---
title: "This 10,000-Word Article Hides China's Biggest Business Opportunities!"
description: "Based on a keynote speech by Shen Shuaibo at the 2019 New Opportunities, New Wealth conference, this article challenges common assumptions about the Chinese market with nine counterintuitive data points, explores China's four major advantages, and offers insights on consumption trends, the real economy, and emerging opportunities in lower-tier cities and overseas markets."
author: "沈帅波"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2019-05-03"
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# This 10,000-Word Article Hides China's Biggest Business Opportunities!

> Based on a keynote speech by Shen Shuaibo at the 2019 New Opportunities, New Wealth conference, this article challenges common assumptions about the Chinese market with nine counterintuitive data points, explores China's four major advantages, and offers insights on consumption trends, the real economy, and emerging opportunities in lower-tier cities and overseas markets.

Source: Notesman (ID: Notesman)
Content source: On April 19, 2019, "2019 New Opportunities, New Wealth" was held in Beijing. This article is a keynote speech by Shen Shuaibo, chief editor of Jinjibo Finance and CEO of Paidong Media. Notesman has reviewed and authorized its release.
**Before reading, think about:**
Do you really understand China?
What entrepreneurial opportunities do you value most?
**Looking at Consumption from a Different Angle**
**1. Nine Counterintuitive Data Points**
1. Over 90% of people nationwide have never drunk Starbucks.
This is my logical deduction.
Last year, Starbucks announced that it would connect 7 million Starbucks members to Alipay. Based on this data, I made a series of inferences.
If we calculate that one in seven customers has opened a membership, that's 49 million; if one in ten, that's 70 million.
Starbucks has the most stores in Shanghai, over 500. The city has a population of 25-30 million (including floating population). If 30% have drunk it, that's 9 million.
China currently has 3,400 Starbucks stores, mostly covering first- and second-tier cities. The total population of first-tier, new first-tier, and second-tier (including broad second-tier) cities does not exceed 360 million. 30% of that is 108 million, 20% is 72 million (further down, stores are few and penetration is low; overall it does not exceed 15%. The above conversion only provides an idea, not actual data.)
Since I don't have accurate data, I can only deduce backwards. No matter how you calculate, 90% of people have never drunk Starbucks.
Therefore, knowing does not equal having drunk, and there must be a huge number of people who don't know Starbucks. The above data is still a conservative estimate.
2. Over 50% of Chinese people have never drunk Nongfu Spring.
In 2016, Nongfu Spring's annual sales reached 10.911 billion yuan, including new and high-end products, barreled water, conference hotel water supply, etc. I might spend over 2,400 yuan a year on Nongfu Spring.
Based on this sales figure, assuming an average transaction of 20 yuan, only over 500 million people have drunk Nongfu Spring.
The "2018 Global Brand Footprint Report" shows that Nongfu Spring's consumer reach is 335 million. Although Nongfu Spring's average transaction is not high, its audience is relatively concentrated.
Therefore, even if this brand is as mass-market as possible, it still cannot be drunk by everyone.
3. About 10 million people in China are engaged in foot therapy.
In Beijing alone, 200,000 people work in foot therapy. By extrapolation, with 661 cities in China, the figure of 10 million is still a conservative estimate.
4. 1.3 billion people have never been abroad.
According to the National Immigration Administration, the number of valid ordinary passports for private use nationwide was 130 million in 2018. That means at least 90% of Chinese people have never been abroad.
5. 1 billion people have never flown.
Why do flight attendants demonstrate safety procedures every time you fly? Because at least half of the people flying with you are first-time flyers.
China has no more than 6 million first-class passengers, and no more than 15 million frequent flyers (those flying more than 6 times a year).
From this, we can see: advertising in airline magazines is only seen by those 15 million frequent flyers. So, it's not feasible for airline advertisers to do cheap products; only products and services targeting those 15 million can achieve effective results.
Air China's Platinum Card users do not exceed 50,000, and I heard that China Eastern's does not exceed 5,000 (except for some special channels, you need to fly 120 economy class, 60 business class, or 40 intercontinental business class on one airline per year to get this Platinum Card).
6. China's largest convenience store is not FamilyMart, but Sinopec's Easy Joy convenience store.
Every Sinopec gas station has an Easy Joy convenience store next to it.
