---
title: "Variables: Finding the Logic of Growth Within Trends"
description: "The 7th China FMCG Channel Innovation Conference, hosted by New Distribution, opened in Chengdu on November 3, attracting FMCG professionals nationwide. The main forum featured 14 keynote speakers, and this article shares the theme of finding growth logic within trends, emphasizing the importance of understanding slow variables and adapting to a new cycle."
author: "赵波"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-11-04"
language: "en"
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# Variables: Finding the Logic of Growth Within Trends

> The 7th China FMCG Channel Innovation Conference, hosted by New Distribution, opened in Chengdu on November 3, attracting FMCG professionals nationwide. The main forum featured 14 keynote speakers, and this article shares the theme of finding growth logic within trends, emphasizing the importance of understanding slow variables and adapting to a new cycle.

The 7th China FMCG Channel Innovation Conference, hosted by New Distribution, a professional new media platform for FMCG, officially opened in Chengdu on November 3, attracting FMCG professionals from across the country. In the full-day main forum agenda, the organizers invited 14 heavyweight guests to deliver keynote speeches, and the venue was packed, witnessing the highlights of this conference together.
Today, the theme I want to share with you is: **Variables: Finding the Logic of Growth Within Trends.**

**01** Why choose variables as the theme? I believe everyone knows that in 2022, China faced a large number of uncertain factors in both domestic and international environments: the global pandemic continued, and outbreaks in various Chinese cities repeatedly caused great inconvenience to people's lives, with no end in sight, significantly impacting the economy; the Russia-Ukraine war led to a surge in global commodity prices, with no clear timeline for recovery; the US-China decoupling and ongoing confrontation will persist for a long time, posing unprecedented challenges to China's globalization strategy. These uncertainties have made enterprises hesitant to invest, consumers reluctant to spend, and the economy full of uncertainty. Let's look at a set of data: in the first half of the past four years, household deposits increased the most in the first half of 2022, reaching 10.33 trillion yuan, far exceeding the same period in the previous three years. Compared to the same period last year, it increased by nearly 2.9 trillion yuan. **This is "stress savings" or "revenge deposits."** Due to economic downturn and rising unemployment, people are afraid to spend or take loans, so households have increased their savings. In the second quarter of this year, the epidemic rebound and strict control measures in many provinces and cities suppressed demand and business activities. In July, new RMB loans increased by 679 billion yuan, less than a quarter of June's increase, indicating an unusual contraction in China's economy... It can be said that compared to the impact on the economy, the epidemic has had a greater impact on consumer confidence. The entire consumer goods industry is facing unprecedented challenges.

**02** In-depth analysis shows that domestic involution is mainly caused by two constants: severe oversupply in the market and China's population officially entering negative growth in 2022, which means that due to competition, the cost of customer acquisition has risen sharply, and the reduction in total consumption has led to the peak of quantitative growth for enterprises. Changes in the external environment mainly stem from the global COVID-19 pandemic and changes in the global geopolitical landscape, leading to conservative consumer attitudes, declining consumption capacity, and significant disruption to global supply chains. Under such circumstances, New Distribution has a conclusion: **This is an era of great change and the beginning of a new cycle!** However, we see that enterprises are still developing according to their original inertia. From a micro perspective, brand owners are facing serious growth traps at the three levels of people, goods, and places. _People: weakening consumer demand and consumption downgrading;_ _Goods: new products fail to gain traction, and old products are declining;_ _Places: retail scenarios have become extremely complex, terminals are not selling, and online traffic has peaked._ In such uncertain times, how can we seize growth opportunities? For a company, growth is something to consider at all times. Earlier this year, I chatted with Max, the boss of Zhoupu, about Facebook's name change to Meta. As an early Facebook employee, Max's viewpoint was very interesting. He didn't preach big truths; he told me that from a business perspective, Zuckerberg's move was all for "growth." Because Facebook is nearly monopolistic globally except in China, with such a large scale, further growth is already very difficult. But as a leading global tech company, it must consider growth. However, after incorporating all internet users globally into its network, to grow further, it needed a larger imagination space. So Zuckerberg decided to shift Facebook from real to virtual, entering a new virtual world through the name change to Meta, to find living space for itself. To grow, I think all manufacturers and friends, like Zuckerberg, think about it every day. But with the consumer goods sector nearly reaching its growth ceiling, where is the new space for growth? This is a problem all manufacturers must face. Look at community group buying being wiped out; new consumption seems to be failing; prepared dishes are hot again??? How to judge whether to do it? Some distributors ask me whether there are still opportunities in e-commerce, short video, and live streaming, and whether to invest. With such a bleak situation under the epidemic, how can this year's business grow? Should we make additional investments and try things we dare not attempt? Should we be more conservative? As long as we don't lose money, will next year be better if we survive this year? In August this year, Ren Zhengfei published an article within Huawei: "Ren Zhengfei: The Global Economy Will Face Long-Term Recession; Huawei Must Make Survival Its Main Guideline." The core content pointed out that the global economy will face recession and declining consumption capacity. Huawei should change its business approach, shifting from pursuing scale to pursuing profit and cash flow, to ensure survival through the crisis in the next three years, "making survival the main guideline and passing the chill to everyone." Facing such a severe economic situation, I also exchanged views with many FMCG entrepreneurs, and the consensus feedback was: **Enterprises must evolve new capabilities and return to the true essence of business, seeking both survival: grasping existing volume, existing presence, and continuity; and seeking truth: real skills, real foundation, and real business capabilities.**

