---
title: "Zhu Jian of Binfu Capital: How Do Investors View Supply Chain Investment?"
description: "At the 2017 (2nd) China FMCG + Internet Conference held in Chengdu on March 21-22, 2017, Zhu Jian, founding partner of Binfu Capital, shared his insights on supply chain investment in the FMCG sector. He discussed the industry's pain points, the reasons for the current wave of innovation, and offered strategic advice for entrepreneurs, emphasizing the importance of efficiency, focus, and sustainable profitability."
author: "朱健"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2017-03-25"
language: "en"
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# Zhu Jian of Binfu Capital: How Do Investors View Supply Chain Investment?

> At the 2017 (2nd) China FMCG + Internet Conference held in Chengdu on March 21-22, 2017, Zhu Jian, founding partner of Binfu Capital, shared his insights on supply chain investment in the FMCG sector. He discussed the industry's pain points, the reasons for the current wave of innovation, and offered strategic advice for entrepreneurs, emphasizing the importance of efficiency, focus, and sustainable profitability.

From March 21 to 22, 2017, the 2017 (2nd) China FMCG + Internet Conference was grandly held at the Chengdu Century City New International Convention and Exhibition Center, attracting over a thousand distributors, manufacturers, and internet companies from across the country. The venue was packed, and the event was a great success. Below is the speech delivered by Zhu Jian, founding partner of Binfu Capital, on March 22, which we have compiled for our readers.

Thank you to the organizers for the invitation. As the only outsider in the industry on the agenda over these two days, I'm here to share some thoughts. Many startups, brand owners, and channel partners are present today. I'd like to take this opportunity to share how capital views the upgrading and transformation of the FMCG supply chain.

The FMCG industry is a trillion-yuan market, vast in scale, wide in regional coverage, and complex in industrial form. For all practitioners, it undoubtedly contains rich opportunities for entrepreneurship and business, and there is certainly a chance for ecosystem or platform-type large companies to emerge.

Capital will inevitably not be absent. In the past year or two, I believe everyone can feel the impact and influence that the intervention of numerous capital investments in startups has brought to the industry ecosystem in this relatively "traditional" field of FMCG.

During the forum over these two days, various speakers have thoroughly discussed the pain points in each link of the industry. Let me briefly summarize:

> Brand owners: sluggish sales growth, inefficient channels, and difficulty reaching end consumers.
>
> Channel distributors: high operating costs, squeezed from both upstream and downstream.
>
> Retailers: rough front-end and back-end operations management, intense competition.

As the theme of this conference suggests, all parties are in urgent need of being "empowered" and "evolved."

Of course, these problems or pain points may have existed for a long time. Why today? Why are so many new "models" and companies emerging all at once?

We believe the main reasons are as follows:

1. **First, the macro environment continues to exert pressure.** After market dividends gradually dry up, the motivation for all parties to seek efficiency improvements and model innovation on their own is growing stronger.

2. **Second, the basic elements are in place; hardware equipment and software systems are gradually maturing.** The age structure of industry practitioners is changing (as statistics in the "Industry Blue Book" also indicate), and they are more receptive to new models and tools. Additionally, many human resources from the internet field are continuously flowing into the industry.

3. **Consumption is further upgrading, and consumers are also changing.** The simple demand for "convenient access to a rich variety of good products" is forcing upstream links to keep up.

4. **Large-scale capital investment is providing assistance.** The dividend of mobile internet is coming to an end, and industrial internet will take over this overflow of capital. Many of the "star" companies attending this conference have very heavy startup phases in their business models. Whether it's the infrastructure of unified warehousing and distribution or the approach of subsidized marketing, it's hard to imagine achieving such rapid development without substantial capital involvement.

"The wind" may really be coming; the industry is surging, with waves of pioneers, a hundred flowers blooming, and a hundred schools of thought contending... But the "pigs" have only lifted their legs, not yet taken off. For example, many business models around the FMCG B2B direction still commonly suffer from "scale without economy" and "inability to push new products or move traffic-generating products online," where high investment has not brought efficiency gains or user stickiness.

**"I sleep like a baby, waking up crying every two hours."** This quote from "The Hard Thing About Hard Things" (by Ben Horowitz, a veteran Silicon Valley entrepreneur and investor) has become a vivid portrayal of many entrepreneurs.

**"I often feel like I own the world one day, but the next day I feel like the world is slipping away from me,"** deeply touching the softest part of the heart.

