough.

From 2011 to 2014, I spent three years at Yili Group accomplishing two major tasks: first, driving a comprehensive packaging upgrade for Yili Yoghurt, and second, developing and launching Yili Ambrosial, a shelf-stable yogurt that achieved 1 billion yuan in sales in its first year. After that, I left Yili Group.
My subsequent work experience has consistently revolved around one topic: how regional brands and small and medium-sized enterprises (SMEs) can survive and develop. Let's start with three key words: **predicament, strategy, and breakthrough.**
**The Survival Predicament of Regional Brands**
**Winner-Takes-All, Too Many Shortcomings**
Let's first look at a set of stark numbers:
  * In 2021, the CR2 of China's dairy industry was 43%, with 589 dairy enterprises above designated size and a market size of 450 billion yuan.
  * In 2021, the CR4 of China's beverage industry was 28%, and CR8 was 40%, with 1,700 beverage enterprises above designated size and a market size of 1.6 trillion yuan.
Note: CRn stands for "concentration ratio," meaning the market share of the top n companies in the industry.
What does this mean? In China's overall dairy market, the two "giants," Yili and Mengniu, hold a combined market share of over 40%, while the remaining 587 companies compete for less than 60% of the market space.
Although the beverage industry's concentration is much lower, the top 8 national brands (Coca-Cola, Pepsi, Master Kong, Wahaha, Nongfu Spring, Uni-President, China Resources C'estbon, and Ganten) also hold over 40% of the market. While there is still nearly 1 trillion yuan of market to share, it is being fiercely contested by over 1,700 companies.
Moreover, whether in the dairy or beverage industry, concentration is continuously increasing. What's worse, these "leading enterprises" generally have higher profitability than SMEs and regional brands, and the pace of "winner-takes-all" is accelerating. In recent years, businesses have been complaining that it's getting harder to make money. In essence, the operations of most "national leading brands" are continuously improving, while the survival conditions of regional brands and SMEs are indeed becoming increasingly difficult. However, whether managing a regional brand or providing marketing consulting for numerous SMEs, the first problem encountered is always the boss's soul-searching question: "We are not Yili or Mengniu; we can't compare with those wealthy and powerful big brands. Our priority is to sell our current products well; it's not yet time for branding or advertising..." The implication is that you, as the manager, must not "waste money." These so-called "big brands" are like families that own mines; they just throw money to buy market share. We regional brands and SMEs can't learn from that. So, is the boss's idea to focus on immediate sales breakthroughs and solidly do well in the local market with existing products? Of course not. The boss's logic is: "Achieve success through unconventional means, break through with innovation, and plan for national expansion. Sales should climb three steps in three years, go public within three years, break 2 billion yuan in five years, and achieve a strategic goal of 10 billion yuan in sales within ten years. As for brand building, we will definitely do it once sales break 2 billion."
Whenever I encounter such a scenario, I respond with one sentence: "Aiming to grow bigger and stronger and go national is a grand goal and commendable courage, but you must look at the 'layout' from the 'endgame.' If you want results, you must go through the process."
If the goal is to become a "national brand," then you need to do "national" layout and planning now. If you keep doing "local specialty" and small business things, and plan to do "branding" and "nationalization" in the future, to do business across China and the world, the difficulty is imaginable. This is the dilemma of regional brand survival and development: if you don't take the "nationalization" path, you will be gradually eroded by "big brands," and it seems there is no future for business growth; but if you move toward "nationalization," you will immediately face a series of major issues such as insufficient brand power and product strength, as well as capital investment, organizational structure, team capabilities, new customer development, and channel expansion.
**Marketing Strategy for Regional Brands**
**The "Five-Level Leap Model"**
How can regional brands break through in the market? We must first answer the following five questions: 1. Why must a regional brand "nationalize"? 2. What exactly constitutes a "national" brand? 3. If not doing national layout, what other paths for survival and development exist? 4. As numerous regional brands, how can we tailor a sustainable development path for ourselves? 5. On this path full of opportunities and risks, how can we carefully design, reasonably plan, thoroughly arrange, and perfectly implement? Based on long-term observation of China's FMCG industry and practical hands-on experience, Zhongding Yunchuang has summarized the "Five-Level Leap Model" for regional brands. We believe this will provide reference and inspiration for most operators in the food and beverage industry, helping everyone see themselves more clearly and decide their path. We believe that all enterprises have only five choices in two-dimensional space for development: **National Leader, Industry Challenger, Vertical Leader, Regional Leader, and Local Commando.**
**The first type, "National Leader."** These are the industry's leading enterprises we are familiar with. There may be two or three, or seven or eight, depending on the industry concentration. For example, excluding infant formula, in China's dairy sector, Yili and Mengniu together hold nearly 60% of the market share, and each one's sales are three to four times that of the brands behind them. These two are unequivocally "national leaders." The edible oil industry is very similar to the dairy industry, with Arawana, Flavor, and Luhua almost dividing the market into three parts. However, in the beverage industry, it is much more complicated; no one can clearly say what absolute advantage Coca-Cola, Pepsi, Nongfu Spring, Master Kong, or Uni-President has, with sales all between 20 and 50 billion yuan.
**The second type, "Industry Challenger."** These are national brands in the second tier of the industry. Although there is still a clear gap in sales scale compared to "national leaders," they are either growing rapidly or have unique resources and core competitiveness, constantly striving to catch up and challenge the top! Typical examples include Bright Dairy and Junlebao in the dairy industry, Genki Forest in the beverage industry, and Jinmailang in the instant noodle industry.
