---
title: "The Unconventional Distributor in the Snack Food Industry: Annual Revenue of 200 Million, Running Stores, Wholesale, and OEM – He Does It All!"
description: "Zhengzhou Xinghua Trading is a comprehensive FMCG company integrating wholesale, snack food chain stores, and OEM (private label). It operates over 200 franchised snack stores, holds more than 200 brand trademarks, covers over 3,000 distribution points in Zhengzhou, and achieves sales exceeding 200 million yuan. Recently, New Distribution interviewed Zheng Guoxing, General Manager of Xinghua Trading, to explore how this multi-faceted operator spanning distributor, retailer, and brand owner has developed, and what lessons his transformation story offers to other distributors. Turning from offense to defense..."
author: "袁来"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2018-05-16"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/the-unconventional-distributor-in-the-snack-food-industry-annual-revenue-2c70bdbc/"
markdown: "https://xinjignxiao.com/en/articles/the-unconventional-distributor-in-the-snack-food-industry-annual-revenue-2c70bdbc.md"
original_source: "https://mp.weixin.qq.com/s/NdEv9mMTteVjgUuLIPn1zg"
translation: "https://xinjignxiao.com/zh/articles/%E4%BC%91%E9%97%B2%E9%A3%9F%E5%93%81%E7%95%8C%E7%9A%84%E5%8F%A6%E7%B1%BB%E7%BB%8F%E9%94%80%E5%95%86-%E5%B9%B4%E5%85%A52%E4%BA%BF-%E5%BC%80%E5%BA%97-%E6%89%B9%E5%8F%91-%E8%B4%B4%E7%89%8C-%E8%BF%99%E4%BA%9B%E4%BB%96%E9%83%BD%E5%81%9A-2c70bdbc.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/the-unconventional-distributor-in-the-snack-food-industry-annual-revenue-2c70bdbc/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# The Unconventional Distributor in the Snack Food Industry: Annual Revenue of 200 Million, Running Stores, Wholesale, and OEM – He Does It All!

> Zhengzhou Xinghua Trading is a comprehensive FMCG company integrating wholesale, snack food chain stores, and OEM (private label). It operates over 200 franchised snack stores, holds more than 200 brand trademarks, covers over 3,000 distribution points in Zhengzhou, and achieves sales exceeding 200 million yuan. Recently, New Distribution interviewed Zheng Guoxing, General Manager of Xinghua Trading, to explore how this multi-faceted operator spanning distributor, retailer, and brand owner has developed, and what lessons his transformation story offers to other distributors. Turning from offense to defense...

Zhengzhou Xinghua Trading is a comprehensive FMCG company integrating wholesale, snack food chain stores, and OEM (commonly known as private label). It operates over 200 franchised snack stores, holds more than 200 brand trademarks, covers over 3,000 distribution points in Zhengzhou, and achieves sales exceeding 200 million yuan. Recently, New Distribution interviewed Zheng Guoxing, General Manager of Xinghua Trading, to see how this multi-faceted operator spanning distributor, retailer, and brand owner has developed, and what insights his transformation story can offer to other distributors.

**From Offense to Defense, Then Back to Offense: A Rocky Road**
In 1997, Zheng Guoxing entered the FMCG field, working for Want Want and Nongfu Spring. In 2000, he started his own business, founding Xinghua Trading, focusing on agency and distribution of snack foods. Zheng Guoxing knew that first-tier brands offered limited profit margins for a startup trading company, so Xinghua began by entering through lesser-known brands, visiting stores door-to-door in a street-sweeping manner.

Zheng Guoxing recalled that although business was going well at the time, the product range was single, personnel costs were high, and it was not enough to sustain long-term development. Moreover, in the market environment around 2000, many small stores preferred to make one-stop purchases at food wholesale markets. Under cost pressure and business conditions, Zheng Guoxing had to shift from offense to defense, fighting a positional war, and during this defensive phase, he expanded his product categories.

By 2008, after eight years of positional warfare, Xinghua Trading gradually became stronger, with resources, capital, and products. It transformed again, taking the initiative to expand distribution points.

