---
title: "The Truth Behind Why New Consumption Cannot Nurture Great Brands"
description: "On December 3, Xiaoxi sparked a discussion on social media: why can't new consumption create great brands? This led to an offline salon on December 4, where over ten friends gathered to exchange ideas. The article, shared by Huang Xiaojun, explores the reasons, including capital cooling, traffic-centric thinking, internal brand-building deficiencies, and the lack of time for brand-consumer relationships to mature."
author: "洪志西"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-01-27"
language: "en"
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markdown: "https://xinjignxiao.com/en/articles/the-truth-behind-why-new-consumption-cannot-nurture-great-brands-cf9247aa.md"
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---

# The Truth Behind Why New Consumption Cannot Nurture Great Brands

> On December 3, Xiaoxi sparked a discussion on social media: why can't new consumption create great brands? This led to an offline salon on December 4, where over ten friends gathered to exchange ideas. The article, shared by Huang Xiaojun, explores the reasons, including capital cooling, traffic-centric thinking, internal brand-building deficiencies, and the lack of time for brand-consumer relationships to mature.

Source: Jingyan New Consumption (ID: JingyanLab)

On December 3, Xiaoxi sparked a discussion on social media: **Why can't new consumption create great brands?** Unexpectedly, this triggered discussions among many friends, and even led to an offline exchange meeting on December 4.

This was the first offline salon activity since Xiaoxi started "Jingyan New Consumption," with over ten friends attending. Among them were reader fans, local small business entrepreneurs, and a few new media practitioners.

We chatted casually in a café, without the formality of an event, more like a Douban city reading club from our university days.

Of course, the afternoon exchange was fruitful, and I specially recorded and organized some speeches to share with everyone. The following content comes from my friend Mr. Huang Xiaojun, who currently works at the new media agency Shenke New Consumption.

**New Consumption Under Fire**

**First**, capital has cooled. Since July and August, capital institutions' attention to the new consumption sector has declined. This is interpreted as the fading of the new consumption concept, with capital institutions returning to rationality after a heated rush to invest.

But in reality, it's more that leading institutions, from 2020 to the first half of 2021, invested over 170 billion yuan in new consumption brands. They have already selected nearly 900 brands and plan to continue nurturing future unicorns among them.

For the entire new consumption market, this is sufficient. Capital injection has basically determined the majority of leading brands, and the landscape is taking shape, so institutions no longer have the need or desire to seek new projects.

**Second**, the traffic-centric thinking of new consumption: the money earned by oneself plus capital investment has basically gone to Xiaohongshu KOLs, Douyin bloggers, and Bilibili Up主s.

This leads to a problem: "the carnival of explosive products, not the victory of brands." The entire new consumption field is operating on the logic of product sales. While this can support a sales scale of 1 billion or 2 billion yuan, it still falls far short of brands like Coca-Cola and Starbucks.

As a result, from the very beginning, some have said that China's new consumption is creating factory brands, not brands.

Some bosses are speechless: even if I'm making a factory brand, I can earn 1 billion a year. What qualifications does a small reporter with a monthly salary of 3,000 yuan have to criticize?

This is the most realistic response. The development of the new media industry has made too many reporters and editors, who eat instant noodles, overly concerned about other people's billion-dollar businesses.

Of course, there are also many bosses with ideals who want to become China's Coca-Cola, China's Disney, China's Starbucks, China's Suntory...

How are they doing? In my years in the industry, I've basically only seen slogans, but no brand has been able to stand tall and say, "I am China's Coca-Cola."

Anyone who can say this will have comments below like "You're shameless."

Achieving a great brand is truly difficult.

**Why are most new consumption brands called factory brands?**

The most critical reason is that these brands' operational rhythm is too focused on sales data.

Create a high-cost-performance product with low price multiplier, find a few Xiaohongshu KOLs to show off their long legs in beauty photos, and then have Li Jiaqi shout "OMG" hoarsely in the live stream, and sales are made.

This is the three-board axe of new consumption volume. A completely new brand can become the category leader by playing this way.

Then, the brand department takes this "category leader" data to advertise. On elevator ads contracted by Xinchao Media and Focus Media, strings of data have asterisk marks. Following the guide to read the explanation, the so-called category leader is only the category leader on a single platform like Tmall, for a specific period like July-August, and under other specific conditions.

But in that case, my newly opened public account should be the number one public account in terms of reading volume under the big locust tree at the west entrance of our village.

Ads with more asterisks show more lack of confidence.

But there's no choice; seizing the category leader position has become the threshold for new consumption. If you don't do this, capital won't agree. They are the ones who actually gave you money. Obey, and maybe the next round will give more.

Obeying doesn't just mean following capital's ideas; it also requires actual data.

I know a small food brand. A few people's small company can ship over 100 million yuan through offline channels, which is a decent business. But they spend money on live streaming and hire external teams to help with e-commerce, even though the ROI is pitifully poor.