It is currently China's largest convenience store, with over 25,000 stores. The "2018 China Convenience Store Development Report" shows that Easy Joy accounts for over 20% of the national convenience store share, which is hard to surpass.
7. At the top of the real estate agency pyramid are usually second landlords wearing slippers and undershirts.
For example, some small villas in Jing'an District, Shanghai, and courtyard houses in Beijing are scarce and non-renewable. These houses are often very popular, and many people like to rent them.
The second landlord of the house our company rents is such a person.
Early rental agents noticed this phenomenon, so they bought these houses one by one, renovated them, and became second landlords.
I roughly calculated that if you become a second landlord of 20 old villas, your monthly net profit can reach 500,000 yuan, with a price difference of 20,000-50,000 yuan per house, and contracts signed for 10 years.
8. Imported pig trotters are 30%-50% cheaper than domestic ones.
Because except for a few countries like China and Germany, most people in the world don't eat pig trotters. In many countries, pig trotters are treated as waste. Chinese people buy them and bring them back to China, which is cheaper than purchasing domestically.
9. Chinese-made cotton pants can sell for 10 times the price in Spain.
In the past, Europeans didn't know there was a thing called cotton pants.
A young Chinese man took unsold cotton pants produced in Zhejiang to Europe and sold them during their extremely cold winters, and they sold very well.
**2. China's Four Major Advantages and Huge Opportunities**
If these four points do not fundamentally change, then we still have huge opportunities.
1. China has the world's strongest terminal manufacturing industry chain and industrial clusters.
Once I went to India and Egypt with an iPhone, and on the phone was a case with six glass lenses. The locals were very curious and asked me what it was. They had never seen such a phone case.
A phone case with six lenses is considered low-end manufacturing in China, but globally it is mid-end manufacturing, because most regions in the world cannot produce it.
This is because the product involves a complex industry chain and many components, and only China can produce it most efficiently, at the lowest cost, in the largest batches, and consume it on the largest scale.
Another interesting phenomenon: in southern and eastern China, many counties have become industrial clusters, with the entire county centered around one business. There, you can find everything you need within a few kilometers, but in other countries, this might require crossing borders.
I have a basic judgment about Chinese manufacturing: **China is the world's strongest mid-end manufacturing power, bar none.** No country can replace China's mid-end manufacturing advantage without 30 years of accumulation and consistent policy support.
2. Our labor force is no longer the cheapest globally, but the quality of the labor force is the highest.
**Only China's labor force still has the spirit of diligence and hard work.** Vietnamese and Cambodian labor is indeed cheaper, and African labor is even cheaper, but compared to China, their vocational skills are not on the same level.
3. We are still the world's largest consumer market.
Today, most Chinese people have changed their saving habits and are willing to consume.
4. Chinese people are the most eager to change their destiny.
Indians believe in Hinduism, which tells you that people are divided into classes, and if you practice well in this life, you can upgrade to Brahmin in the next. China does not have such education. Chinese people believe that through hard work, they can live better.
**Here, Understand China**
Regarding population, most people's judgments are emotional and wrong.
Some American economists have found that long-term rapid economic growth brings many changes to national character: people become more optimistic, confident, positive, open, and inclusive.
These factors are concentrated in today's Chinese Generation Z (born after 2000).
**1. Many rural areas have a much higher happiness index than cities.**
Rural income is not high, but they have homestead land and private plots. They can rent out their private plots and collect rent every year. In some areas, their happiness index is very high, far higher than in developed regions.
Based on extensive observation, few people in rural areas now farm, and almost all farming is mechanized. Many people go out to work.
But in their eyes, big cities are not their world. When they get old, they will return, because they still have land back home. As long as they think of having land, they are willing to endure any hardship.
**2. The consumption views of the post-90s and post-00s have changed greatly.**
1. Consumption upgrade
Post-90s and post-00s spend on social identity. A few years after entering society, they will converge with the previous generation, and they are more willing to complete this identity consumption ahead of time.
Many of their first cars are not Chevrolets, but directly the low-end versions of high-end cars. So Mercedes C-Class, BMW 3 Series, and BMW X1 sell very well.
In addition, the trend of luxury goods becoming younger is very obvious. In China, more women start using La Mer in their early 20s, while in Europe and the US, more mature women choose it. It's not just about money.
I think the first renovation for post-90s is a non-renewable resource, and this wave of post-90s will definitely be larger than every subsequent generation.
