Xin Chao Media Group co-founder and senior vice president Zeng Jian attended as a guest speaker, delivering a keynote speech titled 'Bouncing Back from the Bottom: Practical Cases of Brand Growth' to over 1,500 industry professionals. New Distribution has compiled the essence of his speech for readers. (Partially edited) How to Navigate Economic Cycles Achieving Counter-Trend Growth After the pandemic, China's consumer market faces many difficulties: the dividend from traffic has peaked, customer acquisition costs are high, consumer demand is weak, brands are in trouble, and the supply chain is highly competitive. So, should we just give up? I believe that a poor external environment cannot be an excuse for a company's lack of growth or failure to meet performance targets. Excellent companies grow above average when the external environment is good, and when it's bad, they can also reduce costs and increase efficiency to achieve effective growth. Therefore, excellent companies always successfully navigate economic cycles and achieve counter-trend growth. The data above pertains to the entire FMCG industry related to Xin Chao. In the first half of 2023, many international listed companies, such as Nestlé, Coca-Cola, Skechers, Vipshop, Philips, Procter & Gamble, and Walmart, achieved double growth in both revenue and profit. We might think we face difficulties in the era of globalization, such as the Russia-Ukraine war, post-pandemic effects, and supply chain restructuring, but according to the 2023 semi-annual reports of these companies, they achieved counter-trend growth. Chinese listed companies, such as China Resources Snow Breweries, Midea Group, Yibin Wuliangye, Kuihua Pharmaceutical, and Dongpeng Beverages, among many other leading companies, also achieved double growth in revenue and profit. Why can these companies navigate economic cycles and achieve sustained growth? I believe every era has its own enterprises and heroes, and every era sees companies fall. The life cycle of a company is like that of a human being. If a company hasn't navigated economic cycles to achieve sustained growth, we should ask ourselves, comparing with those benchmarks, why they can grow in the same era. Most companies have three ways of dying: legal death, policy death, and cash flow death. Most companies fail essentially due to cash flow death. Therefore, ensuring the safety of cash flow and effective leverage is something contemporary entrepreneurs must pay special attention to in financial management. Companies that navigate economic cycles, whether foreign or the new generation of excellent entrepreneurs born in the 1980s and 1990s, are very cautious about cash flow management and reserves. Nokia is the best example. Although it lost in that era, it had cash flow to transform, found a new lifeline, and survived. The worst case is when the era is good, but the company's cash flow breaks, it can't pay salaries, and eventually has to close. From abroad to China, there are many marketing theories. I believe the 4P marketing theory in modern economic management is the most basic management theory framework, especially applicable to the FMCG industry. In business management, excellent companies and entrepreneurs pay more attention to underlying logic. Some entrepreneurs may have been in business for decades, winning the market, but they don't know how they won. Such businesses are called 'businesses' (生意). True entrepreneurs are those who have learning ability, understand basic business knowledge, and have reverence. One part strategy, nine parts execution In the current stage where the market is not good, or Chinese business society is restructuring and undergoing many changes, there is a very interesting phenomenon. Some companies, when facing difficulties, choose to develop many strategies and make many disruptive moves. I think strategy is about choosing what to do and what not to do. Strategic choices are difficult, maintaining strategic focus is even harder, and executing strategy well is even more difficult. Often, after setting a strategy, it's one part strategy and nine parts execution. Most companies' strategies don't have major problems because if you've come this far, it proves your strategy is right. Often, it's execution that's wrong, but most people attribute execution and organizational issues to strategy. Like Tao Shiquan's speech, it's clearly one part strategy and nine parts execution, even planning for the second generation, with two generations working on one thing, leaving only execution. Strategy implementation requires learning ability, review ability, and sufficient cash flow. Strategy is a process of creating value for customers, matching your capabilities, resources, talent, and organization, and continuously correcting. In such times, excellent entrepreneurs should always be on the front line, spending more time with customers externally, and minimizing internal disruptions. Organizations should be vibrant, but not change every three days. Don't change for the sake of change. Sometimes maintaining stability is more important than organizational change. Often, when cognition, capability, methods, and organizational ability are insufficient, change can cause more harm. Peter Drucker once said in an interview with the Wall Street Journal: 'Only shoes are real.' Drucker asked what makes a good shoemaker? The only criterion to measure whether someone is an excellent shoemaker is whether a young, beautiful lady feels comfortable when she wears your shoes. Shoemakers exist because people need shoes, not because shoemakers want to make money. The core of any entrepreneur and company is that products and services are needed by users—this is the essence of doing business and providing services. The ultimate meaning of running a company is to create products and social value, not profit. Profit is just a result. If you particularly want to make money, you often won't. Focus on service, focus on customers, create value for customers, stand with customers, and you'll eventually make money. Success Equation = Mindset × Passion × Ability × Time Whether you're a company in a niche track or a regional market, to navigate the mainstream competition of this era, the core is to face the big market. Big rivers and big seas have big fish; big winds and big waves also have big fish. Choosing the right track is important. You must choose a