However, the environment had changed again by then.

Although the company was growing, external demands on distributors were becoming increasingly stringent. Zheng Guoxing said, "During the process of developing distribution points, we were very passive. Stores compared prices, and there were fees for barcodes, displays, and entry fees. We felt we could never satisfy the supermarkets' appetite. If we continued like this, we had no way out; we would just be accompanying them, playing their game." Eventually, in 2011, Xinghua Trading started its own snack store chain, "Love Snack House" (爱上零食屋).

Zheng Guoxing told New Distribution that he initially thought opening physical stores would be easier, but in reality, this cross-industry transformation was very painful. However, since the stores were already open, there was no choice but to learn from others on how to run store businesses successfully.

Over the years, Zheng Guoxing has traveled to various countries, studying renowned international chains like Japan's 7-Eleven, Germany's Aldi, and America's Costco, observing how they grew and developed. Through this process, he found his own business model and defined Xinghua's goals.

**200 Owned Trademarks, OEM Branding**
Currently, Xinghua has 200 self-operated and franchised chain stores. The products in these stores include both private label and corporate brand items. Zheng Guoxing told New Distribution that snack chain stores typically have two types of product brands: one is fully private label, like Lai Yifen; the other is OEM brands, which are different from the store name but still belong to the company. The second type is more flexible than the first because, in addition to being sold in its own chain stores, it can also be distributed through other channels and wholesale, avoiding channel conflicts.

After repeated discussions and deliberation, Zheng Guoxing ultimately chose the second approach. Currently, Xinghua Trading holds 200 trademarks, with 15 in active use. Xinghua designs its own trademarks, develops its own products, and then outsources production to selected factories across the country. Zheng Guoxing said, "Currently, domestic factories are not specialized; they are all 'part-time' factories, combining sales, production, and R&D – a 'jack-of-all-trades' factory. They have everything, small but complete, but costs remain high. For example, a factory with annual revenue of 20-30 million might hire a sales director with an annual salary of several hundred thousand, set up a laboratory, and maintain a sales team. Personnel wages and travel expenses add up to over ten percentage points."

Zheng Guoxing told New Distribution that in the future, Xinghua will cooperate with these factories, giving them an 8% gross margin, with zero marketing and travel costs. As long as they provide high-quality products and stable supply, selling 10 million yuan would earn the factory 800,000 yuan. In fact, even factories with sales teams are willing to cooperate with Xinghua because most factories cannot achieve 100% capacity utilization. Additionally, on the retail side, since we work directly with factories, our stores can obtain products at the same purchase price as other distributors, highlighting our price advantage.

Zheng Guoxing said, "Through this OEM approach, even if we don't have that many stores, we can achieve large sales volumes. For example, Lai Yifen might sell 1 million in dried fruit category, but because we can sell through all channels, we can reach 5 million. If we fully develop it, we can do even more."

**Beyond Opening Stores: Leveraging Grassroots Strength**
With cost-effective products, Xinghua needs more stores. Relying solely on self-operated stores is insufficient; it must also leverage grassroots strength. Xinghua's future growth lies in extensive distribution networks, increasing coverage, building relationships with mom-and-pop stores, and refining products. Xinghua aims to operate as a distributor with a retail mindset.

Zheng Guoxing told New Distribution, "In fact, we never abandoned our product distribution business; we just didn't focus on it before. Starting in 2018, we increased personnel investment. Initially, we used three core hit products, high-quality items tested in our own stores, to open the doors of distribution points."

Currently, Xinghua Trading has 20 sales staff focused on distribution points in the Zhengzhou market, handling relationship building, displays, and order taking. Xinghua's goal is to reach 10,000 distribution points, and it has already achieved over 3,000. Zheng Guoxing admitted that warehousing and distribution still have shortcomings; they cannot yet achieve daily delivery, only twice a week. To prepare for efficient delivery to 10,000 points in the future, Xinghua has introduced the Maideline (麦得邻) warehousing and distribution system, fully preparing for bus-style delivery of orders.

