---
title: "Ten Suggestions for FMCG Manufacturers Amid the Lingering Pandemic"
description: "The recent COVID-19 outbreak in Shanghai has deeply affected the nation, with daily confirmed cases in the thousands and asymptomatic cases in the tens of thousands, prompting many regions to adopt full or partial lockdowns. Logistics disruptions, consumer restrictions, and declining purchasing power are impacting all industries. GDP growth in Q1 2022 is expected to remain below 5% due to the pandemic and geopolitical tensions, and this article offers ten practical suggestions for FMCG manufacturers to navigate these challenges."
author: "高级研究员 海游"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-05-09"
language: "en"
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# Ten Suggestions for FMCG Manufacturers Amid the Lingering Pandemic

> The recent COVID-19 outbreak in Shanghai has deeply affected the nation, with daily confirmed cases in the thousands and asymptomatic cases in the tens of thousands, prompting many regions to adopt full or partial lockdowns. Logistics disruptions, consumer restrictions, and declining purchasing power are impacting all industries. GDP growth in Q1 2022 is expected to remain below 5% due to the pandemic and geopolitical tensions, and this article offers ten practical suggestions for FMCG manufacturers to navigate these challenges.

The recent COVID-19 outbreak in Shanghai has deeply affected the nation, with daily confirmed cases in the thousands and asymptomatic cases in the tens of thousands, prompting many regions to adopt full or partial lockdowns. Logistics disruptions, consumer restrictions, and declining purchasing power are impacting all industries.
It is understood that GDP growth in Q1 2022 may be below 5% year-on-year, with March economic activity significantly disrupted by the pandemic. Amid domestic resurgence and heightened international geopolitical conflicts, China's economic growth in Q1 2022 may continue to stay below 5%, with major macro indicators in March trending downward.
Facing unpredictable pandemic emergencies, I have summarized ten suggestions for FMCG manufacturers.
******Focus on Per Capita Output**
This is a common topic but remains crucial. I will only raise two points:
**1. Integrate manufacturer and distributor operations to improve labor output.**
For example, a brand's own team handles deep distribution, while distributor teams handle delivery. The brand calculates its own accounts, investing a certain amount per person, while the distributor calculates its own, allocating a vehicle and driver per delivery volume.
This seems reasonable but actually operates in silos without integration, resulting in 1+1<2. Could we try optimization by offering 1.5 times the salary for a dual role of driver and salesperson? Many frontline workers are not afraid of hard work but fear not earning enough to pay off car loans and mortgages.
**2. Cut bloated departments.**
Evaluate departmental value and eliminate those that only strategize without implementation. It's not that they lack value, but it's difficult to sustain them at this time. If cash flow becomes tight, their projects cannot be effectively advanced. Focus resources on high-output units.
******Emphasize Freshness of Product Age**
**Product freshness has always been a core competitiveness for brands.** Beyond the product itself, market operations are more important.
A few days ago, a friend asked about handling a surge of old stock during the pandemic. My response was that large product age is a process management issue; once it becomes a reality, it's about the quality of previous "drainage" channels. Last-minute efforts are not very effective. Without such channels, distributors may go bankrupt, and brands may lose market share.
This is not alarmist; it actually happened in 2020. Moreover, with recurring outbreaks, reserve at least 50% of shelf life time to prevent losses from sudden lockdowns or road closures, avoiding direct expiration of products after two to three months of closure.
Product freshness should be a key KPI for marketing teams, requiring joint supervision by manufacturers and distributors.
******Don't Overlook Trial-and-Error Costs**
Before the pandemic, with the internet's boost, innovation became almost a viral trend; not changing seemed wrong, and only change could adapt to the times. But when the tide receded, many perished. Many manufacturers want to change, which is not wrong, but don't ignore your financial reserves.
A friend scraped together 3 million yuan to open a specialty restaurant, which was locked down within a month of opening. When the lockdown ended, his restaurant was over. This validates the saying: you never know which comes first, tomorrow or the unexpected.
When the market is good, manufacturers have self-sustaining capabilities and can quickly recover losses. But in the current market, if a manufacturer bets everything on a heavy investment and fails, banks won't help, capital won't pay attention, and bankruptcy liquidation is likely.
So, at this stage, any experimentation must be done while ensuring the normal operation of existing business and maintaining a capital reserve to resist general risks. For instance, a small business owner recently asked me about developing a new beverage with Chinese cultural elements, requiring a new production line. He felt it could succeed and asked for advice.
I replied: Without full confidence, I don't recommend heavy asset investment; even 90% confidence isn't enough. Currently, there is severe overcapacity in China. OEM is the lowest-cost way to test. I can also help connect you with OEM factories.
******Improve Operational Efficiency**
What is operational efficiency? It includes operational capability and operational effectiveness.
For example, both A and B brands can sell 1 million, but A earns 100,000 while B earns 150,000. Both have the capability to sell 1 million, but B's effectiveness is higher. **Today's FMCG competition is about efficiency, not just capability or effectiveness alone. In short, you need to sell more and earn more, like Nongfu Spring.**
How to improve efficiency? Here are some suggestions:
**2. Manufacturers drive distributors to progress together:** In the domestic market, few distributors have independent operational efficiency; over 80% follow their brand. So, while learning and improving, brands must also bring distributors along; otherwise, you only widen the gap between yourself and your distributors, failing to coordinate unified operations and giving competitors opportunities.
I once provided distributor training for Beijing Laocaichen Food. Chairman Chen Yueping places great emphasis on building operational efficiency for both his team and distributor teams, organizing annual joint learning sessions. Other brands should follow suit.
