---
title: "The Channel Evolution of a 137-Year-Old Brand: How Lee Kum Kee and Its Distributors Navigate Cycles Together"
description: "How does a condiment brand that has spanned three centuries and 137 years of history face the new era? At the 10th China FMCG Conference, Ms. Zhang Yaping, Vice President of Lee Kum Kee Sauce Group China and Head of New Retail Operations Center, delivered a keynote titled \"Thinking of Others, Winning with 'Lee' – Manufacturer-Distributor Collaboration for Shared Value.\" The presentation was divided into three parts: Redefining Distributor Value: From Channel Movers to Value Creators; How Distributors Develop Amid Retail Channel Transformation; and A New Paradigm of Manufacturer-Distributor Symbiosis: From Transactions to Co-creation."
author: "张亚苹"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2025-04-05"
language: "en"
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# The Channel Evolution of a 137-Year-Old Brand: How Lee Kum Kee and Its Distributors Navigate Cycles Together

> How does a condiment brand that has spanned three centuries and 137 years of history face the new era? At the 10th China FMCG Conference, Ms. Zhang Yaping, Vice President of Lee Kum Kee Sauce Group China and Head of New Retail Operations Center, delivered a keynote titled "Thinking of Others, Winning with 'Lee' – Manufacturer-Distributor Collaboration for Shared Value." The presentation was divided into three parts: Redefining Distributor Value: From Channel Movers to Value Creators; How Distributors Develop Amid Retail Channel Transformation; and A New Paradigm of Manufacturer-Distributor Symbiosis: From Transactions to Co-creation.

How does a condiment brand that has spanned three centuries and 137 years of history face the new era?
At the 10th China FMCG Conference, Ms. Zhang Yaping, Vice President of Lee Kum Kee Sauce Group China and Head of New Retail Operations Center, delivered a keynote titled "Thinking of Others, Winning with 'Lee' – Manufacturer-Distributor Collaboration for Shared Value."
The presentation was divided into three parts:
  * Redefining Distributor Value: From Channel Movers to Value Creators
  * How Distributors Develop Amid Retail Channel Transformation
  * A New Paradigm of Manufacturer-Distributor Symbiosis: From Transactions to Co-creation
New Distribution has distilled Ms. Zhang's core viewpoints into this article for our readers (with some deletions).

**Redefining Distributor Value:**
**From Channel Movers to Value Creators**
From the brand's perspective, the distributor's value proposition needs to evolve from being a channel sales partner to a value creator. The core logic of this transformation lies in redefining the service target and the path of value creation.
In the distributor's entire value system, the brand is not the ultimate customer; the end terminal is the distributor's first customer.
Although the brand provides ongoing resource support, such as marketing investment, training systems, and channel rebate policies, these resources are essentially meant to empower the terminal through the distributor. If the terminal is strong, the distributor is strong.
What constitutes the distributor's core value system?
**1. Channel Service:** From deep coverage of regional networks to precise execution of promotional activities, distributors must ensure the visibility and availability of brand products in the terminal market.
**2. Warehousing and Logistics:** Warehousing and logistics capabilities directly determine the quality of terminal service. Especially in the competition of fresh and short-shelf-life categories, the ability to achieve same-day or scheduled delivery and solve the "last mile" distribution will become the distributor's core moat.
**3. Financial Capital:** By optimizing capital turnover efficiency, such as shortening payment cycles and sharing financial risks, such as establishing an emergency fund pool with the brand, distributors need to find a balance between low-cost operations and risk resistance.
**4. Human Resources:** Flexible employment models, such as combining seasonal worker allocation with digital tools, can compress labor costs to below industry peers.
**5. Data Empowerment:** Distributors need to act as the hub for terminal data collection – feeding real-time inventory and sales data and consumer preferences back to the brand, ensuring seamless integration with the brand's digital systems (e.g., ERP, CRM), while also managing compliance.
**6. Market Promotion:** From community ground promotions to regional media placements, distributors must translate brand strategies into specific actions adapted to local markets. For example, using square dance competitions to promote soy sauce products in third- and fourth-tier cities, or embedding condiment trial scenarios in convenience store fresh food areas in first-tier cities.
These capabilities do not become obsolete with changes in channel formats or consumer markets; they require deep cultivation by both the brand and distributors.
When hard discount stores erode traditional channel profits, restaurant chainization forces B-end service upgrades, and live-stream e-commerce reshapes pricing systems, the core test for distributors is how to integrate these six capabilities from independent modules into a synergistic system, finding a new equilibrium between cost reduction and efficiency enhancement.

