---
title: "Unilever's Fang Jun: In a 1.4 Billion Consumer Market, Segmented Industries May See New Brands at the 1 Billion Scale"
description: "Last September, Unilever's U创 incubator and Tmall's new product incubation platform reached a strategic cooperation agreement to jointly explore new models for supporting Chinese innovative brands. This was Unilever's first large-scale external announcement of its 'U创' incubator, which selected 10 projects from hundreds of applicants for live roadshow evaluations."
author: "曾巧"
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published: "2021-03-06"
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# Unilever's Fang Jun: In a 1.4 Billion Consumer Market, Segmented Industries May See New Brands at the 1 Billion Scale

> Last September, Unilever's U创 incubator and Tmall's new product incubation platform reached a strategic cooperation agreement to jointly explore new models for supporting Chinese innovative brands. This was Unilever's first large-scale external announcement of its 'U创' incubator, which selected 10 projects from hundreds of applicants for live roadshow evaluations.

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Last September, Unilever's U创 incubator and Tmall's new product incubation platform reached a strategic cooperation agreement to jointly explore new models for supporting Chinese innovative brands.
It is understood that this was Unilever's first large-scale external announcement of its 'U创' incubator. Since the project launched on August 15, 2020, hundreds of innovative brands signed up, and ultimately 10 projects were selected from the hundreds for live roadshow evaluations.
In this context, Morketing, a global marketing and business media outlet, observed that Unilever China launched the world's first external incubator, touting an innovation model of 'Created in China, Supported Globally.' To better understand the 'U创' incubator platform, Morketing founder and CEO Zeng Qiao had an in-depth conversation with Fang Jun, Vice President of Data and Digital Development at Unilever China, covering the following four aspects:
**1. Why did Unilever choose to launch the 'U创' incubator platform at this time?**
**2. With the development of internet e-commerce, why are the barriers of big brands disappearing?**
**3. Discovering new opportunities in segmented industries within the vast consumer market.**
**4. Consumer market changes in 2020 and new trends for 2021.**
Fang Jun, Vice President of Data and Digital Development at Unilever China
Below is the content of the conversation:
**-01-**
**The original intention behind Unilever China's launch of the 'U创 Incubator': Discovering people with a sense of mission and new brands**
**Morketing Zeng Qiao: When did Unilever China launch the 'U创 Incubator'?**
**Unilever Fang Jun:** The 'U创 Incubator' is just a collaboration with Tmall. As early as the end of April 2020, we had an official external communication, and there were already incubation projects operating on Tmall flagship stores.
In August, we conducted a large-scale external communication, collaborating with Tmall to recruit projects. All industries were very supportive, which led to the 'competition.'
For such a launch, Unilever had already gone through a considerable period since the actual public announcement. The large-scale promotion was through this joint Unilever-Tmall press conference, communicated via media, as well as our internal channels. Many startups also applied after learning about it through various channels.
**Morketing Zeng Qiao: I noticed that this event emphasized collaboration with Tmall. Why choose Tmall?**
**Unilever Fang Jun:** Alibaba has an 'A100' project, which is a comprehensive cooperation for major clients, including digital collaboration.
Unilever is a long-term strategic partner of Alibaba. During the cooperation, Tmall raised many demands, such as how to help them with new product innovation, and whether Unilever could bring more of its 400+ global brands to China.
In this process, we already had the idea of establishing an external U创 incubator. When we discussed this idea with Tmall, both sides hit it off immediately. Our goal is to incubate more local Chinese emerging brands, and Tmall shares the same goal.
**First, Unilever has vertical capabilities and advantages in industries such as personal care and beauty.**
**Second, this platform-based brand incubation model is highly appreciated by Tmall, as it can provide new brands in bulk and help them grow rapidly. This is based on the complementary goals and advantages of both parties, so they hit it off.**
**Morketing Zeng Qiao: As early as 2015, Unilever established the '创想+' platform. What is the difference between that and the current 'U创' platform?**
**Unilever Fang Jun:** 'U创' mainly incubates physical enterprises, such as the tracks Unilever is familiar with, like personal care and beauty categories, primarily for startup brands.
'创想+' is different; it is not an incubation platform but a cooperation platform between Unilever and technology innovation companies. For example, in '创想+', there are companies using AI for image recognition, smart shelves, and social fission. These are partners in the ecosystem, focusing on technological innovation, and have a 'symbiotic' relationship with Unilever.
In fact, among the brands we incubate, some are competitors of Unilever, but in '创想+', they are partners. We cooperate with them to solve problems, such as smart shelf issues in stores. Smart shelves can interact with consumers, and they provide the technology, achieving a 1+1>2 effect.
