**-01- **Ice and Fire: Two Extremes First, a set of data: During the 7-day Spring Festival holiday in 2019, the total retail sales of national retail and catering was approximately 1005 billion yuan. Even if the entire catering retail does not grow in 2020, the loss in 7 days of catering retail would be at least half, 500 billion yuan. All industries can be said to have suffered heavy losses. The day before yesterday, Jia Guolong, the boss of Xibei, said that their more than 400 stores were closed, with losses of 7-8 billion yuan during the Spring Festival, and more than 20,000 employees were idle but wages still had to be paid. If the epidemic continued, they could only sustain for at most three months. In fact, it's not just catering; hotels, tourism, transportation, retail, and other industries are all affected to varying degrees. Many of our brand owners and distributor friends originally planned to earn more during the Spring Festival, but this year's situation caught many distributors off guard. Some businesses are bad, but some are good, like ice and fire: e-commerce, short videos, mobile games, online education, and knowledge payment are booming. **This Spring Festival, "Honor of Kings" earned 2 billion yuan on New Year's Eve. Online grocery Dingdong Maicai saw online orders increase by more than 300% compared to the same period last month on New Year's Eve, with average order value doubling. During the Spring Festival, expected orders reached 4 million, with daily average exceeding 570,000. **-02-**Question: Will the holiday extension continue? From two perspectives: first, assess whether the epidemic will continue to worsen; second, consider the national economy's resilience to the epidemic. Currently, the epidemic in various provinces and cities has basically been controlled. Further extension would certainly be beneficial for diagnosis and treatment, but the test on the economy is too great. Regardless of when the extension ends, here are some points to consider:

  1. Areas with relatively severe epidemics, such as Wuhan and Huanggang, may extend appropriately;

  2. Enterprises can extend according to their actual situation, with online work recommended in principle;

  3. Employees in epidemic areas can extend their leave or work from home;

  4. Holidays should be released gradually by region and industry, such as schools and state-owned units with high population density, and large gatherings should be appropriately postponed; According to current policy notices, most provinces and cities have extended the return-to-work date to the 16th day of the first lunar month, and Wuhan also notified on the day before yesterday to resume work on February 14. **-03-**Impact on Macro and Micro Economy: Famous economist Xu Xiaonian believes that this epidemic will impact some industries in the short term, but based on the impact of SARS, it will affect at most one or two quarters and will not affect the long-term trend. China's economic resilience is very strong. An epidemic can only slow it down, but the impact on China's economy at the macro level is not too significant. The fundamentals are undoubtedly not greatly affected. However, at the micro level, involving our individual industrial and commercial owners, frankly speaking, especially our distributors, will be greatly affected. Consumption is blocked, catering and retail have large inventory backlogs, and some small and micro enterprises with tight cash flow should be affected to some extent. **-04-**Impact on the FMCG Industry at the Macro Level: The fundamentals of market supply and demand have not changed. Neither production nor demand has disappeared on a large scale. FMCG products are typically characterized by rigid demand and high frequency. People will not stop eating ham and instant noodles because of the epidemic. So, as always, as long as the fundamentals remain unchanged, the impact of the epidemic on the industry is only temporary. As long as this cycle is not very long, I believe it will not have a significant impact on the FMCG industry. Moreover, the retail industry has not seen large-scale closures, and with a small peak of stockpiling before the Spring Festival, the post-Spring Festival period is naturally a slow season for FMCG. As long as after the 15th day of the first lunar month, when work resumes, all industries will quickly return to normal, and the suppressed consumption during the Spring Festival will also promote consumption. **-05-**Impact on the FMCG Industry at the Micro Level: 1. Category Impact: Some categories may be affected, such as walnut milk, milk, and other products greatly influenced by festivals; some industries will benefit, such as household cleaning, with 84 disinfectant being the most typical. But the vast majority of categories, such as beverages, instant noodles, ham sausages, grain and oil, and seasonings, are currently not significantly affected. 2. Gift Market: Large-packaged goods and gift box products will be greatly affected, with large-scale unsold inventory. According to feedback from a distributor in Shandong, the goods stocked before the Spring Festival have basically not moved. Of course, the sluggish sales of Spring Festival gifts are not entirely due to the epidemic. First, the development of e-commerce has led young people to gradually order gifts online, buying more affordable and higher-quality fresh products, alcohol, and other gifts; Second, the hollowing out of townships. With a large number of young people migrating, people no longer gather in clan units, and interpersonal visits have gradually decreased. Therefore, in recent years, the volume of Spring Festival gifts has been declining. New Distribution observes that over the years, the average order value for gift sales has been increasing, such as single purchases generally between 100-200 yuan, but the quantity and frequency of purchases are indeed decreasing. 3. Geographic Impact: Areas severely affected by the epidemic, such as Central China, will be greatly impacted. Areas not particularly severely affected, such as Northeast and Northwest, will be relatively less affected. In addition, some villages and towns have blocked roads, and many villages and towns do not allow entry, which indeed exacerbates restocking difficulties. **-06-**Twelve Focused Questions:

  1. Gift boxes are unsold, inventory is stagnant, what to do? 2. Cash flow shortage, difficulty in paying wages, what to do? 3. Q1 tasks cannot be completed, quarterly rewards, year-end rebates affected, what to do? 4. How to avoid staff turnover and get employees into work state quickly? 5. Villages are sealed, channels cannot restock, leading to market shortages, what to do? 6. Terminal unsold goods will see large-scale returns after the holiday, indigestion, what to do? 7. Manufacturers force completion of Q1 tasks, saying if February tasks are not completed, they will change distributors, what to do? 8. Salesmen don't come to work after the New Year, what to do? 9. Funds are tied up in channels, cannot collect money, what to do? 10. How to find special channels to quickly digest inventory? 11. How to communicate with manufacturers to get significant support? 12. How to use the internet to achieve online distribution? We have summarized these issues:

. Warehouse and channel inventory issues; 2. Handling of near-expiry product returns and exchanges; 3. Capital issues, accounts receivable issues; 4. Personnel assessment and incentive issues; 5. Sales target achievement issues; 6. Poor communication between manufacturers and distributors; 7. New channels, new business opportunities; 8. Business mindset issues. **-07-**Solutions 1. Safety Issues: During the epidemic, whether it's yourself, family, employees, or customers, personal protection is the first core issue. Other issues can be set aside. Emphasize to those around you to avoid going out, wear masks, and avoid gatherings. 2. Business Mindset: What has happened has happened, and mindset is important. Since you are in this business, you must be prepared to make or lose money. Besides, losses are temporary. As long as people are here and the business is still there, it's not easy to collapse. Stay calm and analyze the situation carefully. 3. Inventory Check: A very important thing at this stage is to take stock. Currently, major brand owners should have issued notices requiring distributors to check inventory, even requiring checks on downstream channel inventory. Check as soon as possible, not only inventory and terminal channel inventory, but also your accounts receivable. How much is there, how much cash is in the account, which stores have large inventory, which stores have relatively good sell-through. At least you need to have a clear picture. 4. Summarize: After the inventory check, summarize the data and the things to do. Which things are important, which are urgent, which stores may close after the holiday, which accounts receivable are risky and need focus, and which urgent matters need attention. For example, restocking after the holiday, categorizing terminal near-expiry products, and urgent handling, especially short-shelf-life products like ham sausages, need special attention. Calculate how long the cash flow can support, how much of the channel accounts receivable will come back after the holiday, how much of the existing inventory can be digested, and how much of the March tasks can be completed. 5. Strategy Planning: For current problems, such as near-expiry products, how to solve them: find new channels, bundle existing products, open boxes, discount, promote, or buy-one-get-one. For personnel, not only upstream manufacturers' tasks, but also salesmen's tasks may not be completed. To maintain employee motivation, how to adjust assessment measures, appropriately increase base salary, increase sales commissions, or other assessment methods, need clear response strategies. If cash flow is insufficient, what to do, who to turn to: manufacturers, banks, or others, all need to think of solutions. Which unnecessary expenses can be reduced or directly stopped? Don't hesitate at this time; stop them directly. 6. Mobilization and Scheduling: Once you have thought it through, mobilize everyone to respond actively, ensure staff are in place and morale is stable, and based on the previous inventory check, summary, calculation, and response strategies, handle various businesses by personnel, stage, and priority. At this time, a very important point is that in extraordinary times, you must clearly explain to subordinates what needs to be done, the goals, and the corresponding reward and punishment rules, and then let employees do it. 7. Customer Relationship Maintenance: Not only distributors are not making money, but retailers are also not making money. Since both are not making money, customer relationship communication becomes very important. Tell employees that even if they don't sell goods, they should actively maintain regular and timely visits, communicate with store owners about their business during the epidemic, and actively help store owners brainstorm solutions. 8. Sales Opportunities: Appropriately expand some channels with relatively good sales, such as Dingdong Maicai in Jiangsu, Zhejiang, and Shanghai, which is doing well; online, community group buying, B2B channels, and even rural markets, unit canteens, and other channels usually not valued, are all worth focusing on. They are good channels for handling large-date products and increasing sales. If you usually don't have time to learn, use mini-programs, WeChat Moments, WeChat groups, Enterprise WeChat, live streaming, and other new tools to actively expand online communication channels. For example, try a post-holiday Kuaishou or WeChat live-streaming ordering meeting, with direct online ordering, saving costs and seizing the opportunity. 9. Active Communication: Undoubtedly, the vast majority of brand owners cannot ignore distributors. But the market is so big, and even the landlord has no surplus grain, so there won't be much money to help distributors digest inventory. At this time, whoever actively communicates with headquarters about inventory digestion plans and sales target reduction plans first is likely to get exclusive funding. The crying child gets the milk. Whoever cries first and cries well shows their level at this time. Not only manufacturers, but also landlords for rent and bank loans are all objects of communication. 10. Pay Attention to Information: At this time, it's not just your own business. Pay timely attention to epidemic information, epidemic trends, market changes, policy changes, peers' practices, and competitors' actions. As always, distributors must not sit, wait, or rely. Sitting won't bring business, waiting won't bring performance, and relying won't bring market. Distributors still need to consider self-rescue and actively find ways to handle these inventories. The epidemic is fair to every distributor, and it is also a mirror. Usually, who operates well or poorly is not particularly important, but once an emergency occurs, who has high operational capability and who has good operating conditions immediately reveals their true nature. In my view, this epidemic is both a bad thing and a good thing. The bad thing is that it is a huge test for every boss; the good thing is that it improves our operational capability and awareness of risk prevention. In the future, the trend of online-offline integrated operation is unchanged. So this is just the beginning. Future operations will only become more professional and complex. Distributors who cannot adapt will definitely be eliminated!