Recently, after Huitongda announced its 2023 results announcement, its stock price surged 4.61% the next day, reflecting the market's strong optimism about its fundamentals.

As a leader in the industrial Internet industry, Huitongda recently achieved good results in a sinking market. Judging from net revenue and profit, the company has generally maintained relatively good performance growth in the past six years. Various core financial indicators such as operating income, net profit, and net profit to mother have maintained steady growth year by year in the macro environment, showing its strong market competitiveness and good development prospects.

Data source: choice

According to relevant data from the National Bureau of Statistics and Toubao Research Institute, the scale of China's sinking retail market (ToB) is 7142 billion yuan in 2022, and is expected to reach 939.1 billion yuan in 2027. The overall scale is expected to maintain a high CAGR of 8.5% in 2022. Among them, SaaS and its value-added services will reach a CAGR of 31%, which is extremely good growth. This means that the future incremental market of this industry will exceed 2 trillion yuan, with big water and fish. As the most important player in the sinking retail market, Huitongda still has a lot of room for growth.

Build a unique supply chain system to lead the sinking market

Last year, the company's revenue rose 0.4% to 82,433 billion yuan (RMB, same unit), but profit during the year and profit attributable to the company's shareholders surged 25.0% and 41.7% respectively.

Photo Source: Company Financial Report

Why can the company's revenue and profits maintain steady growth while the market environment is still “resistant to pressure”? The author believes that mainly in recent years, the company has made some progress in innovating and upgrading the industrial chain model, which has greatly reduced supply chain costs.

For self-employed households, the biggest problem for rural husband and wife stores is how to ensure smooth purchasing channels and the advantage of low prices. In the current situation where e-commerce is gradually developing in rural areas, achieving low prices and maintaining a certain profit margin is fundamental to the survival of rural couple stores. Otherwise, they will lose their price advantage and lose customers.

The author has observed that what can meet the needs of rural husband and wife stores must be enterprises with a very strong supply chain operation system. Whoever can help Xiaobi (referring to husband and wife stores) reduce costs and increase efficiency, and who can help f (refers to manufacturers) quickly find sales channels for goods, can quickly occupy the rural retail market and build a strong moat.

As an industrial Internet enterprise that has been deeply involved in the sinking market for many years and has accurately grasped rural consumption trends, Huitongda has created a unique supply chain system through industrial chain model innovation, and its business scale has grown steadily in recent years. Relying on this system, Huitongda provides a package of digital solutions including products, technology, and services for brand manufacturers, supply chain partners, service providers, and even terminal husband and wife stores in the industrial chain.

Today, Huitongda has become a bridge to achieve efficient online distribution for rural couple stores and upstream brand manufacturers.

In this supply chain system, the revenue of the company's trading business segment reached 81.62 billion yuan last year.

Last year, the company continued to promote supply chain cooperation with well-known brands such as Apple, Midea, Gree, Joyang, BYD, GAC Aian, Nana, Wuliangye, Jinshiyuan, and Yanghe Co., Ltd. At the same time, the company's production and marketing integration has also achieved breakthroughs, and the “Altisa” air conditioning and “Huixin” chemical fertilizer have become more focused.

B2f reverse supply chain model: accurately grasp consumer needs

Since many husband and wife stores are still typical traditional physical stores, they have problems such as old business models, single purchase channels, single product categories, and difficulties in capital and inventory turnover, which hinder the further smooth flow of domestic circulation.

Huitongda relies on the deep roots of smart retail and the industrial Internet. Through the “platform+member store” path, local husband and wife stores become “offline physical store+online online store+local community store”, which is closer to consumers than Ali and Jingdong, so it is easier to know what consumers want.

By accurately grasping the needs of rural consumers, Huitongda not only builds a sink channel for upstream supplier partners, but also innovates industrial chain models to promote online and digital upgrading from the supply side to R&D, production, and manufacturing. This has greatly promoted the matching between supply and demand between consumers and upstream product manufacturers.