For a large company like Unilever, with numerous application scenarios, we can provide these startups with application scenarios for their technology to solve practical problems. In this process, they grow, and our business issues are resolved.
Overall, 'U创' and '创想+' together cover innovation across different dimensions of Unilever's entire industry ecosystem.
**Morketing Zeng Qiao: Will these incubated brands have the possibility of synergy and cooperation with Unilever in the future?**
**Unilever Fang Jun:** Yes, all projects here are collaborative. We have business scenarios, and they have technology solutions. There will be many collaborations in the future.
**Morketing Zeng Qiao: In this offline roadshow, what did you find are the core demands of new brand entrepreneurs?**
**Unilever Fang Jun:** These entrepreneurs have very different demands for 'U创' because each startup's stage and founding team's capabilities are different. For example, some come from branding backgrounds, some from OEM, and some have strong R&D capabilities, but no startup has strong capabilities across the entire chain from R&D to production, marketing, and sales.
Startups lack scale, so they need help in many areas in terms of capabilities and resources. Unilever, with its considerable size and scale in the daily chemical vertical industry, can help these entrepreneurial brands in multiple ways.
**Morketing Zeng Qiao: In what specific aspects is this reflected?**
**Unilever Fang Jun:** Simply put, it's about market information and insights. Unilever has a very close relationship with Alibaba. Through this cooperation, we can open up big data and insights to brands. Currently, brands often only have access to public reports, such as industry data from CBNData, which makes it difficult to conduct more granular data analysis within reports.
Some brands open stores on Tmall and can see their brand performance through the data bank, but they cannot see the overall industry situation. By connecting with data companies, we can track industry changes in real time using big data and AI. We can provide this capability to almost all startups.
From a vertical perspective, because Unilever has been deeply involved in the industry for many years, its supply chain and R&D capabilities are strong. We can use our R&D capabilities, including factory systems and the entire third-party OEM/ODM system, to address challenges in formulation and production for small and medium brands.
**Morketing Zeng Qiao: What are the criteria for companies to enter the 'U创 Incubator'?**
**Unilever Fang Jun:** Actually, we don't have special requirements. Companies entering the incubator and using our services are mainly divided into two aspects: platform-based and customized services. Unilever's digital capabilities and scale inherently provide a lot of information and services. We open this capability to interested startups. Theoretically, the cost of serving 20 entrepreneurs is the same as serving 200.
For customized services, we will screen among hundreds of companies, and in the future even thousands, together with the Tmall platform. Tmall can provide a green channel and various types of services.
**Morketing Zeng Qiao: Among the 10 companies selected today, are there any startups you are relatively fond of?**
**Unilever Fang Jun:** I can't specifically name any company yet because the results haven't come out. There are those we signed early on, and some new ones that just came in. The fields covered are very broad, including oral care, pet care, and some Gen Z personal care and beauty products.
We highly value that these brands can match Unilever's values. Unilever is a company with a sense of mission and ranks first in the Dow Jones Sustainability Index every year. This is what differentiates us from other large companies. So on the U创 platform, we also hope to discover founders and brands with a sense of mission to change consumer lives, our society, and the planet.
**-02-**
**With the development of internet e-commerce, the advantages of big brands are disappearing**
**Morketing Zeng Qiao: Regarding new brand incubators, we've noticed that many daily chemical companies are doing this, such as P&G, L'Oréal, Shiseido, etc. What do you think is causing these large enterprises to focus on this track?**
**Unilever Fang Jun:** With the development of the internet and e-commerce, this is happening not only in China but globally. Whether it's the communication channels between brands and consumers or the sales channels, the advantages favoring big brands are shrinking.
In the past, to communicate with consumers in China, you had to have very large advertising investments. An advertising campaign might require hundreds of millions in ad spend, and offline distribution had to be large enough. Now, in the digital marketing era, this threshold has disappeared, and the product technology barriers in this industry are not that high.
**Morketing Zeng Qiao: Can we understand that product technology barriers are actually not that high?**
**Unilever Fang Jun:** This industry may not have seen true technological breakthroughs in decades. With competitive advantages disappearing or diminishing, for entrepreneurs, especially in large markets like China, India, Indonesia, and the US, if they can precisely target consumer groups, meet their needs with products, and communicate and sell to them, this new business model can make small brands more likely to succeed.
In the past, small brands had almost no chance to compete with big brands. Now the environment is different; there are many success stories of small brands. On Tmall, there are 100 million new products every year. Among so many new products, many successful new brands will emerge, inevitably eroding the market share of big brands. It's not that large companies like Unilever and P&G can't innovate, but under the new model, the advantages of large companies over small ones are shrinking.
