Click to read the original article for details. China Want Want Holdings Limited recently experienced another round of personnel changes. On July 26, China Want Want Holdings Limited announced that Zhan Yufeng resigned as executive director and member of the strategy committee for personal reasons, while Cai Minghui and Li Kangyi were appointed as executive director and member of the strategy committee, respectively. In the past period, nearly a quarter of Want Want's board members have been replaced. "Want Want reorganizes its departments every year, mainly re-dividing departments, and the product ownership departments change accordingly. This restructuring has been going on for several years and has also led to staff turnover. In the past two years, many senior executives or key contributors have been transferred to insignificant positions and had no choice but to leave," said Li Yanan (pseudonym), who has worked in multiple departments at Want Want, to reporters. "The company's personnel turmoil is somewhat related to performance." As a long-established FMCG brand, Want Want's influence has been waning in recent years. According to the financial report for the 15 months ending March this year, Want Want's operating profit fell 7.4% to 4.19 billion yuan, net profit was 3.1158 billion yuan, down 6.6% year-on-year, and gross margin dropped from 47.2% to 43.1%. In response, reporters from China Business Journal sent an interview request to Want Want regarding personnel changes and performance, but had not received a reply by press time. Internal Turmoil It is understood that after resigning as executive director and member of the strategy committee, Zhan Yufeng will continue to serve as chief of staff. The new member, Cai Minghui, previously served as general manager of Want Want's Southeast Asia Development Division and was also responsible for sales management, brand promotion, and product and market visibility enhancement in Hong Kong and Macau. Li Kangyi is the company secretary, and both directly hold a certain number of shares in the company. Similar to other established FMCG brands like Uni-President and Master Kong, Want Want quickly opened up the mainland market in its early years through heavy advertising and channel expansion. In 2008, Want Want was listed on the Hong Kong Stock Exchange. Since entering the capital market, from operations to product promotion, under the leadership of boss Tsai Eng-meng, the company has embodied a family business style. Although in 2008, Tsai Eng-meng publicly stated that "the future of Want Want is to be arranged so that it can operate without me," Li Yanan told reporters, "Want Want has a bit of a 'centralized power' feel, and the high-level personnel changes are somewhat related to this. Over the years, it has not been uncommon for important employees to leave, mainly because they were transferred to insignificant departments or positions and had no choice but to leave." Traditionally, Want Want set up different business divisions based on different products. In 2017, Tsai Eng-meng began drastic adjustments and reforms. It is understood that Want Want reformed its original organizational structure, changing from business divisions to a regional system, establishing 16 major regions nationwide. The heads of each business division at headquarters went deep into the market frontline, serving as general managers of their respective regions, overseeing all Want Want business in that region, and implementing strict reward and punishment measures. For regional general managers, they had to simultaneously manage three different businesses: rice crackers, snacks, and dairy drinks. CICC's research report believes that Want Want's adoption of a regional system can optimize market cultivation, promote maximization of sales revenue in each regional market, and also solve the problem of an overly diverse sales team. The incentive system, which also stipulates that sales personnel who fail to meet revenue growth targets will be eliminated, demonstrates leadership's determination to drive revenue growth. However, this approach has been controversial. A person close to Want Want told reporters that Want Want originally set up different business divisions based on different products, which also led to some overlap in distributor operations. This model, after scaling up, did not create good synergies among distributors, and how to integrate different distributors is a challenge for Want Want. "The different business categories are complex and span widely, with completely different channels and promotional methods between categories. It is difficult to integrate them under the regional system, and with the accompanying reward and punishment and elimination systems, the work of regional managers is not easy." Previously, China Foods under COFCO also faced similar adjustments and controversy. It is understood that after the cancellation of business divisions and the establishment of the regional system, regional managers not only had to sell by category but also across categories and brands. For example, they had to be responsible not only for Great Wall wine but also for Fulinmen cooking oil, and even for Le Conte chocolate. Correspondingly, distributors had to sell not only grain and oil but also wine and chocolate. A Beijing trading company's Great Wall wine distributor said, "I don't agree with this change. Asking us wine sellers to sell chocolate is completely different." Lackluster Distributors In fact, alongside reforms and adjustments, the enthusiasm of Want Want's distributors is gradually waning. A distributor who had cooperated with Want Want for many years, Chen Yan (pseudonym), told reporters, "I ended cooperation with Want Want in 2014. From that year on, many distributors like me terminated contracts, all old distributors." The main reasons are "Want Want products are not easy to sell; people now pursue health more, and demand for rice cracker foods has decreased. There is also the problem of channel stuffing." Reporters noted that channel stuffing is a common problem in the retail industry, also known as dumping, which refers to the practice where various levels of agents and branches in the distribution network, driven by profit, sell products across regions, causing price confusion. "Want Want has always had channel stuffing, that is, cross-regional sales, which leaves no profit in our selling prices. Such channel stuffing must be punished," Chen Yan said. Li Yanan told reporters that in recent years, the performance pressure on Want Want distributors has increased year by year, and profits have been gradually diluted. "Want Want reorganizes its departments every year, mainly re-dividing departments, and product ownership departments change accordingly. The products originally distributed by corresponding distributors also change, greatly affecting the interests of existing distributors, causing the market foundation to be lost. Channel stuffing is also serious. Want Want has been pressuring distributors to stock up, forcing some distributors to sell at low prices, leading to no profits for some distributors, who have no choice but to terminate contracts." Want Want is not without efforts to overcome its "midlife crisis." Chen Junjiang, head of Want Want Group's product R&D department, said in a media interview last year that in the past two years, Want Want has been looking for breakthroughs and increased internal adjustments. He said that Want Want's diversified product strategy has brought great pressure to the sales system, as distributors have many product lines, making it impossible for them to cover all product lines comprehensively. According to the adjustment, Want Want divided products into different categories and recruited distributors separately, thereby achieving horizontal growth in the number of distributors. At the same time, Chen Junjiang said that newly added frontline distributors expand to second- and third-tier distributors in downstream channels, allowing Want Want's distribution system to grow geometrically as a whole. Meanwhile, Want Want also made internal adjustments, with the original heads of each business division directly going to the frontline to supervise and manage, each responsible for a business area. The company believes that only through such meticulous cultivation can it reverse the decline. CICC's research report states that Want Want's China market has been re-divided into 7,533 small standardized markets (SSRs), previously 2,455. Since the beginning of 2017, nearly 1,000 small standard markets have been sorted out by increasing sales personnel and signing new distributors. In terms of new product launches, Want Want is also trying to make an effort. In June this year, Want Want announced new product plans, including launching Bond coffee, "Sawow" fruit wine, and herbal beverage "Da Kou Shuang." In markets such as juice, coffee, and energy drinks covered by new products, Want Want has mature competitors, and its exploration of young consumer groups is still insufficient. In 2017, Want Want launched nearly 50 new products. On Want Want's Tmall flagship store, there is a special section for "Want Want you haven't tried." Before that, Want Want also launched many "brainstorming" new products: dollar-shaped fish crackers, wasabi and chili milk candy, pressed candy in tea bags, and snow ice senbei bigger than a face. However, reporters did not find them in supermarkets. "A very important reason for the lack of success in new product launches is that only Want Want headquarters is enthusiastic, while other levels, including distributors, have resistance. Other brands are very motivated to launch new products, with profits and rewards for distributors, but Want Want is lacking in new product promotion. It relies on the large number of customers and teams, sets high prices for new products, and the remaining inventory is mostly borne by distributors, using new product launches to make a big profit. As a result, the survival rate of new products is very low," Li Yanan told reporters. Source: China Business Journal -END-