Between dreams and reality, there are often numerous chasms and obstacles. Hence, a very interesting question arises.

This viewpoint is a metaphor from a recent sharing by Zhou Yahui, chairman of Kunlun Wanwei. The underlying meaning is the classic proposition: "Dig for gold, or sell shovels?" Over the past two days, many guests and speakers have given everyone much advice. But when making choices, **you must consider your own resource endowments, and then decide whether to "transform and build an ecosystem," "evolve and integrate into an ecosystem," or "leave the ecosystem."**

Over these two days, discussions on business models for supply chain upgrading and optimization have been quite thorough, and some preliminary conclusions may have been reached.

**First, "talking about models without distinguishing categories is hooliganism."** This viewpoint has basically gained consensus recognition; both self-operated and matchmaking models have their rationality and suitable soil.

**Second, "no category is perfect."** Different sub-categories differ in industry scale, upstream and downstream concentration, distribution of traditional interest chains, and derivative attributes of the category. "Choosing the right category makes it half as easy." The industry differences among various sub-categories in the FMCG field are significant; everyone should choose the one that suits them best. But in reality, for many industry practitioners, there is little room to choose a category; they often have to rely on "path dependence." Abandoning a field they've cultivated for ten or twenty years to enter an unfamiliar category poses equally huge challenges.

**Let me share some of our thoughts:**

1. **You must have deep insight into your industry and make as accurate a judgment as possible on trends.** Based on this, design your business model or explore business opportunities.

2. **Choose a suitable entry point and continuously explore and optimize the minimum unit economic model.** "Don't mistake the end for the beginning; be careful, the path may kill you." We see too many entrepreneurs with beautiful visions but too large an entry point, leading to failure after launch due to insufficient resources. There are also many entrepreneurs who are too eager to replicate and expand before the model is fully validated, causing errors to be amplified.

3. **Do what you should and refrain from what you shouldn't; concentrate resources on building moats.** Cut down on things that can be done, find partners for unimportant matters, and take core barriers to the extreme.

4. **Build strong operational capabilities and execution to replicate with maximum efficiency.** The essence of evolution is the replacement of low-efficiency models by high-efficiency models. For the same thing, there may always be people who are more diligent and have more resources competing with you, so efficiency is crucial.

5. **Embrace capital enthusiastically, but financing rhythm is far more important than valuation.** Today, whether for entrepreneurship or business, capital plays an increasingly important role. Moreover, excellent investment institutions often bring other forms of support and help, so you must learn to leverage them.

6. **Don't argue.** Details and data are your most powerful proof; real data never deceives.

Although there are still many controversies or areas for improvement in business model innovation and entrepreneurship in the FMCG supply chain field, we remain very optimistic about the opportunities in this direction.

Of course, the investment logic of capital may have changed somewhat today. **Previously, there was a strong focus on traffic, GMV, scale, and expansion; today, there is more focus on sustainable net income and predictable profitability.** Everyone must clearly understand that **your core value lies not in scale and vision, but in the degree to which you are irreplaceable.**

We believe there are still entrepreneurial opportunities in the following directions:

**First, differentiation in sub-categories and innovative marketing and channels.** For example, "Three Squirrels" in recent years. Founder Zhang Liaoyuan's quote well summarizes the reason for the brand's success: "Squirrels run fast, all thanks to IP." It's not just an ordinary nut; it pursues ultimate user experience and emotional consumption. Taishan Craft Beer first differentiates its products, then fully utilizes new media for communication and promotion, achieving excellent results.

**Second, platform opportunities in segmented vertical industries.** These areas are not as fiercely competitive as the FMCG platform market today. Although the absolute market size is not as huge, there is still a chance to produce unicorn companies. Additionally, there are platforms with regional ecosystem barriers that effectively deepen and strengthen from upstream supply chain improvements to downstream sales promotion, forming moats and barriers. Although expansion speed may be slower, they occupy excellent geographical space.

According to the organizers, this forum is the largest sub-forum at this year's Sugar and Wine Fair, with over a thousand participants and a two-day schedule. It reminds me of a saying: "Carnival is the loneliness of a crowd; solitude is the revelry of one." Perhaps everyone is confused and anxious, but I suggest: **Do something valuable, do your best, and then wait for the reward of time.**

Thank you!

For more on-site highlights, click the "Read Original" link below.

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