Why? Because they want to grow bigger. To grow bigger, they need capital to enter. Capital looks at data, and rough offline shipping data is basically unqualified. What they like is GMV, repurchase rate, and category leader.

There's no choice. The three-board axe of cost-performance products + Xiaohongshu + live streaming still has to be wielded. If you want to go further, you have to cut yourself a few more times. Even if, like some cosmetics brands, 70% of the money from selling goods goes to KOLs, if you can cut to an IPO, it's all beautiful.

Brand? Take it slow.

On the other hand, the internal personnel responsible for brand content are not up to par.

I don't quite understand. Many companies have a brand department that manages the operations of various sub-brands, and also set up a unified PR department to manage corporate public relations.

The brand department might do something for its brand, and the PR department might not even know. What problems does this cause? If it performs well, the brand department gets the bonus; if it performs poorly, the PR department takes the blame.

This is like the sales department and the brand department. The brand pricing is done well, but sales, under pressure at the front line, do some promotions... speechless.

The contradictions in the system are contradictions of interests, and in brand communication, interests are amplified.

First, from the current media environment, brand communication within a company has an **impossible triangle**. The three vertices are effect conversion, value communication, and the boss seeing it.

Many PR friends tell me that what makes them happiest among these three is when a certain article is seen by the boss, or even forwarded by him to his Moments.

As a result, many times they spend money to have KOLs forward it in their Moments, increasing the chance the boss sees it.

From the impossible triangle, the intersection of boss seeing and effect conversion is live streaming sales, a short, fast, and brutal data point that can truly provide a quantitative report.

The intersection of boss seeing and value communication is basically investing in top media and industry vertical media. One problem here is that such communication is mostly self-congratulatory within a small circle and hard to break out—after all, the boss is also a person, trapped in an information cocoon by the internet.

The intersection of value communication and effect conversion is actually the most perfect. But generally, such an intersection cannot obtain feasibility data before investment, and the PR person in charge takes a big risk.

PR heads are already middle or senior management. Most people in this position basically hope to use the budget without making mistakes. Compared to taking risks to do something creative, they prefer to customize soft articles and not make mistakes.

So some have said before, **in many domestic companies, the boss is the real PR leader.**

Because when facing PR incidents, the person in charge doesn't dare to make decisions; the boss directly chairs the meeting. For daily communication, the person in charge doesn't dare to easily optimize brand communication language; many are first spoken by the boss.

PR often learns from the boss's public speeches on the way home from work, because they need to extract keywords from these speeches to amplify communication. It's not that PR writes speeches for the boss to propose new keywords for the boss to spread.

So, don't say PR is always wiping the boss's bottom; it's the boss feeding PR milk.

Internal incompetence plus external capital's value orientation means that new consumption brands that rise in a short time are bound to develop into factory brands. They practice trafficism, selling goods without building brands, eager to quickly form scale, using scale to make consumers realize they are a brand.

This is possible. When a place is suddenly full of a brand's products overnight, the sense of scale it presents can, to some extent, gain consumer trust and make them pay.

**But scale has never been a barrier in consumer goods and retail; brand is.**

A product without brand sense, if labeled by Coca-Cola, loses its competitiveness. Ironically, Coca-Cola might sell the same quality product at a higher price and sell better. Brand is the lifeline.

But does China truly have great brands now? Almost none.

The only one might be Huawei. Through some international events, this brand stirred a wave of supporting domestic products, ultimately forming a great brand.

But this cannot be placed under a market economy, so it cannot be replicated.

What about overseas brands called great? There aren't many either. Coca-Cola, Suntory, Starbucks—they all rely on seniority. If you can survive that long and reach that scale, you can basically become a similar brand.

What new consumption lacks is simply not being old enough.

There's no way. No matter how efficient new consumption brands are, they cannot fight against time. This is like dating; building a relationship between brand and consumer takes time.

**Not being able to kill time is the truth behind why new consumption hasn't nurtured great brands!**

We need to pay attention to why consumer brands of the same age haven't achieved the same brand status. Starbucks was founded in 1971. Bosideng was founded in 1976, Yunnan Baiyao Factory was established in 1971, Midea was founded in 1968...

1. The development of China's market economy lags behind the market Starbucks was in. In the 1970s, our parents were still worrying about getting two jin of pork; how could they have brand awareness?

2. The development of Chinese enterprises over the past three to four decades is more a product of rapid growth in the Chinese market. Undeniably, Chinese enterprises have sustained high growth. But where does this high growth come from?

Take the home appliance industry: Haier, Midea, and Gree have achieved rapid growth. But comparing the growth in market demand capacity for home appliances, and the output and sales of multinational companies like LG and Samsung in China, you'll find that descriptions like "China's largest" or "fastest growing" may be illusions.

