The B2B Gene of the Salt Reform Breaker

Content Summary Salt reform + B2B = rebirth from the cocoon.

Interview with Nantong Salt Industry Chairman Mo Zongqiang Salt is a typical FMCG with high frequency and rigid demand. China's salt production and distribution have long been protected by the monopoly system, with operational characteristics of state-owned enterprises and administrative management. It can be said that China's salt enterprises are the most typical and traditional retail enterprises. 2017 marked the beginning of the salt industry system reform. With the liberalization of salt prices, distribution systems, and the direct entry of production enterprises and other salt business entities into the market, salt companies that had their "marketing iron rice bowl" broken felt the intense market competition and foresaw that traditional enterprises would face losses within the next 2-3 years. Facing life-and-death challenges, there are reform pioneers who dare to break through and innovate, leveraging the "new retail" market trend to carve out a new world in transformation. The transformation of Nantong Salt Industry over the past year is a good example. They proactively embraced the B2B platform "Dianda" and fully cooperated to establish "Nantong Dianda", transforming from a monopoly entity to a market entity, breaking through from factor-driven to innovation-driven, exploring a transformation path from traditional salt wholesale to Internet+. In 2017, Nantong Salt Industry became the only company among the 13 subsidiaries of Suyan Group to achieve positive high growth, with total revenue of 459 million yuan, a revenue growth rate of 20%, and exceeding operating profit targets. Among these, the contribution of "Nantong Dianda" cannot be underestimated. Nantong Salt Industry's business breakthrough has attracted the attention of "Qian Research". Our industry research interests focus on: First, how did a salt company—a conservative organization in a traditional industry—when offline retail distributors were still questioning whether B2B is an enemy and whether it has commercial value, already mount its horse and fully embrace B2B—what was it thinking? Second, Nantong Salt Industry not only fully embraced B2B but also achieved impressive results at the business level—how did it do it? "Qian Research" visited Nantong Salt Industry Chairman Mo Zongqiang on January 11 to hear why they transformed to B2B "new retail" and why they partnered with "Dianda". Special thanks to Liu Chen and Lin Yue for their contributions to this report. Nantong Salt Industry Chairman Mo Zongqiang (left) accompanies Nantong Deputy Mayor Xu Xinmin (right) to inspect Nantong Dianda 1 Salt Reform Hits, Seeking Change and Survival China's salt monopoly system has been in place for over 20 years since its formal establishment in 1996. Although this system has played a prominent role in increasing iodized salt coverage and consumption, eliminating iodine deficiency disorders, and stabilizing salt prices, issues such as administrative monopoly, lack of separation between government and enterprise, and resulting regional segmentation and production-sales contradictions have made salt enterprises inefficient. To stimulate market vitality and promote the healthy development of the salt industry, the salt industry system reform was officially implemented in 2017. With the introduction of a series of new policies such as "relaxing state-owned restrictions, introducing social capital; liberalizing salt pricing, wholesale and distribution systems, and canceling regional restrictions on salt production and sales", the survival environment for traditional salt enterprises has undergone tremendous changes. After the salt reform, salt production enterprises can independently carry out distribution and sales, and salt wholesale enterprises can operate across regions, significantly increasing the number of market competitors. Moreover, independent pricing of salt has led to "price wars" in some regions. Under multiple factors, the good days of salt wholesale enterprises enjoying monopoly profits are gone. These challenges faced by salt enterprises are also common challenges faced by many traditional retail enterprises. The "new retail" reform in 2016, to some extent, intensified market competition. Especially in the FMCG field, both production and channel ends have felt the impact of B2B platforms of all sizes. Some manufacturers and distributors consider B2B platforms as "barbarians at the gate", relying on capital strength to burn money, disrupt prices, and cross-region sales to disturb the market, stealing their rice bowls, so they are resistant; others, through years of operation, have recognized the pain points of multi-level distribution systems and seen the real effect of pragmatic B2B teams on supply chain improvement, gradually changing from wait-and-see to recognition, even proactive cooperation. Nantong Salt Industry is such a traditional salt