**The third type, "Vertical Leader."** These brands may not achieve national coverage in the industry or full product line layout, but in certain niche markets or specific channels, they can achieve national first or nationwide penetration. Still taking the dairy industry as an example, the most typical "vertical leader" is Milkground in the cheese category. Since the launch of its "Cheese Stick" product in 2017, it has firmly held the leading position in the cheese industry. Other categories are too numerous to list: Nestlé in instant coffee, Red Bull in energy drinks, Six Walnuts in plant protein drinks, as well as Chengde Lulu, Wong Lo Kat, JDB, Coconut Palm, Hawthorn Tree, Xiangpiaopiao milk tea, RIO cocktails, Niulanshan Erguotou, and Jing Liquor. Even "the most expensive ice cream," "the most expensive yogurt," and "the most expensive melon seeds" can become national brands with influence and still thrive. Looking around, most national brands are actually seeking further breakthroughs and development at this level.
**The fourth type, "Regional Leader."** These are brands that strictly defend their local regions, seeking competitive advantage and long-term sustainable development in their specific sales areas. They are also the goal that most regional brands and SMEs have strived for over decades: to become the "leader" in the regional market. In fact, when we say "regional leader," the region can be large or small, ranging from several provinces to a single city. Even within a city, several brands may be "evenly matched," competing fiercely for territory. Therefore, the "regional leader" here refers to those brands that, whether passively accepted or actively chosen, have certain market advantages (not necessarily significant or stable) in certain geographic areas, special categories, or specific channels, but have not yet broken through their original sales regions. The vast majority of these enterprises have tried to "go out" but mostly retreated, and they are finding it increasingly difficult to hold their ground! We can list a long roster of "regional leading brands": Nanjing Weigang, Xi'an Yinqiao, Chongqing Tianyou, Guiyang Shanhua, Chongqing Baiya, Xi'an Bingfeng...
The last type is called **"Local Commando."** These are the thousands of SMEs, local brands, and startups in China that haven't even achieved leading positions in their regional markets. They are small in scale, numerous, often struggling with operations, and under enormous survival pressure.
The above "regional leaders" and "local commandos" are the mainstay and "backbone" of China's consumer goods industry, and they are the ones most in need of strategic reshaping. Through the "Five-Level Leap Model," these "regional brands" and "SMEs" can find the right direction, clarify their positioning, design their paths, break through development, and embark on a bright road of sustainable growth.
**Breakthrough for Regional Brand Marketing**
**Two Main Paths for Development**
In our view, there are only two paths for the survival and development of "regional brands":
**1. Long-term layout, regional coverage, and advance toward "Industry Challenger."** This means firmly and continuously pursuing the strategic goal of "spreading the pie" and doing national business. Start from being the "first" in a city, then the "first" in a province, then cover surrounding provinces as a advantageous brand, and finally gradually develop nationwide. The most famous successful case on this path is Junlebao, now the fifth-largest dairy company in China. Many consumers who don't know the industry's history think Junlebao has always been a "national brand," especially famous for yogurt. But they don't know that 20 years ago, Junlebao was truly a city-level dairy company, known only in Shijiazhuang and Tianjin at best. In 2000, Junlebao's sales were less than 300 million yuan; in 2008, sales just broke 1 billion yuan, still a "well-known brand in Hebei Province." It wasn't until 2015 that it proposed the slogan "In North China, most people choose Junlebao for yogurt," with sales exceeding 5 billion yuan. By 2021, Junlebao Group's sales exceeded 20 billion yuan! Perhaps 20 years ago, no one would have thought that Junlebao, starting from Shijiazhuang and Hebei Province, steadily expanding its territory circle by circle, would gradually develop into China's fifth-largest dairy company, comparable to Yili and Mengniu.
**2. Focus on a single product, break through channels, and migrate toward "Vertical Leader."** This means firmly narrowing the battlefield, locking onto a specific product line, specific channels, specific consumption scenarios, or specific consumer groups, and doing it deeply and thoroughly, hoping to gradually gain a leading advantage in these specific niche markets. The most typical case is still Milkground. Most consumers don't know that Milkground's predecessor was a genuine "regional dairy enterprise": Guangze Dairy in Changchun, Jilin Province. Those familiar with the dairy landscape know that the three northeastern provinces are a famous milk source belt in China. Wandashan, Huishan, Feihe, and Hongxing are far more well-known than the obscure "Guangze." Even in Changchun and Jilin, Guangze Dairy had little competitive advantage, with sales of less than 300 million yuan in 2018. If it hadn't been for Guangze Dairy's decisive focus on the "Cheese Stick" niche, single-handedly entering the domestic cheese market with heavy investment, there might be no Milkground as "China's No.1 Cheese Brand" with annual sales approaching 5 billion yuan today, nor the current 10-billion-yuan cheese market in China. Guangze Dairy would still be the same Guangze Dairy unable to break out of Jilin and Changchun, struggling to survive amid rounds of "strangulation" by Yili and Mengniu.
Of course, this doesn't mean that "long-term layout and spreading the pie" will definitely succeed, nor that "narrowing the front and becoming No.1" will definitely win. But at least one thing is certain: without the persistence of long-term layout or the focus of narrowing the front, if you only think about "staying unchanged" and "strictly defending," the survival and development path for regional brands will inevitably become narrower and narrower.
**Therefore, there are only two paths for the survival and development of regional brands, and the choice lies in a single thought.**
Gu Fan, Founder of Beijing Zhongding Yunchuang Technology Consulting Co., Ltd.
Known as the "First Person in New Product Launch Marketing in China," a marketing expert, consultant, and lecturer.
Proficient in marketing strategy planning and implementation, focusing on brand and product marketing promotion. He led the development and launch of Yili Ambrosial, achieving the miracle of 30 billion yuan in sales for a single product, and the full upgrade and integrated communication of Yoghurt, creating a classic industry case.


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671