I am very pleased to have this opportunity to share insights on behalf of Qicheng Capital at a time when the pandemic has ended for a year and China's retail industry is at a turning point. Echoing this era of inflection, the title of my speech is "Three Transformations in Retail Chains Navigating the Consumer 'Buyer's Era': Discounting, Community-based, and Manufacturing-oriented." Qicheng Capital is a fund focused on consumer investments, with the vision of empowering the 'new generation of consumer champions.' We have five 'mosts': the most consumer-focused fund, established with the support of China's largest retail company JD.com; the earliest and largest investor; and we focus on joining industries to be the best problem-solving investors. Qicheng primarily invests in two themes in the consumer sector: 'new generation national chains' and 'new generation national brands,' focusing on three major segments: large food, home goods, and lifestyle. The 'community-based chain stores with thousands of outlets' that Qicheng has invested in collectively have over 20,000 stores, with combined sales exceeding 60 billion yuan, and are expected to grow to over 100 billion yuan in three years. I will share insights based on their practices. First, let me present my viewpoint: China's retail industry has entered a 'buyer's era.' Over the past 20 years of development, driven by urbanization, digitalization, and becoming the world's factory after joining the WTO, we have evolved from an era of supply less than demand to a 'buyer's era' where supply exceeds demand. Compared to Japan, after rapid growth in the 1970s and 1980s, it entered a state of overcapacity, with capacity utilization continuously declining during the 'lost three decades.' In China, after the pandemic, changes in demand are also evident; we can feel the sharp drop in consumer temperature, consumers are tightening their wallets, shifting from past consumption upgrades to being more price-sensitive today, with increasingly segmented demands. From the experience of developed countries, when supply is less than demand, the bargaining power lies with brands; when supply exceeds demand, more power shifts to retailers. This means that for China's retail industry, the retail model driven by brand supply is being challenged. The original ecosystem served brands, with large brands like P&G pushing more SKU supply through extensive distribution to channels, promoting at regular prices in supermarkets. However, this very complex system has led to a very complicated cost structure. For example, in product promotions, brands do a lot of work, and even the sales promoters may be dispatched by the brand. But with the development of retail, this approach will gradually diminish. In today's 'buyer's era,' we can see three significant changes in retail chains: in pricing, location, and merchandise, moving towards discounting, community-based, and manufacturing-oriented development. Discount retail has grown rapidly this year and is one of the hottest consumer topics: Snack Hero has become a hot company in the consumer retail track, quickly growing to 4,000 stores; the entire discount snack industry is growing rapidly; Hema made a big move this year with the 'Moving Mountain Price' to lower its prices; Pinduoduo's market value once surpassed Alibaba's, etc. The essence of discounting is to act as a consumer agent; new-generation retailers need to move upstream across the entire chain to varying degrees, gradually replacing the brand-led role in selection, promotion, fulfillment, etc. Originally, everyone revolved around brands, but the brand-led model has huge losses. This is because in China, all brand owners attempt to build a circulation system, trying to replace retailers in ordering, promotion, selection, and warehousing and logistics, including the industry's 'deep distribution,' where distributors can reach villages and towns, and distribution sales personnel ensure display and sell-through. This leads to inaccurate ordering, repeated new product launches, and a large number of ineffective promotional activities. The most basic principle of retail is that whoever is closest to the consumer should take on more roles and initiate the entire supply chain. This naturally should be handed over to retailers, who must also take on more roles during transformation, doing more streamlined selection and stronger single-item management capabilities. Next is quality-price ratio and demand segmentation. Although low prices are an effective strategy this year because they bring products back to their essence, over a longer cycle, consumers need not only the products themselves but also other value-added services. Finally, retailers will inevitably segment consumer demand. Qicheng has invested in two companies directly related to hard discount: Snack Hero and Duoledun. We started contacting Snack Hero around 2019 and became the first-round investor in early 2021. At that time, many did not regard it as hard discount but as a more competitive convenience store. However, we believed that Snack Hero's core was hard discount. Founder Yan is very good at doing subtraction, connecting directly with factories, pricing at lower multiples, reducing costs through fewer handling and unpacking steps, and ultimately passing the savings to consumers. This is consistent with the efficiency-centric philosophy of hard discount. The reason hard discount first broke through in the offline snack format is largely due to the efficiency imbalance in the category. Snacks are a medium-frequency product, with slower turnover compared to other food categories, and a larger price deviation, with higher markups in supermarkets. Next, I believe hard discount will spread across all categories, and Duoledun is a representative. It operates in broader categories, including basic items and fresh produce, similar to the European hard discount model of ALDI, applying hard