For renovation, many big items, including home appliances, furniture, and even small appliances, are not easily replaced. The marriage wave for post-90s has arrived. Although many choose not to marry or marry late, in lower-pressure third- and fourth-tier cities, this wave is still quite obvious.
So, we must seize the post-90s renovation upgrade. If you miss it, there may be no consumption for three to five years.
2. Loneliness breeds business opportunities.
**Post-90s are relatively lazy, and they have the "only child" syndrome. Loneliness will breed a wave of business opportunities.**
Lonely young people like to keep pets. They take pets for massages and swimming. When they travel on business, they find a pet store to board them. A space of less than one square meter costs 300 yuan a day.
In addition, there are specialized pet funerals. Based on this, the pet market will definitely expand and grow rapidly every year.
3. Compared to KOLs, they trust real user feedback more.
In Tencent's post-00s report, we can see that the influence of KOLs (Key Opinion Leaders) is declining. Compared to KOLs, post-00s trust real user feedback more.
For all brand owners, future advertising will become very difficult because you need to connect with a huge number of super users, and you must treat them as a very important thing to operate.
4. Perceptions of domestic brands are changing.
Today, domestic brands are not inferior to foreign brands. This view is forming in the minds of post-00s.
There are three main reasons:
First, Chinese manufacturing is really improving;
Second, many foreign brands have dumped outdated production lines in China and are only now starting to pay attention to the Chinese market, but it's too late because Chinese brands respond faster;
Third, the era in which post-00s grew up is the era of national pride.
For post-00s, they yearn for brands with deep insights in their focused fields.
The older generation wants a product to have all functions, but **today's post-00s prefer professional, vertical, and excellent brands in their fields.**
5. Post-00s have twice the savings of post-90s.
Although post-00s have only 1,840 yuan in savings, post-90s have even less, only 800 yuan (data from Tencent's latest post-00s research report).
**3. About the Demographic Dividend**
We always pessimistically say the demographic dividend is gone, but in fact, only the way dividends are distributed has changed.
Now the demographic dividend is reflected in regional, structural, and micro aspects. Each region is not uniformly coordinated.
Even though China now has fewer young workers, the absolute number still surpasses most countries, and China's labor force has a balance advantage of quality and salary.
Don't always think that employees should do things for you; that's wrong. First, think about what you can do for your employees and what you can help them achieve.
That is, dreams are necessary, but so is reward.
**4. The total labor force is still growing.**
Currently, our labor force has not declined. Last year, the number of migrant workers increased by 0.6% year-on-year. Farmers have been further liberated from the land.
Compared to last year, urbanization has further improved. According to this trend, I believe China's urbanization rate will approach that of developed countries in the future, reaching about 70%.
In the third quarter, the average income of migrant workers working away from home was 11,130 yuan. But they have private plots and homestead land. (All the above data are from the National Bureau of Statistics 2018.)
**Here, Change Prejudices**
Here we want to share a methodology for looking at companies. I have written many articles in the "Here, Change Prejudices" series. Some views seem outrageous, but there is a rigorous system behind them.
**1. There is a methodology for looking at companies.**
1. Look at top-level design.
Top-level design must be done well first; if not, it's hard to make progress later.
2. Look at tactics.
Tactics should be looked at with the team. Look at the team; senior and grassroots should be looked at separately.
If employees think the boss is a liar and don't believe his dream, there is a problem. You will find that in excellent companies, at least 30% of employees strongly believe in the boss, 50% don't believe that much but think the boss is right and follow along.
If your company is like this, the probability of success is higher.
3. Look at the big market.
If the market is small, it's hard to do well. So the big market is the ceiling for enterprise development.
Opportunities come from time windows. Every stage, social factors change. In the process of change, we can find the biggest opportunity to re-enter the existing market.
4. Look at execution.
Check if execution is in place. If execution is not in place, it's all in vain.
**2. What educated people think is content is usually different from what the masses need.**
We all say the internet is an economy of scale. In fact, the internet is, to some extent, anti-scale economy. User time is limited, and many companies are competing for it. That is, the cost of acquiring users is very high, and after a certain point, it goes against internet laws.
Qutoutiao previously hired many excellent editors. These editors selected many articles and pushed them to their users, but found that the click-through rate was very low.
Later, they put a video teaching square dancing at the top and pushed it to all users. The click-through rate reached 10%, meaning one in ten people watched it.