**Morketing Zeng Qiao: Can we understand that large companies have already felt a sense of crisis?**
**Unilever Fang Jun:** It's not that we just felt it now; we felt it several years ago. But everyone has adopted different solutions. Generally, they are accelerating internal innovation, increasing flexibility, and adopting new marketing methods. Unilever is doing all this, and so are competitors.
**While exploring internal potential, we are also thinking about how to leverage the capabilities and enthusiasm of entrepreneurs, using their innovativeness to take 'risks.'**
**Morketing Zeng Qiao: Why don't we acquire an existing brand instead of discovering potential brands to incubate?**
**Unilever Fang Jun:** In the M&A market, the later you acquire a mature brand, the higher the premium you pay. If you say a brand is good, the market already knows. If you try to acquire it, they might not be willing to sell, or they might want to go public. So the earlier you invest and incubate, the greater the ultimate return. This actually challenges the level of investors.
We are not professional investors, but we understand our industry. While conducting large-scale brand incubation, we also export Unilever's digital vertical capabilities. Because Unilever has sufficient scale and resources, we can 'package' this and make it available to more emerging brands. This is also a way to lower the threshold.
In the process of providing services, through natural competitive elimination, we can actually see which brands can do better.
**Morketing Zeng Qiao: What are the main ways Unilever currently discovers emerging brands?**
**Unilever Fang Jun:** We have different channels, including the incubator team's own work, cooperation with some VC companies, and collaboration with the U Family Alumni Association. For example, this cooperation with Tmall, because there are many emerging brands on the Tmall platform, these are all ways of discovery.
**Morketing Zeng Qiao: This time, you selected 10 brands from over a hundred. Are there any new plans next?**
**Unilever Fang Jun:** This year, we are still trying out this model, building the U创 incubator platform product. Next year, we can iterate the product. Unilever will scale up mature methods. For example, now Tmall gives us 100 brands, and we select 10. Next time, Tmall gives us 1,000 brands, and we select 100.
**Morketing Zeng Qiao: How do you understand the relationship between Unilever and the incubated enterprises?**
**Unilever Fang Jun:** This is an interesting question. It's a new type of relationship. We hope to become a platform-based incubation method. General incubation is more like a hen hatching chicks, slowly nurturing them to grow.
**Morketing Zeng Qiao: How do you understand 'platform-based'?**
**Unilever Fang Jun:** Platform-based means our public service capabilities, which many enterprises or individuals are willing to pay to use. For example, if you want to see what consumption trends or insights are in a certain platform area, you can find a creative idea there. Even if you have no idea at all initially, you can participate in this project. We provide incubation from 0 to 1.
We will also provide other platforms, such as a social, creative consumer platform we are about to build. On this platform, you can interact with consumers to see if there are new ideas and unresolved problems in certain categories.
**Morketing Zeng Qiao: Have the products you just mentioned been officially released, or are they just a plan?**
**Unilever Fang Jun:** These have not been officially implemented yet, but in the near future, we expect to use this model to empower brands in 2021.
**Morketing Zeng Qiao: What is the general situation of Unilever's incubator team?**
**Unilever Fang Jun:** We currently adopt a flexible approach. The entire incubator has only one and a half employees belonging to Unilever. We outsource recruitment through third-party and fourth-party forms. We have different incentive mechanisms for them, which is different from Unilever employees. They will experience the passion of working in a startup.
**Morketing Zeng Qiao: Under the large Unilever group, is the U创 incubator like a startup?**
**Unilever Fang Jun:** Our work nature is like a startup, but we are a platform, hoping to connect with these incubated enterprises through products and services.
**Morketing Zeng Qiao: What is the current team size of U创?**
**Unilever Fang Jun:** The current overall size is about six or seven people. Soon we will expand. Our team currently collaborates in a very flexible way. For example, for legal consulting, we cooperate with industry companies, and for recruiting some professional talents, we also adopt a 'plug-and-play' approach.
**-03-**
**China's 1.4 billion market is large enough, and there are still many opportunities in segmented industries**
**Morketing Zeng Qiao: This year's consumer market is undergoing significant changes, and many emerging brands have emerged, such as Genki Forest, Perfect Diary, Zhong Xue Gao, etc. How do you view this phenomenon?**
**Unilever Fang Jun:** China's market is large enough, and for 1.4 billion people, many needs are similar. Different types of consumers have different consumption needs. Almost every major category can be segmented into 100 or even 1,000 niche markets.
