Capturing Consumer Demand and Pursuing Innovation and Change to Enhance Product Competitiveness
Enhancing Market Competitiveness via Consumer-oriented Approaches and Continuous Product Lines Expansion
We take the people’s desire for a healthy life as our goal. In the first half of 2019, the Group adhered to consumer-oriented concepts and expanded its product lines, introducing new products including Besunyen Miao Miao Jiao Enzyme Jelly, Besunyen Day and Night White Collagen Powder, Besunyen red bean and adlay tea and Besunyen lotus leaf green tea on the e-commerce platform. Focusing on an array of weight management product offerings and intestine healthcare product offerings, comprising “OTC drug + Health food + Ordinary food”, the Group continues the development of “OTC drug + Health food + Ordinary food” under the product categories of dietary supplements as well as health and beauty products. The Group captured consumer demand while pursuing innovation and change to enable the continuous creation of popular products.
Exploring New Branding Models and Broadening Brand Promotion Channels to Highlight Brand Value
Leveraging Radio Platform to Increase Brand Exposure and Expand Brand Influence
In the first half of 2019, the Group placed frequent advertisements on The Voice of China and Music Radio of China National Radio at different times of the day to create brand memory in a short period of time. The Group continued to use slogans such as “Give Your Intestines a Bath” to awaken the brand memory of the audience, which served to increase brand exposure while facilitating product sales. The Group also sponsored the “I Want to Go to School 1200 Student Aid Programme” jointly promoted by the China Children and Teenagers’ Fund and Music Radio of China National Radio to make children’s dreams come true, thereby sharing social responsibility, enhancing brand reputation and expanding its influence.
Making Strategic Use of Elevator Media to Aim Precisely at Family Consumer Group for the Shift to New Operation Model
In the first half of 2019, the Group made strategic use of elevator media to aim precisely at family users, and integrated offline terminals and online data to reshape the new operation model of “people, goods and venues”. Our advertisements were shown on more than 300,000 elevator monitors in nearly 70 cities to delve into the pain points of users, resonate with the target audience and meet the consumption demand of families. As socialisation becomes personalised and mobile, the new operation philosophy which integrates terminal-based advertising will usher in a simpler, more efficient and easier way for the circulation of goods, which further promoted the shift of the operation of the Group from a conventional model to a new operation model and further conducive to the Group’s promotion of the sales of offline pharmacy chains nationwide.
Fully Upgrading Product Placement into Movies and Television Dramas to Create New Branding Models and Promoting Brand Rejuvenation
Expanding Product Placement into Web Dramas and Variety Shows to Enhance Brand Competitiveness with Contents Marketing and Scenario Marketing
In the first half of 2019, the Group fully upgraded its brand promotion campaigns to create new branding models of community dissemination and scenario marketing, actively promote brand rejuvenation and step up product placement into web dramas and variety shows, which improved brand awareness among young internet users and enhanced brand competitiveness with contents marketing and scenario marketing. In the first half of 2019, a total of two dramas with placement have been confirmed and are expected to be broadcast this year and next year respectively. In addition, adhering to the principle of “brand rejuvenation”, a number of online videos have been produced, and are distributed to younger active consumers over time.
Increasing Joint Marketing Efforts to Keep Enhancing Brand Competitiveness
The variety show Living It Up 《( 人 生 加 減 法 》), which was specially supported by Besunyen Slimming Tea, was broadcast on Dragon Television, iQiyi, Tencent and Youku concurrently, injecting the audience with a green, healthy and positive booster of weight management. The programme was produced by Mr. Yu Fan, who had 13 years of experience in making variety shows and was one of the earliest producers of reality shows which featured amateurs in China. The 100-day life-changing stories of a group of 14 amateurs, who were led by the skilful singer Will Liu, were filmed in the form of documentary. Meanwhile, the Group increased its joint distribution efforts in the first half of 2019, gaining the enterprise a greater competitive advantage and more development opportunities.
Joining Hands with Academy Award and Sponsoring “Besunyen Cup” Public Welfare Advertising Contest
In the first half of 2019, the Group joined hands with the collection activity of Academy Award of Advertisement and Art Festival for Chinese College Students in the 2019 spring competition and held “Besunyen Cup” Public Welfare Advertising Contest. The contest spanned 30 provinces and cities and involved 40 colleges and universities, with 18 creative lectures and 20 off-site product interactive experience sessions. The official proposition poster and strategy sheet covered more than 1,500 schools across the country.