This tells us that many times, what educated people think is content is different from what the masses need.
**3. Brands must achieve user insight, retention, repurchase, and fission.**
Recently, a friend from Tencent told me that some brands have achieved rapid men's clothing customization through mini-program advertising, with monthly sales of 150,000 orders at a unit price of 200 yuan.
In the past, this was difficult because it's hard to make money from men, and it's hard to find them.
Two things are most critical here: **one is flexible supply chain, and the other is precise targeting.** Without these two, men's clothing customization remains a small and beautiful business.
When we talk about parent-child accounts, we think they should sell baby diapers and children's toys. But a friend from Youzan told me that the best-selling items on Youzan are snacks, things for adults.
Why? Because adults are tortured by their children every day, so at night they buy something to eat for themselves. So many times our understanding of users is wrong and biased.
There is a live-streaming influencer selling liquor, with sales of over 10 million in two or three days, at a unit price of 900 yuan. This tells us that the era of private domain traffic has arrived. You must truly do user insight well.
**The operation of private domain traffic has three key differences from traditional advertising: retention, repurchase, and fission.**
In the past, you advertised, people came, bought, and left. Now, people come in, you must retain them, make them buy repeatedly, and then make them bring in new people, fission.
Today, many accounts have only 20,000 followers. In many people's eyes, 20,000 followers is not scale. I even thought it was impossible to make money with 20,000 followers.
But they do well by retaining customers, discovering follower needs, and doing repurchase and fission well. This subverts my original understanding.
**4. A metal cutting machine worth a million yuan was sold on Kuaishou.**
When communicating with Kuaishou, I found a magical thing: a metal cutting machine worth a million yuan was sold on Kuaishou.
In the past, everyone thought the internet could only sell cheap, high-frequency, daily necessities.
How was the metal cutting machine sold? Their method was to put a cutting machine to work, cutting metal balls. Some factory owners saw the video and bought it.
The main reason is that township entrepreneurs like to use Kuaishou, so the audience matches, and this kind of video is very intuitive and has sales capability.
When township entrepreneurs purchase equipment, showing them many PPTs is useless. They want to see intuitive effects. So people often do violent demonstrations on Kuaishou.
A person sells fishing rods on Kuaishou. He uses a rod to lift a 200-jin barrel spinning in the air. Below, someone comments, "Where is this fishing rod sold? I want to buy it." This is performance advertising, often simple and crude.
The top 10 towns on Kuaishou by play count nationwide include Haitou Town in Lianyungang, where many people sell fish through live streaming.
These cases provide us with a logic: **different things can be done in different scenarios. We must think boldly about many issues.**
**This is an Anti-Intellectual Era**
**1. Reading too much can make people anti-intellectual.**
When people read a lot, they sometimes enter a strange phenomenon—anti-intellectualism.
Smart people always think that if they understand a hundred businesses, they can do a hundred businesses well. This is completely wrong. You only need to do one thing well in your life.
Many bosses' anti-intellectualism appears when their main business has problems, and they want to save the company through side businesses. In 99% of cases, this is impossible.
**When your main business has problems, you should solve the main business problem, not start a side business. Don't try to do business that doesn't match your capability model.**
For example, I discussed small-town youth and lower-tier markets with Ma Yingyao (founder of Sunmei Life & OneZone) many times.
We can write articles with 100,000+ or 1,000,000+ views, which only proves our writing ability, summarization ability, and logic. It doesn't prove we can do business in small towns. So don't do things unrelated to your capability model.
If you don't love something enough, you can't grasp its essence. You must love it. Only when you love it can you discover things others can't.
**2. Unpopular industries can be very profitable.**
Many people think that if an industry is not lively, it can't make money. This is anti-intellectual.
People who make money won't tell you they're making money, let alone how. In fact, overly lively industries are the ones that don't make money; unpopular industries often do.
I know a boss in Guangzhou who digs sand at the mouth of the Pearl River. His profits are considerable.
Is this industry lively? No. But these are the ones that make money.
**The cost of upgrading must be lower than the income. This is common sense.** But today many people lack this common sense.
For example, if you upgrade your store to be very high-end, people may only come to take photos, not buy. This is the simplest but most easily overlooked essence of business.
In many industries, the rule is that 1%-2% of companies make big money, 18% make money, 30% break even, 50% lose money. The remaining unprofitable and losing companies complain online every day that the industry has reached its end.