******Reshape Product Strategy**
For manufacturers, this is an extraordinary period. For brands, the strategy of casting a wide net and focusing on key catches is not suitable. **You need to build competitive products, subtract in strategy, and add in tactics.**
Strategic subtraction includes cutting products and markets that cannot scale in the short term, focusing on key markets and products, and building the core competitiveness of the first engine product. Especially for SMEs, decisively abandon the "big and comprehensive" product structure and focus on creating "refined and beautiful" super single products.
Tactical addition means enhancing the product power of existing products, striving to achieve high quality and low price to the extreme, achieving total cost leadership, focusing resources, amplifying differentiation, and reshaping core selling points.
Manufacturers should slow down new product development and strengthen the competitiveness of existing products.
******Leverage Social Dividends in Communication Strategy**
Recently, two events have shown the benefits of social dividends. One is the surge in popularity of Baixiang instant noodles after the 315 pickled cabbage incident, which went viral through WeChat Moments and word-of-mouth, allowing them to appeal to consumers from a moral high ground, urging rational consumption and purchase on demand.
The other is renowned consultant Liu Run, who humorously mentioned "four eggs an hour" during Shanghai's lockdown, and soon his image circulated widely on my WeChat Moments, with many people searching frantically.
These examples show manufacturers that brand communication has undergone earth-shaking changes. CCTV advertising still holds weight but is no longer the only option.
Today's social currency is multidimensional. The key is to create appropriate content topics at the right time, spread through fragmented media, to achieve low-cost, wide-reaching, high-engagement brand promotion. This is what traditional FMCG manufacturers generally lack and need to urgently upgrade and prioritize.
******Digital Transformation: Start with Channel Digitization**
The digital wave has been strong in the past year or two, but I feel it's a slow process that cannot be rushed. Moreover, the digital system is vast. For most FMCG manufacturers, focusing on channel digitization is enough to remain competitive; don't bite off more than you can chew.
Channel digitization also seems large, but a journey of a thousand miles begins with a single step. I suggest brands first focus on two aspects: **organizational efficiency and performance growth.**
Organizational efficiency requires two digitalizations: process digitization (orders, warehousing, logistics, accounting) and management digitization (standards, truthfulness, inspection, incentives).
Performance growth requires two digitalizations: execution digitization (outlets, displays, visits, sales) and operational digitization (products, tools, methods, willingness).
For distributors, brands should lead by example. If you can't digitize your closest distributors who have direct profit relationships, don't consider outlets and consumers; otherwise, you're wasting resources.
Distributors care most about digitization of profitability, expenses, and personnel efficiency. Brands that cater to these will accelerate channel digitization.
******SMEs Should Focus on Building Base Areas**
Fifteen years ago, the incremental market was a win-win for all; brands jointly expanded the market pie, and everyone got a share. Today, it's a stock market where gains and losses are zero-sum. With recurring outbreaks and declining consumer spending, the stock market is moving toward a shrinking market, and the pie is getting smaller.
At this time, manufacturers should reserve a self-owned plot, a base area. These markets should achieve three "number ones": market share first and far ahead of the second competitor; absolute first in product brand power; and absolute first in operating profit. It is the hematopoietic stem cell of the enterprise, the talent pool, and the Noah's Ark in times of crisis.
******Review Talent Pipeline, Focus on Post-90s**
I use the word "review" to urge manufacturers to first check how many post-90s are in their frontline teams, then pay attention to this issue.
FMCG companies are always recruiting but always short-staffed. A common phenomenon is frontline workers jumping between companies, but fewer post-90s are joining FMCG teams. Many post-90s, even those with bachelor's degrees or above, prefer delivering packages, food delivery, or driving for ride-hailing services over joining the FMCG workforce.
This leads to two alarming issues: First, where will the internal management team come from? Will we promote a 40-year-old salesperson to frontline supervisor? How do we select manager teams? How do we promote higher levels internally? Second, in five or ten years, as the post-70s and post-80s gradually exit the FMCG stage, who will take over?
If we don't address this now, the future "labor shortage" will cripple many manufacturers.
******Return to Offline, But Don't Ignore Online**
Returning to offline and the basic market is a hot topic in the FMCG industry this year. Previously, 2C e-commerce optimized the supply chain from brand to consumer; later, B2B optimized from brand to terminal outlets; and in recent years, community group buying optimized from distributor to consumer.
Throughout the entire supply chain system F2B2b2C, with capital and internet tools, there has been constant innovation and breakthrough, eventually capturing nearly 30% of market sales. So, everyone has refocused on the 70% offline operations.
In my view, the FMCG industry periodically has "fits" where something seems to dictate the rhythm, swinging from extreme left to extreme right.
This is not advisable. Online has its value, and offline has its benefits. Brands good at offline should start exploring online operations, and those good at online should start exploring offline layout. I believe that in the near future, only manufacturers that integrate offline and online will dominate the market.
FMCG manufacturers should define offline and online as different channels and leverage their channel advantages to develop focus markets. After all, an additional channel brings additional harvest.


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