discount to comprehensive food categories like rice, flour, and cooking oil. In terms of community-based retail, we can see many chain community stores opening in residential areas over the past two years. China is a country with high population density and residential density, unique globally. There are about 300,000 residential communities in China, with a plot ratio of around 2.0, and the layout is relatively dense and enclosed, so purchasing power and foot traffic are highly concentrated within the community. Since 2015, people have moved to high-rise buildings in new towns, and as occupancy rates increased, purchasing power rose. Currently, one square kilometer of residents corresponds to 500 million yuan in purchasing power. One percent of that purchasing power can support a store. But because there are no supporting facilities downstairs, no vegetable markets or supermarkets, and they are far away, hard to reach on foot, this creates many opportunities for community stores. Among the companies Qicheng has invested in, there is Qian Dama, which specializes in fresh produce; Guoquan, which specializes in frozen products; and Snack Hero, which sells snacks. These are vertical category brands that bring the corresponding supermarket products to the doorstep. Such formats provide consumers with cheap goods, closer distance, and less walking, which is an efficiency improvement. The community-based approach has changed the operating model of many retail chains: first, dense store opening, where the same stores can be seen at the entrances of different communities, intercepting consumer traffic and retail traffic in a dense grid of community stores. This is different from Japanese retail, where high-density store opening is mainly in commercial areas, but in China, dense site selection is more in communities. Second, if you want consumers to travel farther and open larger stores, you need to create greater differentiated value. Large-store retailers need to do better in price competitiveness and differentiation, such as Duoledun being cheaper than Pinduoduo, and Sam's Club having unique private labels. Third, online empowerment further increases the output per store of community stores. When everyone opens small stores of 60-150 square meters, the store space and street traffic are limited. Using online tools to improve product efficiency, personnel efficiency, and offer consumers more SKUs is an important direction for evolution. The community store Qian Dama, which we invested in, can achieve 500-600 customer visits daily in a community of 3,000 households, mostly repeat business. How to continuously win the trust of these neighbors and capture the largest wallet share is the source of the moat. Finally, the rise of manufacturing-oriented retail. Retailers may not directly manufacture goods or invest in factories, but they will move upstream to participate in product definition, order management, and raw material selection. This is actually the concrete implementation of discounting. After mastering insights and selection capabilities, retailers define products from consumer demand, with a shorter value chain and higher efficiency. Manufacturing-oriented retail helps retailers enhance price competitiveness and also improve the competitiveness of distinctive products. Let me give a few examples of how manufacturing-oriented retail has strengthened the competitiveness of Chinese retailers. First, Hema's promotion of private-label fresh milk has enhanced its price competitiveness; in addition, Pangdonglai's mooncake is a very distinctive product that sells out as soon as it hits the shelves. Taking Japan as an example, consumer demand is increasingly segmented, and to seize the opportunities, more products are needed. Japanese brands and channels have built a system called 'production-sales alliance,' where they set plans, brands help channels launch 100 products annually, channels filter and retain 10, and two become classic products. This stable product supply chain system reduces the friction cost of new product launches and is the basic guarantee of efficiency. In addition, the cooperation between Guoquan and the upstream factory Daixieji is a successful case. Guoquan, by understanding consumer demand, customized shrimp balls and shrimp paste products, and jointly developed with Daixieji in Beihai, Guangxi, a quality-price ratio product with sufficiently high shrimp content. Because the product quality is good enough, it is very popular in the channel, and it also helped Daixieji win many customers to sell in channels other than Guoquan. Finally, let me summarize: we have entered the consumer 'buyer's era,' and during this process, China's retail has undergone three transformations: discounting, community-based, and manufacturing-oriented. The essential change still comes back to the hard truth: retailers must take consumer demand as the core, become consumer agents, and continuously iterate their business models around demand. Today, the transformation of offline retail in China has just begun. The single-item management capabilities and merchandising definition capabilities that China has lacked over the past 20 years will be continuously strengthened in the rise of the new generation of retailers. And with the strengthening of these capabilities, retail formats will continue to evolve. Take OK Store as an example: the brand introduced Europe's hard discount ALDI to the Japanese market, but it was initially unsuccessful. Later, it added fresh produce and strengthened frozen products, and suddenly achieved rapid growth. Compared to Japan at that time, China's current consumer market has a larger scale and more advanced retail infrastructure. For overseas formats to take root in China, the wisdom of the entire industry is needed. I also look forward to our retail colleagues creating more advanced retail formats based on their continuously improving capabilities.