In the current session of Academy Award, the Group was the only enterprise which used public welfare as its main proposition. 2019 witnesses the 19th anniversary of the Group, during which the Group launched brand new “classic packages” for the Two Teas nationwide, and the theme of “Classic Beauty and Slimming Tea” was well received by the students. The zero-distance contact with university students during the current session of Academy Award gained the Group a sound and profound brand reputation among the youth, in the hope of maintaining popularity of the Besunyen brand among the existing and future target consumers.
Adjusting Sales Team Structures and Functions and Focusing on Growth of Direct Sales to End Users
Adjusting Sales Team Structures to Enhance Management Efficiency and Team Competitiveness
In the first half of 2019, the Group adjusted its national sales systems, structures and functions. Under the foundation of the existing three major regions in national offline retail, Key Account (“KA”) chain management was added to formulate a “3+1” management model. All of them compete against and improve each other, which stimulates their sense of ownership. This has significantly improved the work motivation of the sales team and has enhanced the overall capability of the sales team. To further improve management efficiency as well as sale capability, all sales team have made efforts in innovation, such as improving team development, making significant progress in major retail chains, innovating marketing model, eliminating the lowest, developing membership base, introducing new models and new products, etc.
Improving Distribution Penetration Rate for Offline Management, Enriching Terminal Promotion Modes and Enhancing Horizontal Growth
Based on the three major regions, in the first half of 2019, the Group’s national offline management has established 15 direct sales departments and business departments in secondary regions, which are mainly responsible for distribution management and terminal promotion to optimise the resources of distributors, unblock circulation channels, establish a more reasonable distributor/sub-distributor portfolio and further improve distribution penetration rate. Key retail terminal works such as prevention of supply suspension, price maintenance, terminal display, promotion and interception of competing products have been done to boost the rate of priority recommendation of the Group’s products, enrich terminal promotion modes, cultivate terminal image and enhance horizontal growth.
Improving Management and Operation of Chains for KA Management Department, Establishing Model Chains and Enhancing Vertical Growth
In the first half of 2019, the Group established KA management department to facilitate centralised management of pharmacy chains for the improvement of overall operation of the chains. The KA management department is mainly responsible for refined management of six core chains across the country, namely Dashenlin, LBX, Neptunus, Yixintang, Yifeng and Jianzhijia, and has established different sales policies targeting at the characteristics of different market chains. Vertical growth could therefore be achieved with the establishment of such model chains, penetration into non-core chains and launch of three-tier campaigns.
Establishing New Performance Appraisal Orientation and Focusing on Growth of Direct Sales to End Users
To make sales teams focus on the growth of direct sales to end users, eliminate the violation of the Group’s management policies by distributors/sub-distributors and avoid the sales of stockpile in the market at low price, the Group connected the data of shipment on the distributor/sub-distributor side and the data of terminal sales, and changed the performance appraisal from distributors’ shipment appraisal to direct sales to end users appraisal. By establishing direct sales to end users as a PK parameter for the sales personnel, it allows the sales personnel to completely participate in terminal management and maintenance and the excessive stockpile through the distributions has been avoided, leading to more solid and effective terminal management and terminal basic promotion.
Enhancing Flow Management and Maintaining a Smooth Operating Order of Market
In order to maintain the freshness of the products in the market and avoid obsolete products and returns due to stockpiling, with respect to flow control of distributors, the Group controlled the inventory turnover days of distributors from the source, upgraded logistics anti-counterfeiting system management system, and monitored the logistics information of distributors to further enhance the timely acquisition and supervision of logistics information. On the other hand, the Group made direct connection to the systems of distributors and sub- distributors, which provided a real-time command of data such as stock-out, stock-in and serial number of distributors and sub-distributors, allowed the acquisition of accurate flow data, avoided overstocking through the distributions and enabled better supervision of customers and distributions. Meanwhile, the Group strengthened regulation on product pricing and adopted a series of measures to safeguard the price stability. The confidence of distributors/sub-distributors has been improved and this will be beneficial to the healthy and stable development of the market.
Keeping Abreast of the Industry Development Trend, Creating and Optimising New Products and Building an Operation Team with High Standards
Implementing Refined Management and Adjusting Distribution Strategies
In the first half of 2019, the Group implemented refined management, enhanced the management and operation modes of e-commerce according to the type of goods and the scale of logistics, and conducted more standardised management for four stations (Beijing, Guangzhou, Hangzhou and drugs); to ensure the rapid development of e-commerce business; an e-commerce integrated marketing centre, supply chain group and sales support group were established; the original customer service team was upgraded to a customer service centre. Based on the e-commerce platform promotion policy, the Group fully explored and analysed the purchasing habits and feedback of platform users to track, analyse and give feedback on the operation and promotion results, and linked up the management, contents and customer service team to adjust distribution strategies accordingly to create a better user experience, which effectively improved the total revenue of the Two Teas, drugs and new products and laid a solid foundation for the future development of the Group’s e-commerce distribution.
