---
title: "The More the Market Involution, the More Brands Need to Unite Social Forces"
description: "On April 29, 1956, Chairman Mao emphasized 'uniting all forces that can be united' during a meeting with representatives of communist parties from several Latin American countries. This principle applies equally to the FMCG industry: in an era of involution, strengthening channel competitiveness requires uniting all possible forces, yet many brands overlook this or only adopt 'metaphysical' strategies without concrete tactical guidance."
author: "高级研究员 海游"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2025-01-27"
language: "en"
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# The More the Market Involution, the More Brands Need to Unite Social Forces

> On April 29, 1956, Chairman Mao emphasized 'uniting all forces that can be united' during a meeting with representatives of communist parties from several Latin American countries. This principle applies equally to the FMCG industry: in an era of involution, strengthening channel competitiveness requires uniting all possible forces, yet many brands overlook this or only adopt 'metaphysical' strategies without concrete tactical guidance.

On April 29, 1956, Chairman Mao emphasized during a meeting with representatives of communist parties from several Latin American countries: 'We must unite all forces that can be united.' He pointed out the need to win over intermediate forces, unite all who can be united, minimize enemies, and maximize friends—the more friends, the better; the fewer enemies, the better.
This thinking is equally applicable to the FMCG industry. In an era of involution, strengthening channel competitiveness requires uniting all possible forces, but many brands seem not to have paid attention to this, or they only have 'metaphysical' strategies without key guidance for 'physical' tactics. So, which social forces require systematic attention from brands? Let's discuss this topic today.
**Wholesalers** Wholesalers are not unfamiliar; many manufacturers attach great importance to them, and this is the first force to unite. Social consumer goods are becoming increasingly homogeneous and substitutable. For wholesalers, if they don't sell your products, they will sell competitors'. In terms of competitive landscape, they are either your 'friends' or your 'enemies.' Manufacturers should think: unite all forces that can be united, minimize 'enemies,' and maximize 'friends.' **So how should wholesalers be united?** Briefly: Wholesalers can be divided into seated wholesalers and traveling wholesalers based on whether they have distribution capabilities, and the strategies for uniting them differ. **1. Seated wholesalers:** They wait for customers to come to them, mainly serving traditional grocery stores. Their sales characteristics include low order volumes per downstream customer but a large number of service points. They also serve consumers secondarily, with the feature that even a single item is sold at wholesale prices. They have two major advantages to fully exploit: first, seizing fixed stall displays (form, position, taste, area, merchandising, etc.) to enhance the competitiveness of homogeneous products in the best positions and displays; second, serving special channels (closed outlets). Most seated wholesalers, after years of operation, have a few 'hidden big players'—such as enterprise group purchases or factory internal needs—with stable demand and large volumes, making them excellent channel resources. **2. Traveling wholesalers:** They have distribution capabilities but rarely have 'sales visit' or 'vehicle sales' capabilities. That is, these wholesalers have accumulated fixed downstream customers over the years and do not need to visit; they rely on phone orders for immediate and accurate delivery (many within 1 hour). In an era of product homogenization, wholesalers' recommendation value is significant, and their importance for product coverage in traditional grocery stores cannot be ignored. Summary: Many say wholesalers are disappearing or have already disappeared; these remarks are very irresponsible. **Networks are layered; existence is reasonable. Some outlets are destined to be wholesalers' customers, determined by industry laws and attributes.** As for what happens in 10 years, there's no need to worry. Manufacturers should focus on current layout and will still benefit.
**Distributors** The layout of distributors is essentially the construction of a secondary market network. It is particularly important for first-tier products in remote or micro terminal customer sales maintenance, as well as for full coverage of second- and third-tier product brands and dealer outlets. It can be operated according to regional actual conditions to achieve market complementarity and ultimately steady sales growth. **The value of distributors includes the following four points:** **1. Distributors have better customer relationships:** Distributors' sales force enables brand dealers to reach more small and medium-sized customers at lower cost. Due to their broad contact, distributors often gain more trust from terminal store owners than brand dealers. **2. Flexible and diverse product sales:** Distributors, through extensive contact with different brands, can efficiently purchase and configure multiple products, meeting all terminal store product needs at once through 'assorted goods' and 'bundled delivery,' improving terminal procurement efficiency. **3. Efficient inventory transfer:** Distributors maintain considerable inventory, reducing storage costs and risks for brand dealers and terminal customers. **4. Improved product delivery efficiency:** With sufficient inventory, distributors can provide first-time delivery in remote townships where dealers cannot respond quickly, along with related transportation services. **What are the key elements for cooperation between manufacturers and distributors?** I think four points must be emphasized:
> **First, legitimacy:** There should be a tripartite standardized agreement among brand, dealer, and distributor, with 'treatment' (like human and material resources) distinct from wholesalers. **Second, territory division:** Distributors have their own service areas, implementing a 'household contract responsibility system' for land. **Third, vehicle requirements:** Distributors must have basic production means, i.e., vehicle configuration requirements. **Fourth, service requirements:** Including but not limited to regular visits, display maintenance, price maintenance, age management, and customer relationship maintenance.