**3. Those who talk about disruption often only understand 30% of the industry.**
When you understand 30% of an industry, you feel you've discovered a huge opportunity and want to disrupt it. At 70%, your confidence collapses—everything you thought of has already been thought of. When you hold on to 90%, you find you don't have many competitors left. After 95%, you face only a few players.
Every industry has a golden line. We must find that line. If you don't, you'll never achieve mastery.
**4. Much pessimism is emotional pessimism.**
Regarding consumption, let me give a few examples:
A family has two houses, 1 million in savings, a 3 million loan, and 500,000 stuck in the stock market. They feel bad, but they still eat and drink as usual.
A family has one house, 500,000 in savings, no loan, no hope for promotion. They feel bad, but they still eat and drink.
A family has no house, 100,000 in savings, plans to buy a house, but feels it's a bit far off. But they still eat and drink.
Much pessimism is emotional pessimism.
When looking at consumption, what do we look at? Look at industry, power generation, and highways. If there are no cars on the highways and power generation drops significantly, then there might really be a problem. If these numbers don't fluctuate much, then probably the problem is not big.
During the Qing Dynasty, there was a war called the Battle of Yaksa. The Russians fought the Qing, and the Qing won, but with great difficulty.
Russia had already equipped its troops with the most advanced muskets, which posed a great threat to the Qing soldiers.
The Qing had cannons. In the end, the Qing used a large number of red cannons to suppress the muskets, but the Qing did not realize that muskets were the more advanced equipment.
This era is the same. **Many times, a company seems to win in the end, but it's still the advantage of the previous era. You think you should strengthen this advantage, but the world has already changed.**
At the next node, your cannons will be scrap metal.
**5. Showing off never changes; only the methods change.**
Today, many people think that after a certain stage, people stop showing off. I think that's nonsense. Your LOGO may be gone, but you post your son's private school on your Moments every day.
Why do you post without a location when at work, but always with a location when in Phuket or Los Angeles?
This is all showing off.
Showing off has never changed; only the methods have changed among different groups. If we grasp this change, we can find some patterns.
**6. Industries that rely on hard work must respect the essence.**
Some time ago, I wrote an article called "There Is No New Retail." I believe there is no "new retail" in the world; it's just that retail has become new.
**The essence is retail, not new. The essential issues have never changed: rent, deposits, payment terms, personnel, recruitment, management, training, prevention, logistics and warehousing, turnover rate, sales per square meter, and per capita efficiency. The four years of vigorous new retail entrepreneurship only made intermediaries, renovation teams, and property management money.**
Online-offline integration is not valid for most companies, because when your users are not the full user base, the two ends cannot match.
Many industries in China are called "diligent trades." All industries that rely on hard work to get rich must respect the essence.
I used to open a dozen juice shops and restaurants, and half of them failed. Later, I concluded that just because you understand the principles clearly doesn't mean you can do things well.
**7. Newcomers like to talk about cross-industry attacks, but basically they come to be attacked.**
The premise of a cross-industry attack is that you can do everything the person you're attacking can do, and also what they can't.
If they can do something you can't, you'll be defeated before you even reach them.
The total demand growth for social retail has slowed, slower than the speed of channel differentiation. This means that within five years, many channels will completely collapse.
**8. Consumption upgrade is also reflected in more streamlined SKUs (stock keeping units).**
Recently, NetEase Yanxuan has had many problems because its SKUs are too many. In fact, it should have fewer SKUs to meet 80% of demand, rather than creating 80% of trouble for the 20% of demand. This is very important.
Many times, flashy things only satisfy a small group of people.
Jingdong Jingzao has an important product called latex pillow, which sells very well.
Today, our trust in domestic products is rapidly increasing. **On the JD platform, the conversion rate for men is higher than for women,** especially in this type of consumption upgrade.
**9. The most important thing about live streaming is not the live streaming, but calling out to the big spenders.**
Creating junk happiness is the most efficient way to attract money nowadays. Mini-program fortune-telling, counterattack novels, and live-streaming girls—everyone likes to watch.
**Who likes to tip the most on live-streaming platforms? It's those who have money but are not valued in their daily lives.**
How did I discover this secret? When I ran a shop, I chatted with a contractor boss. He said he spent 100,000 yuan a year on tips, but he was the least in his circle; others started at 1 million.