**03** Let me ask a question: Where do waves come from? You might say, "That's obvious—from the sea wind." You're right, but waves that span the entire ocean are not caused by wind but by the gravitational pull of the sun and the moon, which is the tidal phenomenon. Here, wind is a fast variable, while gravity is a slow variable. If you are a captain and go to sea without checking the weather forecast, you may be in danger immediately. But if you don't know the laws of tides, you can't use tidal patterns for fishing and salt production. So, for each of us, we need to observe the rapidly changing world, but more importantly, we need to focus on the laws of how the world operates and changes within a large cycle and time-space. Let's expand the time-space scale and look at the opportunities behind each crisis in this world:
· 1920-1970: The Great Depression, World War II, US-Soviet confrontation—the 50 years of fastest growth for the US
· 1998: China's century flood, 20 million workers laid off, Asian financial crisis—in the next 10 years, China's annual growth exceeded 10%
· 2008: US subprime crisis, China's 4 trillion yuan stimulus—China became the world's second-largest economy
· 2018: US-China decoupling, US suppression of Huawei—PWC analysis suggests China will surpass the US around 2030 to become the world's largest economy
When we use fast and slow variables and look at China's development trends over a large cycle, we can make some basic judgments. First, let's look at the visible fast variables in China today:
**1. Although the external environment is challenging, the government has sufficient macro-control space and room for maneuver.**
**2. China remains the world's factory, and the basic foundation of manufacturing-based nation-building has not changed.**
**3. The current economic downturn is a normal correction after thirty years of rapid growth; although there is pressure, it is also reasonable.**
**4. The trend of consumption upgrading has not changed; people still yearn for a better life.**
**5. The low-hanging fruit in the market has been picked; the market has shifted from extensive competition to highly specialized and systematic competition.**
Based on the slow variable thinking, let's look at the predictable slow variables in China's development over the next decade:
1. China's economic growth has shifted from high growth to slow growth.
2. US-China confrontation and decoupling will likely become a high-probability event.
3. China's GDP will surpass that of the US around 2030.
4. China's per capita income will move from middle income to high income.
5. China has entered an aging society, and by 2025 it will become a deeply aging society.
6. China will continue to invest substantial resources in new technologies, new tech, and new infrastructure to maintain global leadership.

**04** What small trends can we see from these slow variables?
· China will become the world's largest consumer market, with huge market depth and countless opportunities.
· The rise of 100 million new middle class and the consumption upgrade of 1.4 billion people have not been well satisfied.
· The efficiency of production, supply chain, and distribution in traditional industries remains very low.
· Enterprise labor costs have risen significantly, and marketing efficiency is declining sharply.
· The cost and threshold of digital infrastructure have been greatly reduced, but in a sense, barriers are getting higher.
· Old soldiers don't die; traditional distributors still have obvious competitive advantages in the new era, but they need to upgrade and iterate.
· Data empowerment and new marketing dividends brought by new technologies are gradually emerging, including opportunities in near-field e-commerce and interest-based e-commerce.
Under such trends, how should we seize opportunities? I believe enterprises should base themselves on offline, use technology as a means, focus on consumers, iterate themselves, and find the first opportunity for growth and development. The question is, what is the first opportunity? **The first opportunity is not the Douyin live streaming dividend; it is to see future trends in long-cycle slow variables and lay out in advance; it is to use new technologies, new models, and new means to build competitive core barriers for the enterprise, such as brand, channels, and models, faster.**