Without these four points, it's 'metaphysical' and won't genuinely help channel competitiveness. Summary: There's a saying that we should compress the channel chain and reduce middlemen's profit margins, making distributors unnecessary and destined to disappear. In fact, early B2b slogans aimed to eliminate dealers, and community group buying slogans aimed to eliminate terminal outlets. Except for the false prosperity during capital burning, it all ended in chaos, ultimately forcing compromise with channel essence and coexistence with channel chain players. **The vastness and complexity of the Chinese market cannot be operated by a single coverage form; it requires multiple forms and roles. The key is to allocate rights, responsibilities, and benefits well, and distributors are no exception!**
**B2b and Community Group Buying** In recent years, I've noticed that instilling internet marketing thinking into traditional industry marketing managers is difficult; they worry more about insurmountable drawbacks. In fact, everything has pros and cons; otherwise, concepts like opportunity cost wouldn't exist. Strategy itself is a choice. Our task is to make choices where 'benefits' far outweigh 'drawbacks.' Often, not choosing stems from 'unfamiliarity' or 'lack of understanding.' Briefly explain **some values of B2b:** **1. Improved efficiency:** B2b significantly enhances transaction efficiency through digital tools and systems. For example, online transactions can occur anytime, anywhere, eliminating time and space constraints. In the transaction chain, B2b achieves order sharing, inventory sharing, and delivery sharing, reducing intermediate links, improving order, inventory, and delivery efficiency, and quickly enhancing outlet coverage efficiency. **2. Optimized distribution system:** B2b platforms integrate and optimize regional dealer systems, reducing channel conflicts and management costs. Platform data feedback can effectively identify dealer business and market performance, helping brands achieve survival of the fittest in the dealer system and improve overall channel quality. **3. Enhanced transparency and data-driven decision-making:** B2b platforms provide detailed data and information, helping brands better understand market demand, sales trends, and inventory status, achieving data transparency and refined management. Through data analysis, brands can monitor terminal coverage scale, single-product distribution quantity, and average transaction value in real time, adjusting market strategies promptly. Briefly explain **some values of community group buying:** **1. Improved supply chain efficiency:** Community group buying reduces intermediate links through centralized procurement and unified delivery, improving supply chain efficiency and reducing logistics costs. Additionally, platforms collect large amounts of user data, including purchase preferences and consumption frequency, providing a basis for precision marketing. **2. Enhanced community stickiness:** Community group buying aggregates orders through social tools like WeChat groups and mini-programs, delivering products directly from suppliers to consumers, greatly shortening the supply chain and meeting modern consumers' demand for immediate consumption. This model relies on familiar networks within communities, has natural social attributes and trust foundations, and can effectively enhance brand loyalty and repurchase rates. So, **what are the drawbacks of B2b and community group buying for traditional business?** **1. Disruption of pricing systems:** Internet platforms often use low prices as a selling point, forcing FMCG companies' price systems in other channels to become chaotic. Traditional circulation channels have a markup rate of 10%-35% from dealers to outlets, while internet platforms have lower channel markups, causing overall market prices to decline and affecting brand sales in other channels. **2. Declining brand competitiveness:** Internet platforms often require large volumes of low-margin products, potentially leading to industry-wide price wars, lowering the industry's average product price, and hindering product price increase cycles. Summary: How should we choose between these pros and cons? My view is: **Deeply consider your needs based on the priorities of development requirements.** For example, if someone has a severe cold and needs a medicine that can cure it quickly but has some kidney side effects, should they take it? Most would choose to take it because the cold needs rapid treatment, and the kidney damage can be repaired later. Similarly, if a company urgently needs effective outlet coverage and precise targeting of consumers, it might consider deep cooperation with community group buying, and address price and brand issues later.
**【New Order · Symbiosis】**
**The 10th China FMCG Innovation Conference**
**Date: March 17-19, 2025**
**Location: Chengdu, China**


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