Later, I researched and found that those contractors earn millions or even tens of millions a year. But in the business world, many people think they are low-class and not presentable. They feel lost, so they like to tip on live-streaming platforms.
Many people spend a lot of money to be mentioned by name. On live-streaming platforms, they gain respect and glory. **So the essence of live streaming is the shout-out, not the live streaming.**
**Looking at the Real Economy Again**
In the real economy and real brands, as long as the essence does not change, there will always be opportunities for novelty-seeking and extremes reversing.
For example, a few years ago, girls liked to buy Coach bags. Then, when the subway doors opened, 10 Coach bags appeared in one car.
So they found the next brand. After a year or two, the subway doors opened and there were 10 of that brand again. They switched to another brand. This is called extremes reversing and novelty-seeking.
There are two most reliable paths for the rise of new domestic brands:
The first is to focus on cost performance: high quality, high style, and medium-low price.
The second is to focus on high circle, high quality, and high price.
**1. The Transformation Path of Factories**
Today, Chinese factories that do well are of two types:
One is **short-term**: making high-quality, low-price products for C2M (customer-to-manufacturer) models, and quickly selling them through various platforms. Only this way can they keep the production line running and the factory flowing. But without a brand, it only solves immediate needs.
The other is **long-term**: building a brand with high style and low price. That is, in the early stage, use scale to exchange for space, use scale to reduce costs; in the mid-term, think about how to become a brand.
But among long-term enterprises, most factories find it hard to create a brand. Because they lack the genes; their top-level design and team are wrong.
For example, they hire someone at a high salary to build a brand, but don't trust them or delegate authority, and insist on managing the brand thinking with their production line thinking. That won't work. So basically, factories that can achieve iteration are still few.
**2. Four Types of Products and Their Downward Strategies**
We can divide products into four types by a segmentation method:
1. Functional products: Uniqlo-ize them.
What does Uniqlo-ization mean? When Uniqlo first entered the US market, it opened next to Walmart, because opening in the countryside meant no one bought it, thinking it was low-class.
How did Uniqlo rise? It spent heavily on the best streets, opened the best flagship stores, and created a symbol and quality feel of the upper-middle class, but its prices were low. **Turning the functionality of FMCG into a symbol, a tone, wins people's hearts.**
2. Identity products: luxury-ize them.
Identity products should be luxury-ized, but they are mainly functional.
I think functional attributes, even with strong cost performance, are hard to become what entrepreneurs need, or what the upper-middle class and middle class need.
Here you must **create your sense of distinction. Identity products should be made high-end, with a luxury feel.**
3. High-frequency consumables: addict-ize them.
**High-frequency consumables must have a certain addictive quality.** If you can't make people addicted, can't form a certain tactile and connected feeling, it's hard to do this business well.
For example, many people smoke not for the smoking itself, but because they like having something in their hand, making it an extended organ. Creating addictive characteristics is very important.
When toothpaste was first launched, it didn't foam. But product managers found that without bubbles and mint flavor, it was hard to make people addicted; they felt the toothpaste wasn't effective. So toothpaste has bubbles and is cool, making consumers feel it's effective, and the product became popular.
That is, your product can add something that has no practical effect but makes people addicted.
4. Low-frequency durable goods: faith-ize them.
Today, many large home appliances are durable goods. They must have faith and a circle.
**2. Industry Phenomena**
1. Braised products
China's braised products industry is highly fragmented. Industry research reports say 250 billion yuan, but because there are many un-invoiced phenomena (wet markets, small workshops, roadside stalls, etc.), some in the industry even estimate 800 billion yuan.
Juewei Duck Neck is the industry leader, with annual revenue of about 4 billion yuan. So this is a highly dispersed industry. That means: you still have the opportunity to produce a braised product brand worth several hundred million in one region.
2. Passenger vehicles
Currently, China's passenger vehicle market faces a very important problem: the gap between production and sales is widening, meaning a large amount of inventory. How to solve it?
I have two ideas: **First, mid- and low-end production lines may be solved through better ride-hailing systems, allowing cars to be better shared. Second, go overseas.** Africa is dominated by Japanese and Korean brands. Chinese cars' market share there is not as big as we imagine.
3. Hair salons and massage
If you haven't risen from the grassroots, the probability of success is less than 10%.