As Professor Chen Chunhua said, **the growth of Chinese enterprises in recent years stems more from market scarcity than from capability.**

Professor Chen Chunhua once mentioned this phenomenon in a speech, and I'll paraphrase:

Over 30 years, Chinese enterprises have gone from zero to the global market, creating development models suitable for themselves in practice, but there is still a sense of unease. Chinese enterprises do not have sufficient capability to seize the opportunities brought by natural market growth; they have only gained a development space in the growth of this factor.

**In other words, the market creates enterprises, not enterprises creating the market.** The real bubble may stem from the excitement and satisfaction brought by good performance, making enterprises unaware of the crisis.

The ensuing question is: can such high growth remain stable and sustainable?

The current answer is not optimistic.

**First, there is a large amount of homogeneous competition among enterprises.**

Leading enterprises that can respond to changes have unique strategic logic and can reflect it in their products. Few Chinese enterprises can be as unique as excellent multinational companies; they are similar in product R&D technology, manufacturing processes, raw material markets, and services.

**Second, external factors such as technology, globalization, and government policies remain key issues troubling enterprises.**

There are many factors affecting stable and sustained growth. What needs special identification is: do the enterprise's own capabilities play a leading role, or do external factors?

Studying long-lived companies reveals they have different characteristics, but share three commonalities: products that meet customer expectations, steadily growing employees, and conservative finance. They are not affected by the external environment; these are elements of market dominance accumulated through the enterprise's own capabilities.

**Finally, Chinese enterprises do not yet possess true operational capability.** Over these 30 years, they have gained the ability to expand scale, control costs, and sell, but these are only survival capabilities.

Enterprise operational capability refers to the ability to lead the supply chain system and the value chain formed by investment and technology, with the enterprise determining the direction and flow of capital and technology.

When an enterprise has a certain level of scale, cost, and sales, it can survive in the market, but this does not mean it can sustain growth. Only with higher operational capability can an enterprise grow steadily and sustainably.

Chinese brands of the same generation as Starbucks have developed to this day more through inertial growth. They have not truly done their homework from a brand perspective, nor have they gained corresponding empowerment.

Pull back 30 years, then push forward 30 years. Today's new consumption brands may be more like the market environment Starbucks faced then, so the call for brand building is louder.

This is a bit exaggerated; it's an analogy, otherwise I can't continue.

In 30 years, let's see: will Perfect Diary become a great brand? Will Jiangxiaobai still exist? Will Luckin have replaced Starbucks?

Everything is still unknown.

As for what everyone should do in these 30 years to build a brand? This question is a bit difficult. I think it's more about the accumulation of brand content—in finance, entertainment, politics, and consumer social aspects—should be accumulated early.

These accumulations may be creative content, scenes, emotional expressions, social welfare...

Accumulate early, and you have a first-mover advantage. And when "**every brand needs time to build a relationship with consumers**" has become an axiom of brand building, first-mover advantage is an absolute barrier.

**The greatest content accumulation is the foundation that supports your brand's continued existence—products and services.** Forget growth; just surviving for decades is already difficult.

How to accumulate this? If you sell wine, make good wine; if you sell clothes, make good clothes. This is actually a narrow-minded way of thinking. Did Huiyuan Juice go bankrupt because its juice wasn't good? Did Nokia abandon its mobile phone business because its phones weren't good enough?

Products themselves don't distinguish between growth and decline; product thinking does. You need to build system capability, which may be reflected in middle-platform construction. It reasonably allocates resources across supply chain, brand, and even R&D, ultimately giving you a solution.

This solution cannot be seen as a product, but as a set of solutions that can provide solutions to users.

The survival of an enterprise lies in attracting a certain number of users who are willing to pay. Users always have many choices to solve their problems. What they buy is not the product, but the solution to the problem.

In this way, you'll find that people buying trendy clothes are not buying clothes but trendiness. Your solution is how to make clothes trendy, not making a piece of clothing as warm as 30 years ago.

Drinking is the same. Young people drink for relaxation and pleasure, so you need to create a copywriting bottle or other scene construction. If they want to get drunk, they can go to the street and buy bulk liquor from a white plastic bucket.

Cosmetics? A 60-yuan lipstick and a 300-yuan lipstick are basically the same, but why do people buy the 300-yuan big-name lipstick?

What they need may not just be lipstick, but whether they are in the same circle when chatting about lipstick with sisters; whether they worry about allergies when applying red stuff to their lips; or even whether their idol endorses this lipstick... These issues can only be given the best solution under real-time feedback from the middle platform.

Only by unremitting efforts to help users better solve problems—that is, providing them with better functions, higher value, and more convenient services—can an enterprise survive and even grow.

Try it first, try it for 30 years, and then we'll look back. Just like if you ask Starbucks how they did it, they look back at those 30-40 years and may have nothing to say.

**What is finally said, or summarized by others, is basically literary work.** That is something derived from reality but higher than reality, which you and I can never achieve.

_-END-_


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