**From a consumer perspective, over the past 40 years, China's changes have been accelerating, especially in the last 10-15 years. The emerging post-85s and post-90s young consumers have grown up under the mobile internet, and their personalized consumption needs have grown significantly, leading to growth in demand for various segmented categories.**
Under this growth, especially in the e-commerce environment, brands that meet the special needs of a certain consumer group can be cultivated. This trend will not stop in the coming years.
In the shampoo field, P&G and Unilever adopted multi-brand strategies early on. For example, Unilever has Lux and Hazeline shampoos targeting different needs, and they have been successful. But now this category already has dozens or hundreds of brands. The skincare industry has even more brands, from price points to functional needs, all highly segmented.
**Morketing Zeng Qiao: Do you think these new brands have the potential to grow into ultra-large groups like Unilever and Coca-Cola?**
**Unilever Fang Jun:** Regarding ultra-large scale, I think the challenge is getting bigger, but it's not impossible. It depends on the category and average order value. For categories like daily necessities, I think it's still difficult to grow on the internet. In the internet market, for an ultra-large category, it's hard for a brand to reach tens of billions, but the 1 billion scale is achievable.
**In the original 'big TV era' and 'big FMCG era,' to build a brand, you had to build a large factory, have marketing budgets in the hundreds of millions, and then set up offline channels and train a sales team of thousands. Only with such scale could the brand threshold be high. If you couldn't reach 1 billion in scale, you couldn't survive in the Chinese market.**
Now the environment is that internet e-commerce has lowered this threshold significantly. When a brand can be profitable, the e-commerce threshold is around 100-200 million. But conversely, this might become your bottleneck because no matter how big you make it, you don't have scale advantages.
**Morketing Zeng Qiao: E-commerce can help new brands lower the threshold quickly in the early stages, but it also has its own limitations?**
**Unilever Fang Jun:** In economics, there is the 'scale effect.' In the original big FMCG era, spending money was a big barrier. In such a market, there might only be a few brands. But in the internet era, scale advantages continue to diminish. Some brands can be profitable with very low revenue.
Each brand targets different directions and audiences, creating a dynamic balance. In the future, with the development of internet technology and the supply chain, some startups are already doing personalized customization, serving very few consumers and still surviving well.
**Morketing Zeng Qiao: Regarding personalized customization, Alibaba recently released Rhino Manufacturing, which is personalized new manufacturing for small and medium enterprises. Has Unilever paid attention to this information?**
**Unilever Fang Jun:** We are indeed paying attention. Rhino Manufacturing is mainly in the apparel industry, and it can lower personalized customization to around 100 pieces. This is related to the industry. For example, in Unilever's industry, what scale can flexible manufacturing achieve? I don't have precise calculations yet, but in the future, the threshold will definitely be lower. How low it goes is determined by consumer supply and demand.
Based on the needs of both supply and demand, a dynamic balance will eventually be reached. I believe customization will be implemented for every individual.
**-04-**
**Discussing 2020 consumer market changes and 2021 new trends**
**Morketing Zeng Qiao: You've seen quite a few roadshow projects. In these projects, have you observed any consumer changes in 2020 and new trends for 2021?**
**Unilever Fang Jun:** The projects we see now basically continue the consumption trends of recent years. Under the pandemic, O2O has seen explosive growth, and live-streaming e-commerce has seen explosive growth.
These are two trends we've already seen. What will happen next? Predicting trends is a very dangerous profession. For example, how will 5G and short videos after 2021 affect marketing? What we already know is that the growth of short videos has led many creative companies and brands to do it, and the production cost of short videos will decrease.
**When short videos develop to a certain extent, consumers' marginal effect on brand short video marketing will definitely decline. At that time, the entire industry will look for the next 'breakthrough.' What will the next 'breakthrough' be? I believe brands doing marketing in China will definitely find it, and Unilever is one of the companies that will find the 'breakthrough.'**
**Morketing Zeng Qiao: The last question: What are your expectations for the future of the U创 incubator?**
**Unilever Fang Jun:** Our approach is different from our peers. My expectation is to bring this digital platform incubation model to entrepreneurs. I know this platform-based thinking is a huge challenge for traditional enterprises, but it is indeed more effective than traditional incubation models.
**My other expectation: I deeply admire this group of emerging entrepreneurs. Their persistence and love for their brand philosophy, and their enthusiasm for serving consumers. I hope the U创 platform is not a personal achievement but the effort of the entire team, truly helping these hundreds or thousands of Chinese entrepreneurs, helping them possibly achieve success and better serve Chinese consumers.**
Source: Zeng Qiao (ID: missivy1988) Author: Zeng Qiao


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