**05** What are the core competitiveness of enterprises in the new cycle? **We believe there are three points: the basic foundation, digitalization, and co-creation with consumers.**
**First, what is the basic foundation?** The basic foundation is that even if new markets, new products, and new models all fail, you still have a piece of self-retained land that keeps you alive; the basic foundation is the base area, the self-retained land, the core market that others cannot take away. Where is the basic foundation? It depends on the products, channels, regions, and personnel that contribute 70% of profits and 30% of growth. What is a base market? It is a region where you rank first in market share, influence, and profit. To see if it is a basic foundation, look at these six indicators: _a single product with sales contribution over 60% and profit contribution over 80%_ _a large regional market with market share over 60%_ _an effective market strategy_ _a group of core distributors_ _a stable sales team_ _a product with future growth potential_ Without a base market, no product can succeed in competition. Without a basic foundation, no enterprise can achieve longevity. The basic foundation is the fulcrum: it is the support base for material supply to other markets and the oxygen supply for strong spiritual motivation; the basic foundation is the talent pool: it is the training ground, the marketing training academy, and the talent export base; the basic foundation is the experimental field: the practice ground for new methods and explorations, and the birthplace of successful operating models.
**Second, digitalization.** In the past, enterprises that did not digitalize would not die, but they would not be very bad either. But today, enterprises that do not digitalize will surely die. However, many enterprises and distributors seem to have clicked the wrong tech tree in the direction of digitalization and cannot successfully transform for a long time. On the one hand, this is due to historical development path issues; on the other hand, the logic here needs to be re-clarified. I believe digitalization has seven points: real data, having data, closed loop of people-goods-place, full control of sales points, integration of all networks, internal and external connectivity, and external-external connectivity.
**Third, co-creation with consumers.** The problem for brand owners today is not traffic but retention. All traffic is priced, and the issue is that if repurchase is insufficient and retention is inadequate, all enterprises will be overwhelmed by traffic costs. The function and value of products can no longer satisfy users; we must co-create some relationship with users to truly achieve deep connection and long-term value realization. LEGO-style marketing: try to co-create value with consumers, turning consumers from audience into actors, and giving the creative rights to consumers. Either make them think you are awesome, or make them think they are awesome. **We believe that only marketing driven by content, co-creating meaning and new interactive relationships with consumers, can remain effective in the future.**

**06** New Distribution believes that enterprises should focus on four key points:
**1. Use new technologies to solve old problems.** Dongpeng Special Beverage used the one-item-one-code technology to implement a consumer promotion case of "one more bottle," and gradually extended it, interacting with consumers at the front end and developing a series of digital application methods at the back end, finally forming a complete digital system based on technology and product sales logic, providing a good reference for FMCG enterprises.
**2. Combine with the new normal to seize new business.** Physical retail has also seen many technological solutions. Retail ecosystems rebuilt based on O2O traffic, such as Meituan Flash Purchase, are, in my opinion, key channels that brand owners can focus on in the coming years. Whether it is data feedback, product launches, or holiday promotions, they have huge advantages over the previous mom-and-pop stores, and they are also new business worth focusing on for brand owners.
**3. Consolidate the foundation and optimize market and organizational structure.** Ma Yun recently appeared and shared some views on digitalization. In the past decade, whoever could digitalize would gain a competitive advantage in the market; in the next decade, whoever does not do new retail will definitely be eliminated by the market. Therefore, using new technologies and digital means to quickly optimize the enterprise's market and organizational issues is something every enterprise should focus on. In this regard, we have invited many brands to share with us, and you can pay more attention.
**4. Be flexible and seek progress while maintaining stability.** Finally, in the current situation of repeated epidemics, enterprises should adjust their development strategies in a timely manner according to the environment, epidemic, economy, and consumer conditions. They should still be flexible and focus on steady progress.
Finally, New Distribution also gives some advice to distributors: From a development perspective, in the next few years, distributors will seek growth in a limited existing market, and survival pressure will be relatively high. But the regional market is like an eggshell: if you break it inward, it becomes a dish; if you break it outward, it becomes life. What distributors need to do next is to break outward. For distributor development, they still need to find new living space. Here, New Distribution gives distributors four directional suggestions:
**Downward:** Further penetrate and intensively cultivate channels, complete full coverage of physical stores, further squeeze competitors, and deepen single-store operation efficiency through SFA + mini-programs.
**Upward:** Complete the reach of local network space, covering local social and e-commerce traffic such as community group buying, vertical communities, Meituan, Ele.me, Douyin local, Hema, Taoxianda, and PUPU.
**Forward:** Leverage the KOC relationship of small stores, use mini-programs to directly connect with consumers, operate consumers, build private domain relationships with consumers, and complete the construction of a local social retail network.
**Backward:** Fully digitalize yourself, fully open to brand owners, embed yourself into a larger organization, become part of the organization, and thus gain the organization's support for the local market.
Distributors must understand that to achieve growth, they must open up their pattern in time and space, create and join new spaces, find new groups of people, and only then can they have new increments. That's all for today's sharing. Finally, thank you again for coming. I believe there will be enough content in the next few days to inspire you. Once again, thank you for your presence. Thank you!
_PS: Friends interested in the on-site speech content can follow the recent push of the "New Distribution" WeChat official account. We will organize and publish all guests' speeches for readers._
_Click **Read the original text** to see more highlights of the 7th China FMCG Channel Innovation Conference..._


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