wholesale enterprise that proactively seeks change, actively embraces B2B, and has felt the actual effects of reform within just one year. 2 Partnering with B2B is the Result of Proactive Change Mo Zongqiang repeatedly emphasized that cooperating with B2B was his proactive choice. He has been paying attention to B2B for more than a year or two and knows the industry dynamics well. As a senior person in the FMCG retail frontline, he recognized that B2B would be the development trend of the retail industry, but also clearly realized that the B2B industry, as a solid business, has thresholds. He firmly believes: B2B is definitely the direction of retail reform; the entry of B2B forces will inevitably make market competition more intense and trigger a round of industry reshuffling; B2B requires professional talent and technology, and tests the planning and allocation of the entire "people, finance, goods, supply, production, and sales" system. It is not about playing concepts but doing real business. In actual enterprise operations, Mo Zongqiang also places great emphasis on supply chain construction such as warehousing and logistics, accumulating brand-side enterprise customer resources, and changing attitudes towards retail-side services. It should be said that under Chairman Mo's leadership, Nantong Salt Industry inherently contains the B2B gene. The 2016 salt reform gave Nantong Salt Industry a shot in the arm to accelerate transformation. After calm and profound thinking, Mo Zongqiang decided to take the initiative, embracing Internet+ and exploring new B2B models to take the first step in transformation. 3 Why Choose "Dianda" Cooperation? When talking about familiar B2B platforms, Mo Zongqiang listed 7 or 8 names in one breath. Especially in 2017, the number of B2B platforms entering Nantong may have reached double digits. In fact, several proactively sought cooperation with Nantong Salt Industry. But Mo Zongqiang stated that he has a scale in his heart for choosing partners. To sustain development in the fiercely competitive B2B industry, one needs a team with capability, courage, and determination. By chance, Nantong Salt Industry, seeking change and survival, met the B2B platform Dianda Mall. The two sides coincided in development models, routes and policies, and service concepts. Not simply burning money to buy traffic but jointly maintaining a healthy and reasonable price system with upstream brands; not blindly expanding but focusing on certain regions; not ignoring profitability for scale; not using cross-region sales for short-term customers but using services to retain customers long-term... "Dianda"'s vibrant team spirit and market-oriented operation model deeply infected Nantong Salt Industry during its transformation. Mo Zongqiang therefore proactively proposed cooperation with "Dianda". In April 2017, the two parties established Nantong Dianda Xintongfu Technology Co., Ltd. as a joint venture to explore "new retail" services for FMCG retail small shops. On May 20, the first warehouse after the cooperation between Nantong Salt Industry and Dianda opened in Tongzhou, followed by Hai'an, Haimen, Rugao, and Rudong within six months. Chairman Mo Zongqiang speaking at the Nantong Dianda listing ceremony 4 The Development Path of Traditional Salt Enterprises Partnering with B2B Through partnering with B2B, Nantong Salt Industry successfully achieved transformation and upgrading in business categories and service levels, from sitting merchant service to door-to-door service, from single category to category portfolio optimization. Not only did the product structure expand from salt + chemicals to thousands of SKUs, but they also strengthened proactive service awareness and placed customer experience in a more important position. These changes have increased customer recognition of Nantong Dianda and established a firm foothold in the market. Nantong Salt Industry's embrace of "new retail" as a breakthrough method allowed it to deliver a satisfactory answer in the first year of salt reform, becoming the only salt branch in the province with positive growth. The 20% revenue growth rate made Nantong Salt Industry stand out in the new competitive environment. Among these, the contribution from Nantong Dianda cannot be underestimated. Within just half a year, the effective customer count of Nantong Dianda Mall exceeded 10,000, with total GMV in the tens of millions, and single-day transaction volume on Double 12 exceeded 1.36 million. Nantong Dianda FMCG warehouse In its cooperation with "Dianda", Nantong Salt Industry has explored some development experiences for traditional enterprises partnering with B2B, including cooperation methods, supply chain, customer management, and talent development. These have certain reference significance for other enterprises that are about to or have already embarked on this path. Chairman Mo Zongqiang imparting his business philosophy to team members 01 Seek organic integration, avoid