It is noteworthy that Xinghua's transformation from retailer to distributor is not just for product price differences or reaping the rewards of self-developed products, but also to build a supply chain platform for the snack food category. Through three cost-effective, high-quality products, Xinghua establishes relationships with terminal outlets, making them aware of Xinghua, recognizing Xinghua, and ultimately trusting Xinghua's professionalism in the snack food field, meeting their one-stop food ordering needs.

Zheng Guoxing told New Distribution that in the future, as stores trust us more, we will consider further integration, similar to franchising. Once the store brand is established, we will sell many private label products. Consumers may not have heard of these product brands, but based on their trust in the store brand, they will trust the quality of the products.

**How Should a Snack Distributor with Annual Sales of 20 Million Transform?**
On the topic of distributor transformation, Zheng Guoxing told New Distribution, "I don't agree with complete transformation. If a distributor knows nothing before transforming and hasn't made any preparations, it's better not to transform. Distributors must find what suits them. Blindly pursuing transformation is like putting a Mercedes engine on a Mobike – it definitely won't run. Don't transform just because you see others doing it. Other distributors may have thought about it 10 years ago, planned 5 years ago, failed 3 years ago, and now succeed after crawling out of pits. If you jump in, you might only die."

Using the example of a snack distributor with annual sales of 20 million, Zheng Guoxing advised, "Before implementing transformation, first think about where those 20 million in sales come from. For instance, if you cover 1,000 outlets, but they are evenly distributed, each point only buys 100, then you need to consider whether there is room for growth, from 100 to 200, or even 500. If you only have 500 outlets, it means individual outlets are okay, but coverage is insufficient, so you need to increase the number of outlets."

In Zheng Guoxing's view, before transforming, distributors should first analyze what they lack, fill the gaps, and then think about upgrading. If distributors don't know what to improve, transformation will be blind and unlikely to succeed. Zheng Guoxing continued, "In the past, Xinghua tried many areas and finally slowly found its own path, focusing on its strengths. This process was very painful, and only we know the taste. But without these processes and attempts, it remains just ideas and concepts; you never know if it's right or wrong."

**Final Thoughts**
The above is the transformation exploration path of Zhengzhou Xinghua Trading. In the view of New Distribution, Xinghua's distribution transformation differs from other distributors. Most distributors start as sedentary merchants, then become itinerant merchants, but Xinghua was itinerant first, then sedentary, then itinerant again. Facts prove that there is no standard path for transformation for each distributor. Each distributor's genes, resources, and location are different. Others' transformation paths can inspire you, but cannot be imitated; complete imitation is bound to fail. Distributors should learn from others' strengths, get inspired, and then study their own strengths.

Currently, many distributors only look at trends, not advantages. New Distribution suggests that distributors considering transformation should first look at advantages, then trends. Trends are generally similar, but how to combine them with your own advantages is the key.

Unlike the mainstream transformation to unified warehousing and distribution, Xinghua's transformation focuses on category specialization, using snack foods as the entry point, extending upstream and downstream to build a precise supply chain for a niche category. Strictly speaking, Xinghua is not a pure distributor, brand owner, or retailer, but a resource integration platform for snack foods, understanding the needs of every link in the snack food supply chain, and then specializing, refining, and penetrating deeply.

Compared to other FMCG products, the product and consumption characteristics of snack foods determine that Xinghua can extend and connect the upstream and downstream supply chain and succeed. First, from a category extension perspective, there is significant room for product innovation, such as pastries, dried fruits, meat products, etc., with further extension possibilities. Second, compared to beverages and daily chemicals, snack foods are non-essential categories with shorter product life cycles and lower brand concentration, providing fertile ground for OEM products.

In the view of New Distribution, no matter what direction distributors take in transformation, they must consider their own operating categories. Summarizing recent transformation cases contacted by New Distribution, distributors in snack foods, general merchandise, fresh produce, etc., whether strengthening their own categories or grafting unified warehousing and distribution onto existing businesses, are more likely to succeed than distributors in other categories. (If you are interested in the above cases, feel free to add the author's WeChat for exchange: yuandejian2607)


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671