4. Home textiles
In the past, we thought the textile industry had no profit left. That's wrong. Anta's gross margin is 52.6%, and net margin is 24.9%.
Shenzhou International does OEM, with a gross margin of 31.6% and net margin of 24.8%. Nike is one of its largest customers, but Nike's margin is not as high. Most of the world's top sports brands are made by Shenzhou.
Shenzhou International tells us one thing: **when the real industry is done to the extreme, you have the right to speak and absolute advantage.**
Many factories are cheaper than Shenzhou, but they can't ship in large quantities. Those that can ship in large quantities can't afford to advance so much money. Those that can afford to advance money find it hard to guarantee stable quality in large-scale shipments. This is the barrier of the real economy, which is different from the barrier the internet talks about.
5. Soy sauce and vinegar
China's No.1 soy sauce company is Haitian Soy Sauce. As of April 17, its market value was 232.7 billion yuan, with a total share of 18% and net margin of 30.5%. That is, the real industry, such as the unremarkable soy sauce industry, is very profitable.
6. Food multinationals
The world's No.1 food multinational is Nestlé. It has acquired a large number of companies, but those companies don't use the Nestlé name.
Last year, Nestlé had global sales of over 600 billion yuan and net profit of 67 billion.
So I always emphasize: we must respect international giants.
You raise 100 million and think you're great, but they make 6.7 billion in profit a year, nearly 200 million a day. That's their money-making speed. Ten years of effort cannot be formed in one day.
7. Underwear
There is a brand called Lululemon, which initially made women's sports underwear and now also makes men's products.
Lululemon gives the brand spirit, a sense of circle, and a sense of technology. Five years ago, I went to Hong Kong and saw the Lululemon flagship store in Times Square. The ceiling was seven or eight meters high, similar to an Apple flagship store.
8. Haidilao
In the past, we did one kind of business for all people. Now, we do all kinds of business around one group of people.
The inspiration from Haidilao is that every department can make money. Haidilao turned its finance department into a financial consulting company, its engineering department does decoration for others, and its hot pot seasoning has been listed separately.
In this era, you must fully tap your company's existing capabilities and quickly turn them into money-making things.
**3. Brand Premium**
People will pay a premium for great pleasure, but everyone's source of pleasure is different.
**Men can pay for three things: pleasure, presence, and recognition.** If you make products for men without these three standards, you may not do badly, but you won't make the most money.
We must think clearly: the coffee in the first-class lounge is not good, and the noodles are not tasty. But why do so many people stay there to drink coffee? There are many inner truths to understand. This is very important for branding.
**Looking at Lower-Tier Markets Again**
The biggest problem for people in first-tier cities is that they never step out of their CBD, but every day they think about how to make money from those people. That's simply impossible.
Here are some views and facts about lower-tier markets:
1. Second-tier and third-tier cities are two different types of cities; don't mix them.
Second-tier cities have industrial clusters, and employment opportunities are significantly higher than in third-tier cities. So second-tier cities' ability to attract talent is many times that of third-tier cities.
2. In third-tier cities, the new city and old city are clearly separated.
For example, in Quanzhou, the old city is very ancient. My feeling there was like returning to the 1980s. But its new city, Wanda Plaza, is very large. Wanda built a very large residential area next to it, with all kinds of brands, no different from a CBD in Shanghai.
3. Preferences in the consumer goods market are completely different.
The brand Juzi is positioned to sell to small-town rich ladies, that is, the middle-class women in lower-tier markets. But I asked around, and basically no one in first-tier cities knows it.
In rural areas, 80-inch TVs sell very well. But in first-tier cities, homes can't fit an 80-inch TV. Because young people in first-tier cities rent houses and don't have a living room.
**4. Renovation of existing stock is a huge business.**
This includes 4S store renovation, hotel renovation, home furnishing industry renovation, retail renovation, and home appliance 3C renovation.
First- and second-tier cities now have a population of 360 million, with 475 million phones, an average of 1.3 per person. Lower-tier markets have an average of 0.5 per person, meaning one in two people still doesn't have a phone.
**5. Rationally understand small-town youth.**
**China's development over the past 40 years comes from three points: globalization, industrialization, and urbanization.**
At the beginning of reform and opening up, no more than 5% of Chinese people were urban residents. Over 95% were small-town youth. Even today, if your ID card says Beijing or city, deep in your heart, there is still the shadow of a small-town youth. This is something brands must understand. Using data systems to label cannot solve all insight problems.