Continuously Optimising New Products, Riding on the Trend of E-commerce and Improving the Operational Capabilities of the Team
Focusing on the area of weight management, the Group continued to optimise its product mix, expanded from the traditional herbal slimming tea to the OTC arena, focused on improving the packages, and producing graphics and videos of old products (Besunyen Xian Xian Tea, meal replacement milk shake, etc.), and launched the “dietary fibre” series of light meal replacement products and the “collagen” series of new health products for the health-savvy young consumers. Meanwhile, in face of continuous business hardship, the operation team became more mature and mastered the rules of each platform. The amazing growth stories of the aggressive and hardworking team were appraised as classic cases by Alibaba and Pinduoduo for many times. The sales campaign on 21 March in cooperation with the Alibaba Juhuasuan platform was a great success, and the brand was put on the key cultivation list by Juhuasuan and others. The customer service centre grew from 14 people last year to more than 70 people. A sound service mechanism was established to deepen the one-to-one service, which accumulated a large number of regular customers and realised a higher-than-average repurchase rate. The Group’s products for e-commerce channels included the “Two Teas”, Orlistat and new products, which performed well in this year’s “6 • 18 Mid-year Sales” on major e-commerce platforms such as Tmall and JD.com. The overall transaction volume surged to 122% compared with that of “Double 11” last year, resulting in an explosive growth in product sales and brand exposure. “Besunyen’s new retail model has gradually shown its vitality,” China Economic Net and many other authoritative media in China wrote in their detailed commentaries.
Innovating R&D Philosophy, Strengthening External Development Cooperation and Continuing to Launch New Products
In 2019, the research and development work embraces China’s “Health for All” principle and focuses on the two healthcare functions of weight management and intestinal health and expands herbal healthcare products and strengthens external cooperation efforts. The research and development of new health food products for weight loss, defaecation, throat clearing and liver protection continued. Through the participation in the key research and development program of the Ministry of Science and Technology named “Traditional Chinese Medicine Modernisation Project” and the cooperation with renowned research institutes such as Beijing University of Chinese Medicine on product research and development, the formula of the new laxative product based on the precise healthcare principle has entered the expert argumentation phrase and an agreement has been signed for related research and projects with regard to the marketed laxative healthcare products, namely Besunyen Runyuan Tea. The notices of evaluation comments for the renewal of registration of Besunyen Runyuan Tea and Besunyen Changwuyin Granules have been received. Preparation for permit issuance, production and market launch of Besunyen Yanyuan Granules have been completed. For e-commerce common food, the renewal of nutritious meal replacement milk shake, dietary fibre and collagen products has been completed and new products such as Besunyen Xian Xian Shake, Miao Miao Jiao Collagen Jelly and Day and Night White Collagen Powder have been launched. Development of new products such as Besunyen red bean and adlay tea bag and lotus leaf green tea bag has been completed.
In the first half of 2019, Zhongshan Wanyuan made one application and one licencing application and completed the supplementary research for two types of eye drops and submitted the supplementary research materials to the National Medical Products Administration. Zhongshan Wanhan made three invention patent applications and six licencing applications. On 1 April 2019, Zhongshan Wanhan and Zhongshan Wanyuan passed the certification of the intellectual property management system.
According to the publication of National Bureau of Statistics, China’s economy achieved stable and healthy growth in 2019. China’s economy has transformed from rapid growth to a high-quality development phase. To improve the health of the general public, China has put forward a feasible new medical reform proposal and the health development strategy of “Healthy China 2020” and advanced “Healthy and Powerful Country” to the national strategic level. The favourable policy will greatly encourage the development of the big health industry. The “Healthy China 2030 Strategy” also proposes higher requirements for people’s health, health service capability and health system optimisation.
The Group will continue to regulate and manage its business while highly focusing on the growth of direct sales to end users in the market. Leveraging the current excellent market base and brand recognition, the Group will promote the development and launch of new products. Through establishment of reasonable new product incentive policy, enrichment of product range, and continuous introduction of new products based on independent research and development and outsourced processing, the Group will continue to develop its e-commerce business to achieve higher revenue growth.
Hong Kong, 23 August 2019