At the end of 2016, CCTV-2's "Dialogue" program aired a show titled "Focusing on the Real Economy, Speaking for China's Industry," inviting leaders from well-known enterprises such as Zong Qinghou and Dong Mingzhu to converse on the same occasion. During the show, Zong Qinghou not only discussed the real economy but also responded to topics including Wahaha's sales decline and Zong Fuli's succession.

Regarding the performance decline, Zong Qinghou reflected and summarized ten reasons for Wahaha's decline. See which one resonates most with you?

1 Declining Sales Force Among the ten reasons, Zong Qinghou attributed the primary cause to the increasing costs for distributors. Rising costs have led to a decline in sales enthusiasm and consequently a decline in sales. Zong Qinghou said, "Rental costs are higher, labor costs are higher, and transportation costs are higher. Retailers demand higher price differences, so the company needs to add more high-value-added products. I always say that sales must solve the problem of who sells for you and who buys." He said the former is a matter of interests; if selling your product doesn't make money, no one will sell it for you.

The recession of the real economy and the rise of online shopping have undoubtedly brought huge challenges to traditional enterprises, and the increased taxes, fees, rents, and labor costs are not comparable to online shopping. How to promote the development of the real economy is not only a dilemma faced by Wahaha and Zong Qinghou but also a problem that the entire national economy must solve.

2 Negative Impact of Online Rumors Do nutrition express and "Shuangwaiwai" turn into "gel" after air-drying? "Do beverages cause leukemia?" "Do beverages contain botulinum toxin?" According to Wahaha Group's monitoring of self-media platforms such as Sina Weibo and Tencent WeChat, nearly 30,000 such rumors have been found since 2014, with over 170 million reposts and views, causing losses exceeding 2 billion yuan to Wahaha.

Because online rumors spread widely and quickly, they can easily bring adverse effects to enterprises and even the entire industry. Not only Wahaha but also products like instant noodles suffer incalculable losses each year due to sales reductions caused by rumors.

3 Population Migration from Rural to Urban Areas Wahaha is a large enterprise that has developed for decades. Compared with other enterprises, due to its strong joint distribution network, its sales channels in rural areas and third- and fourth-tier cities are already well-established. In large cities, however, it is more difficult for Wahaha to expand new channels than for small brands, such as small supermarkets and chain convenience stores.

With the process of urbanization in China, the rural population is continuously moving to cities, and Wahaha's offline channels need further expansion.

4 Too Many Product Categories, Lack of Blockbuster Products According to Wahaha's official website, it now has 14 major product series, including beverages, leisure foods, convenience foods, alcoholic drinks, dairy products, and health products.

Once, Wahaha created blockbuster products such as purified water, AD calcium milk, nutrition express, nutrient solution, and lotus seed eight-treasure porridge. However, with brand aging and insufficient innovation, the advantages of these blockbusters have not been sustained and have been gradually overtaken by similar products from other companies.

5 No Planning in New Product Development When it comes to new product development, we have to mention a very failed new product promotion plan by Wahaha. Qili is a taurine functional drink heavily launched by Wahaha in March 2012. At that time, Wahaha used its distribution system advantages to fully deploy, and even sponsored the then most popular variety show "The Voice of China."

Qili contains seven nutritional groups including taurine, L-carnitine, D-glucosamine hydrochloride, inositol, and B vitamins. As an emerging functional drink, it had great advantages. However, Wahaha mispositioned the product, pricing it at 6.5 yuan, even higher than Red Bull, which dominated the functional drink market at the time. Moreover, the promotional slogans such as "Often driving, always have Qili; address both symptoms and root causes; authentic health functional drink; drinking Qili won't harm your body; seven nutrients attack, enhance immunity" were too numerous and failed to create a memorable point for consumers. Since its launch, sales have been lukewarm, not only failing to compete with Red Bull but also being surpassed by later launches like Lehu and Dongsheng Teyin.

6 Rapidly Changing Media Environment Although Wahaha was one of the earliest companies to advertise, the current media landscape is diverse, with traditional media declining and new media rising. Wahaha has not fully adapted to these changes.

7 Significant Shift in Consumption Concepts The main consumer group has changed. For the post-90s and post-00s generations, packaging is the primary consideration, followed by whether the brand concept resonates, and then whether the taste and flavor of the product are suitable.

8 Insufficient and Unbalanced Market Development Many of Wahaha's products are regional bestsellers. Due to insufficient market development depth, many products with great market potential have not been successfully promoted.

9 Improper Command by Sales Executives The former sales executive of Wahaha commanded improperly, arbitrarily opening customers, turning large customers into small ones. Because the profit margin became smaller, distributors were not active in selling, and terminal order volumes decreased.

10 Reduced Harmony in Manufacturer-Dealer Relations and Poor Sales Team Management In some markets, the relationship between Wahaha and dealers is not harmonious. In some markets, there are cases where sales personnel deceive dealers, or dealers deceive sales personnel. Moreover, some sales personnel lack discipline and are not active in their work.

However, Zong Qinghou also optimistically stated that although performance has declined, a rebound is not a big problem. "I have a good mentality. When encountering difficulties and setbacks, just get through them."

In 2017, Wahaha launched more than ten new products ambitiously to regain lost ground. Whether it can succeed remains to be seen.

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