large industry, a good industry, with a high enough ceiling. Ambitious entrepreneurs can then build big companies. Mr. Inamori Kazuo said the equation for success in life is mindset × passion × ability. I added time. Often, we have the mindset, passion, and ability, but we can't persist. The success equation is about your mindset, whether you maintain enough passion, and whether you have ability. But note, these are all multiplicative. A person or company might have only 30% ability, but if passion and mindset are 100%, that's 100×100×30. If ability is 90%, but passion is only 10% and mindset is 10%, plus the accumulation of time, your gains will be very small. Xin Chao Media has long studied Inamori Kazuo's philosophy and methods: put in efforts no less than anyone else, don't be arrogant, reflect daily, be grateful for life, and don't have emotional troubles. These words are simple, but can we do them? The essence of business, family, and life is sometimes very simple, but can we do it? Most of the time we can't, but if we can do just one of them, through daily reflection, we can achieve the previous points. Through these, we want to express that a company should know how to review, and pay more attention to organizational and cultural construction. The Way to Win with Strong Brands a1 Snacks Case Study a1 Snacks grew 57% year-on-year this year. Many might say it's impossible? It's not impossible; you just don't know. a1 Snacks did it. Why, in such a difficult baking track, could a1 Snacks achieve counter-trend growth of 57%? I think the core is based on 4P. a1 values products, investing over 10% in product R&D. The root cause of a1's counter-trend growth is seizing the essence of the track: product and experience innovation. 1. Brand Strategy The new brand's hit product strategy requires resource concentration and trade-offs in category scale data. The founder of a1 Snacks is an entrepreneur born in the 1980s and also an old food craftsman. He knows how to use category scale to make decisions. Using category scale data to see trends is very important. The core is user-first; you must build super users, drive product upgrades and innovation, and improve supply chain efficiency. 2. Hit Product Innovation The founder of a1 Snacks, Zhou Weiping, has a theory: All traditional large categories are worth redoing. Why? Because consumption is upgrading, users are changing, channels are changing, so all traditional large categories are worth redoing. That's why we have a1 Cloud Cake, a1 Fruit Toast, a1 Banana Bread, and a1 Panda Cake. a1 Banana Bread is this year's hit product, aiming to redo the entire banana bread category. 3. Supply Chain Innovation The founder of a1 Snacks invested 1.6 billion yuan at his peak to build a super factory in Shandong. Because the traditional factory model has dispersed resources, while a super factory is an intensive factory that improves efficiency and reduces costs. Why do this? Because to face large-scale production, you need to do big markets. Scale brings competition in cost and efficiency. Breads at different price points face different markets. Up to now, 88% of China's population has a monthly income below 6,000 yuan. Most ordinary people are highly price-sensitive, so today's business is harder. The core is that there are too many supply chains and too many participants. How to stand out? Only by improving your company's capabilities, product capabilities, and market organization capabilities can you outcompete others and survive. This is an inevitable process after 30 years of reform and opening up. 4. Channel Management Innovation In channel management, a1 made a very important innovation. Its twelve-character policy is: 'Generals brave, customers smooth, network wide, points deep, sound loud, momentum strong.' The core is to move the sales team to the front line, truly lead distributors in grid-based city management, and do deep distribution. For example, a distributor in a county-level city in Shandong had been doing business for five or six years, with monthly sales of just over 100,000 yuan. After using this community-centered approach, they achieved over 500,000 yuan in the third month. 5. Terminal Experience Innovation Terminal experience innovation means looking at stores, using beauty-style aesthetics to attract fans, creating a 'high-value' product image, leveraging offline store layouts to enhance brand awareness, relying on hit products to drive traffic, and connecting online and offline traffic loops to reach consumers directly. 6. Brand Communication Innovation Only brands with sales are called brands. a1 Snacks develops 26 new products to create one hit product. In fact, before the hit product, they already had a horse-racing mechanism. Through brand IP-ization, public-private domain traffic conversion, super user cooperation, and cooperation with media platforms that promote sales effectiveness, a1 Banana Bread has exceeded 300 million yuan in sales in 9 months since launch. a1 Snacks Research Institute chose Xin Chao Media, using 'community elevator media' for high-frequency exposure, repeated touchpoints, and multi-angle, full-range communication to more consumer groups, significantly boosting brand influence. In its ten years of entrepreneurship, Xin Chao Media has become the number one community elevator media in China. This number is indisputable. Mr. Jiang Nanchun proposed 'Double Micro, One Douyin, One Focus Media' (双微一抖一分众), which can be changed to 'Double Micro, One Douyin, Double Elevator Media' (双微一抖双梯媒). With Xin Chao's 8 billion yuan investment, the elevator media market landscape has undergone tremendous changes. The Xin Chao 3.0 smart screen, covering over 1 million elevators, has truly formed the largest media category in China, far exceeding LCD and frame media covering office buildings. In 2022, Xin Chao elevator video media covered a total population of 180 million people. At the same time, Xin Chao is continuously strengthening intelligent and digital development, empowering the entire chain, and providing better services for more brands! PS: Friends interested in the on-site speech content can follow the recent posts on the 'New Distribution' WeChat official account. We will compile and publish all speakers' speeches for readers. Click Read Original to see more highlights from the 5th China FMCG Conference and the 1st China FMCG Distributor Conference...