In summary, **all brand upgrades revolve around one sentence: the desire to be like people in big cities.**
In addition, if today you still expect to talk to me about lower-tier markets without going to see for yourself, then this business has little to do with you.
**Going Overseas to Create Another Economy**
**1. Going overseas is not simply replication.**
China's overseas expansion is divided into two types:
**One is exporting with China as the parent, and the other is directly using overseas as the parent.**
Take India as an example.
We keep saying India is the next China. I think this is a low-probability event.
There is an important set of data: three or four years ago, the median age in China, India, and Vietnam was 37 for China, and this year it's about 40. But India is only 30.4, and Vietnam is even younger at 26.7.
India's GDP is only 2 trillion, while China's is 13 trillion, not even a fraction of China's. Per capita GDP has just exceeded 1,900 US dollars, but its population structure is similar to China's at the beginning of reform.
A market more worthy of our attention now is the Southeast Asian market.
Among the 11 Southeast Asian countries, the richest is Singapore, and the poorest is Myanmar. Dividing Singapore by Myanmar, the per capita GDP difference is 46.7 times. Regional market differences are quite large.
**2. The "Pits" of Going to Africa**
Africa is a complex and diversified market. The overall economy of Africa gets worse from north to south.
Where are the pits in Africa? Its single market size is small, and the market is very fragmented. So what should we do? Simple replicable businesses won't work.
In Africa, there is a brand that does particularly well, called Transsion.
How did it enter the African market?
First, it started in Nigeria and found that Africa's power supply is not stable, making phone charging troublesome. So it made phone batteries 3000 mAh.
At the same time, it slightly understated the capacity, making people think the battery lasts longer.
Second, Africa's economy is relatively tight, and people use multiple SIM cards because of discount packages. Transsion became the first company to introduce dual-SIM dual-standby and quad-SIM quad-standby to Africa.
Wealth and poverty are the same: they limit people's horizons and thinking ability.
**The New Financial Era**
1. The huge invisible market
In the future, a company without financial capability cannot be called a company. Points, securitization, and financialization are important directions.
Points and mileage are a huge market. American Express spends 1 billion US dollars annually purchasing points from American Airlines Group.
A company called CreditFly is working on how to integrate the points of dozens of Chinese airlines. If this is done, it will become a huge business.
Ctrip's most profitable business now is selling insurance. Don't underestimate selling delay insurance; its profit margin is particularly high.
Among Chinese private enterprises, Ant Financial should be one of the best at the financial level. What is Ant Financial good at? When extending to offline, it extends to small business owners. In addition to front-end collection, it also lends at the back end.
I have always thought that China has a huge market for small and medium merchants.
Don't think everyone can get a credit card. Some people can't.
Today's small and medium enterprises, especially micro-enterprises, can get loans through Alibaba. I think if this can be done thoroughly, it is a very big market, much better than doing front-end new retail. Solving the cash flow problem in retail at the back end is an important part of new retail.
**Final Words**
We have discussed my views on the new business civilization era across eight sections: counterintuitive data, China's opportunities and advantages, the real economy, changing prejudices, lower-tier markets, overseas markets, and the new financial era.
Overall, I believe pessimists are often right, but optimists often succeed. This is also why I love this era.
2019 has already passed more than 100 days, meaning only two-thirds of the year remains.
At the beginning of the year, I wrote an article called "The Waves of the Jianghu, Be a Fearless Person." I said, "We must find the source of power that makes us fearless. That fearlessness is not the indifference of having nothing to lose when you're penniless, but the courage to move forward even when you have something, even if moving forward may mean losing."
From good to excellent, from not bad to truly respected, this step is what most people cannot cross. Even if I cannot cross it, I choose not to not cross it.
In the past 90 days, we have seen many indices recovering; we have seen the airport still bustling late at night, never stopping; we have seen people returning from frenzy to rationality; we have seen many companies' balance sheets repairing; we have seen new entrepreneurial opportunities emerging in all walks of life.
The reason I firmly believe in the future is that it has charming eyes, and it can see through the chapters of time to see people's pupils.
In the end, it is because China has the most people in the world who are eager to change their destiny.
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**China FMCG + Internet Professional New Media**
**Committed to FMCG manufacturers' transformation and upgrading and channel digital solutions**


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