copy-paste. Traditional salt industry and new retail still have certain differences in channels, pricing, and distribution. Therefore, when combining the two, one should seek "organic reactions", take the essence and discard the dross, and make choices most suitable for one's own development path, rather than blindly copying. B2B is currently in an era of extensive competition, with no ready-made models or brand effects, requiring gradual exploration of experience. The cooperation between Nantong Salt Industry and Dianda has achieved continuous optimization in practice. Nantong Salt Industry has formed its own methods in warehouse management, product category design, distribution services, and frontline personnel management, choosing the path most suitable for itself. 02 Focus on supply chain construction and seek quality products. Quality products and smooth supply chains are the foundation for business results. Enterprises should accelerate supplier development, discover quality products (such as those with good brand effects and good value), and ensure a steady supply of goods to front warehouses. At the same time, based on different living and consumption habits in different regions, product category design should also differ. Only suitable products can be monetized. For example, Nantong Salt Industry equipped different brands of rice wine in different regions according to local conditions, reached strategic cooperation with local beer, playing cards, and other brand enterprises, and also discovered high-quality and low-price dairy products, effectively opening the market. 03 Develop customers with heart and maintain customers with service. Customers are the lifeline for long-term enterprise development. Good service can retain customers effectively in the long term, enabling enterprises to stand out in fierce competition. Therefore, enterprises should pay special attention to customer management during development. Especially during the expansion stage, it is necessary to ensure quality and quantity, develop customers in the right way, and maintain customers with thoughtful service. Nantong Salt Industry coincides with "Dianda" in emphasizing service, both adhering to the bottom line of "not burning money for traffic, winning people's hearts through service", striving to retain customers through thoughtful service rather than grabbing temporary popularity through crude price wars. In specific practices, salt industry executives, ground promotion managers, and customers maintain uninterrupted direct communication through WeChat groups, promptly discovering and solving problems; at the same time, Nantong Dianda always puts service before benefits. For example, no matter what difficulties are encountered, as long as customers make requests, they will do their best to deliver on time, even at higher costs. 04 "Recruit talents widely" and continuously optimize the talent team. People are the core driving force for enterprise operation and development, especially for the B2B industry in fierce competition. Experienced, forward-looking, and capable talents can mobilize various resources and factors, solve various problems in a timely manner, and achieve optimal business benefits. In recent years, Nantong Salt Industry has recruited talents widely, actively introducing talents with rich practical experience from traditional retail stores. They have made important contributions to Nantong Salt Industry's smooth transition to B2B. 5 Conclusion: It's Win-Win, Not Zero-Sum; Salt Reform + B2B = Rebirth from the Cocoon Facing salt reform, when many traditional salt enterprises are stuck in development difficulties, the successful marriage between Nantong Salt Industry and Dianda and the wonderful sparks it emitted convey a signal to us: When the factor-driven salt reform meets innovation-driven, and encounters the B2B new retail revolution, the chemical reaction is magical. This is not a zero-sum game but a win-win integration. As a typical state-owned salt enterprise, Nantong Salt Industry has rich wholesale and sales experience, accumulated many enterprise customer resources, and has a relatively complete supply chain and warehousing foundation. These natural B2B genes make its transformation to new retail logical. After partnering with B2B, "Dianda"'s relatively advanced platform system and market-oriented operation concepts also helped Nantong Salt Industry quickly achieve transformation of business thinking and expansion of business categories, ultimately helping it generate revenue. It can be said that under the background of salt reform, traditional salt enterprises actively exploring organic integration with B2B helps reshape their core competitiveness. Those who can recognize the situation survive; those who are good at breaking the situation thrive. Under the changing circumstances, perhaps more traditional salt enterprises can achieve rebirth by leveraging B2B! Source: Qian Research (ID: buysideresearch) -END-