**Under the Transformation of Retail Channels**
**How Should Distributors Develop?**
The evolution of China's retail channels shows two core trends:
**I. Continuous Iteration of Channel Formats**
> 1990s to 2000: Department stores and large supermarkets dominated the market;
>
> 2003: Taobao was born, ushering in the e-commerce era;
>
> 2010: "Double 11" became a global consumer IP, and e-commerce entered an explosive phase;
>
> 2015: Pinduoduo was founded, and mobile e-commerce and lower-tier markets rose;
>
> After 2020: Online and offline integration accelerated, with new channels such as Douyin e-commerce, community group buying, and hard discount stores emerging.
In this context, distributors must possess omni-channel operational capabilities; otherwise, they may fall into trouble due to the decline of a single channel.
**II. Rising Chainization Rate of Terminals**
> In the catering sector: The chainization rate rose from 12% in 2012 to 22% in 2024 (compared to 50%-60% in the US);
>
> In the retail sector: The chainization rate of KA hypermarkets, convenience stores, discount stores, and other formats has increased year by year.
In this context, distributors have only two paths for evolution: either dominate a specific vertical channel, such as catering supply chain or community group buying, establishing absolute advantage; or become an integrator of multiple channels in a specific region, integrating diverse terminals such as KA, convenience stores, and fresh food stores, and winning through scale effects.
In the condiment industry where Lee Kum Kee operates, distributors have differentiated into multiple professional types to adapt to different channel needs.
For example, in the catering channel, there are those focusing on industrial customization, wholesale centralized procurement, and terminal operations; in the retail channel, there are professional KA wholesalers and BC store operators; in the e-commerce channel, there are agency operation models and supply chain palletizers.
A classic case: A Lee Kum Kee distributor who had deeply cultivated RT-Mart in East China for 20 years upgraded his capabilities amid declining hypermarket traffic. He packaged his mature salesperson training and promoter management system as an agency operation service, charging commissions from multiple brands. Leveraging existing logistics and customer relationships, he served six brands simultaneously, spreading operational costs. The share of agency operation commission income rose to 40%, achieving counter-trend growth during the KA channel downturn.
In addition to channel deepening, how to select products and how to improve terminal sell-through are also core capabilities that distributors need to continuously enhance.
First, product selection. A distributor's brand portfolio must balance market demand and operational efficiency, focusing on three types of products: brand-advantage products, white-label value-for-money products, and differentiated specialty products.
As consumer decision-making simplifies, distributors can dynamically adjust the proportion of these three types based on their own resource endowments, such as warehousing capacity, capital scale, and team experience. For example, regional leaders can focus on a combination of white-label and differentiated products, while new entrants should prioritize binding with leading brands to reduce risk.
Second, terminal sell-through. Terminals are divided into three categories: high-output (core stores), medium-output (potential stores), and low-output (long-tail stores).
Low-output stores can achieve automated replenishment through B2B platforms, such as intelligent ordering systems, reducing manual intervention and freeing up manpower for deep service to high-value stores.
In high-output stores, implement scenario-based sell-through, such as setting up a "Weekend Kitchen" experience area in community supermarkets, combining Lee Kum Kee products with cooking classes.

**A New Paradigm of Manufacturer-Distributor Symbiosis:**
**From Transactions to Co-creation**
In 1888, Mr. Lee Kum Sheung accidentally overcooked oyster juice and inadvertently created oyster sauce, changing culinary history. This "beautiful mistake" began Lee Kum Kee's 137-year journey of low-key yet legendary global expansion.
To date, Lee Kum Kee has six major production bases worldwide, with products sold in over 100 countries and regions, achieving global operations.
For many years, the core philosophy of Lee Kum Kee's cooperation with distributors has always been "long-lasting."
For example, a distributor in Fujian named Chaoyang Trading had annual sales of less than 650,000 yuan at the start of cooperation in 1998, focusing on traditional channel operations. Today, it is one of Lee Kum Kee's largest distributors.
The brand-distributor relationship is like a "marriage." Since cooperation began in 1998, what have both parties done right?
In 2006, Chaoyang Trading took a regional step by establishing its first branch company – Changle Branch – officially expanding business beyond Fuzhou.
In 2014, it established its first retail branch, focusing on serving the Yonghui system, laying the foundation for future channel expansion.
In 2017, it deepened terminal coverage, achieving rapid business growth and winning Lee Kum Kee's "Super Platinum Award."
In 2018, it expanded into online channels, establishing Fujian Chaoyang Net, accelerating digital transformation. The following year, Lee Kum Kee's annual business exceeded 100 million yuan.
In 2023, it launched the "Diamond Distributor" project at the Lianjiang Branch and won the "Lee Man Tat Award" from Lee Kum Kee that same year.
Last year, both parties signed a strategic distributor agreement, embarking on a new journey of cooperation, further strengthening resource integration and long-term planning.
Through continuous optimization of distribution networks, embracing digitalization, and deepening terminal markets, Fujian Chaoyang and Lee Kum Kee have jointly built an ecosystem covering multi-level channels. From serving a single region to radiating across the province, from traditional circulation to online-offline integration, every step reflects precise insight into market trends and rapid response.
The second case: Australian distributor Oriental Merchant, with 50 years of brand co-creation with Lee Kum Kee.
OM took 20 years to place Lee Kum Kee products into over 6,000 terminals in chain supermarkets such as Coles and Woolworths. Their salespeople know each supermarket's ordering cycle, golden shelf rules, and can even predict replenishment peaks before holidays. This deep cultivation has made Lee Kum Kee oyster sauce penetrate over 80% of Chinese households in Australia, but OM's ambition does not stop there.
When OM noticed a surge in Australian consumers' demand for "healthy low-sodium" products, they did not stop at selling existing products. Instead, they brought data to Lee Kum Kee's R&D team. Three months later, a "naturally brewed soy sauce" with 20% less sodium was launched, with a prominent green health label on the packaging. This product not only entered supermarket shelves but also appeared in fitness bloggers' light meal tutorials.
At the Darling Harbour Food Festival in Sydney, OM invited Michelin chefs to create an "Australian-style spicy seafood platter" using Lee Kum Kee chili sauce. They were not satisfied with making consumers remember "this is Chinese soy sauce." Instead, through a feature in Australian Gourmet Traveller, they established a strong association between Lee Kum Kee and Australian steak and lobster. This cultural grafting increased repurchase rates by 35% and even attracted non-Chinese families to try.
OM is not just a distributor; it is also a brand operator.
Based on the value of "Thinking of Others," Lee Kum Kee's cooperation with distributors focuses on transitioning from short-term sales-driven to long-term value co-creation, reflected in coordinated growth of sales and profits, joint building of omni-channel capabilities, and systematic empowerment support.
In the future, Lee Kum Kee looks forward to continuing to collaborate with distributor partners, jointly cultivating channel value and achieving scaled development.


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