This article is reposted from the WeChat account: 纳兰醉天 In the FMCG industry, I divide companies by region into Zhejiang, Fujian, Henan, and Guangdong merchants. Among these four major business groups, the most prominent is the Zhejiang merchants, as they include former national richest man Zong Qinghou and advertising legend Zhong Shanshan, founder of Nongfu Spring. In recent years, Wahaha has been plagued by controversies. First, it entered the children's clothing industry in 2002, then came the split with Danone. After the split, succession issues arose. Zong Fuli, who couldn't understand China's business model, threatened to move Wahaha out of China. After this relocation turmoil, Zong Qinghou invested 15 billion yuan in the liquor industry and another 5 billion in real estate. If you're a tycoon with money, you can do whatever you want; it's not something us ordinary folks need to worry about. I'm just finding fault out of envy and jealousy. Speaking of Wahaha, one must mention Danone. In the 2007 Danone-Wahaha battle, Danone left in disgrace. In many people's eyes, it was a victory for national brands, and the imperialists finally got out. Actually, regardless of Wahaha's registration location, Danone didn't invest in a brand to erase it and replace it with the Danone name. In Danone's view, whether it invested in Wahaha, Robust, or even Bright and Mengniu, it wasn't because these were competitors, but because they were supplements to its low-end price range. In other words, they didn't care about these brands' markets, just like the US wouldn't print a lot of RMB just because it's appreciating (though some might mutter that imperialists never die, citing brands like Zhonghua, Active 28, Mininurse, and Dabao that died after foreign acquisitions. If you raise that, I have nothing to say. These so-called national brands died due to their own operational mistakes. The founders all got a big payout from foreign companies and left happily, then claimed the evil imperialists buried their century-old brand dreams. Classic hypocrisy. In FMCG, who doesn't hope their company gets acquired by foreign capital and then get fired, because that means a big severance package). After Danone invested in Wahaha, it brought in substantial funds and advanced marketing models. Most importantly, with Danone as a major shareholder, Wahaha spent money without hesitation, making various activities vibrant, not just focusing on TV ads and pressuring distributors to stock up. Many Wahaha employees became wealthy during that time. After Danone left, Wahaha only had TV ads and tricks to get distributors to pay upfront. That's why from 2007 to 2013, Wahaha launched a new brand every year and each one died. Meanwhile, Danone started operating Mizone, which Robust had already killed. Wahaha's sales in recent years still come from mineral water, Wowayi, AD calcium milk, and Nutri-Express. It has too many dead brands for me to remember. Wahaha's success was due to foreign investment, massive TV advertising, and then capturing rural markets. When foreign capital left, Wahaha didn't want to invest in end-consumer communication because it was too slow. As long as there were ads, there were sales, which worked before 2008. At that time, we saw many advertising-driven companies in China: Huiyuan, Want Want, Wahaha, and Xiangpiaopiao milk tea all relied heavily on ads for sales. Those years created Ye Maozhong's myth of collecting payments at sugar and wine fairs. Endorsements plus ads equaled sales in those days. That's why even products with immature technology could sell well. For example, Wahaha's Nutri-Express has a serious milk-water separation issue that remains unsolved, but it sells over 15 billion yuan a year (recently, negative news about Nutri-Express has increased). However, after 2008, consumers paid more attention to product experience and the concepts conveyed by manufacturers. So we saw Wahaha's Piyi Chashuang, Qili, and Kvass all fail one by one. Actually, Wahaha's unsuccessful brands in recent years are not only due to its operational model but also its brand tone in consumers' minds. Rural channels have always been the main source of Wahaha's sales. For instance, Wahaha's Future Cola sells 2-3 billion yuan annually in rural markets. Perhaps aware of its long-standing brand issues, Wahaha hoped to upgrade its brand image in recent years. So we see Wahaha's recent products focus on functionality. However, due to a short-sighted mentality, not only did the brand fail to upgrade, but it also lost a large number of rural consumers. The only benefit might be that it hurt Fujian's Dali Group, making their Lehu brand also fail miserably. Like its big brother Wahaha, Nongfu Spring is also a master of advertising creativity. Its founder, Zhong Shanshan, transitioned from advertising planning to the FMCG industry. The difference from Wahaha is that Nongfu Spring is more niche, appealing to urban white-collar workers. For example, Nongfu Orchard had a problem with particle sedimentation due to product technology, but they turned it into an advantage with the slogan "Shake before drinking." Also, Nongfu Spring's "Nature's Porter" highlighted its non-processed, natural characteristics (though due to China's severe pollution, nature no longer has its original colors). Of course, my favorite is Nongfu Spring's Oriental Leaf tea ad, though I've never bought a bottle. However, no matter how good the ads are, if consumers can't experience the product, each new product will fail (like this year, Nongfu Spring got into a war of words with the media). Although each new product fails, it doesn't affect the company's revenue. Large companies often have a practice: if you want to continue operating old items, you must stock a certain amount of new products. This ensures first-year sales for new products. But it hurts distributors, who have to engage in cross-region selling or low-price dumping to digest the forced inventory, trying to minimize losses. Of course, more than brand image and product sales, Wahaha's biggest headache is the next generation of leadership. There's a Chinese saying: wealth doesn't last three generations. Miss Zong is a legend. Since she studied fashion design abroad, Wahaha entered the children's clothing market. Because Wahaha employs many relatives of government officials, the organization is bloated. That's why Zong Fuli threatened to move Wahaha out of mainland China. She seems to have forgotten how the government helped Wahaha during the Danone battle. Zong Qinghou once said: Any successful enterprise needs a strong leader to ensure execution. Of course, a successful person's words are truth, just like why I think everything Jack Ma says is truth? Because he succeeded. I don't understand how a boss can discuss a 5 billion investment project during the day and at night review whether a mop at 4 yuan is okay. Does such a company really have execution? However, one thing we must admire about Zhejiang entrepreneurs is their insistence on product quality. In the melamine incident, neither Wahaha's Nutri-Express nor Beingmate's milk powder was implicated (though recently, Wahaha seems slightly involved in the Fonterra incident). If Zhejiang merchants don't change their habit of focusing only on advertising and channels while ignoring consumer experience, I think Wahaha will be the next Dabao. 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