Why has Huitongda been able to gain a foothold in a complex sinking market. It has stood firm for many years, and has never lost in revenue growth in the past six years? The author believes that the answer lies in Huitongda's B2f reverse supply chain model.

The B2f reverse supply chain model is not the same as the traditional supply chain model. The biggest characteristic of the B2f reverse supply chain model is demand-driven, consolidated procurement, and production is determined by sales. This model can help downstream husband and wife stores to purchase upstream at relatively low prices. Therefore, it is an efficient operating model, and there is a lot of room for expansion.

As China's economy moves from a stage of rapid growth to a stage of high-quality growth, the total economic growth rate will slow down, which requires enterprises to pay more attention to “efficiency and cost” in commercial competition. As a B2f reverse supply chain model with significant cost reduction and efficiency, it can accelerate the rapid operation of the entire industrial chain of the urban and rural economy, break down information barriers and price barriers, and leave more profits in township and husband stores in the sinking market. Therefore, it can be said that the industrial Internet industry where Huitongda is located will be one of the industries with the most business opportunities in China in the future. The B2f reverse supply chain model may also be one of the best business models in the future in the Chinese manufacturing supply chain field. Under a system with high efficiency and great price advantages, the industrial Internet will restructure China's 126 trillion GDP.

Image source: Guojin Securities

Although this model was not first proposed by Huitongda, Huitongda has made outstanding contributions in terms of business application and innovation promotion. Last year, in the home appliance industry, Huitongda collaborated strategically with Jiangxi Gongqingcheng Youth Innovation Group and Rongdian Group to participate in product development and manufacturing, enter the upstream home appliance ecosystem, and innovate and improve the existing supply chain model.

This model has greatly improved the efficiency of enterprise operations. In 2023, Huitongda launched the “Zhonghuida” brand air conditioner through the “B2f model based on sales and procurement”, which greatly increased the product turnover rate. The product inventory turnover period was only 20-30 days. Under this effect, the company attracted more than 10 other air conditioning brands to cooperate in this industry chain.

As an industrial Internet platform that is deeply involved in the sinking rural market, Huitongda is focused enough, professional enough, and at the same time fully understands rural needs. This is the reason why its industrial chain has been able to stand strong in the township market.

The core of the B2f reverse supply chain model is high inventory turnover. It requires enterprises to remain sensitive to consumer demand, and need to be sufficiently innovative and forward-looking in supply chain management and operation to connect upstream factories through reverse drive to achieve flexible and efficient operation of the supply chain and fast sales. Furthermore, focusing on the rural market for more than ten years has greatly improved Huitongda's accurate grasp of the needs of rural consumers. Enterprises can easily provide customers with customized products and services, and open up a new blue ocean market.

Deepening Government-Enterprise Cooperation: Further Exploiting the Potential of a Sinking Market

In order to further open up untapped consumer markets in rural areas, the company is also strengthening cooperation with supply and marketing agencies in many places.

Before the reform and opening up, supply and marketing agencies were at the forefront of reaching rural consumer demand. They were the places that best understood the purchasing needs of rural people. They had an irreplaceable advantage in the distribution of Chinese products. At the same time, in an age where products were scarce at the time, supply and marketing agencies also had the highest product coverage rate.

In recent years, with the support and encouragement of national policies, the supply and marketing agency model has been revitalized again, providing convenience for living and consumption in a more novel way to facilitate living and consumption in a sinking market.

According to information, after the country proposed the “restart supply and marketing agencies” strategy in 2022, Huitongda has reached strategic cooperation with 12 provincial supply and marketing cooperatives across the country through the three sharing actions of “sharing supply chain resources”, “sharing member store resources”, and “sharing digital technology,” to complement each other's advantages and jointly serve online stores for husband and wife stores in the sinking market.

epilogue

In summary, with its innovative industrial chain model, deep-seated market strategy, and ability to accurately grasp consumer demand, Huitongda stood out in a fiercely competitive market, and achieved a sharp rise in performance and market expansion.

Its successful experience not only provided useful lessons and inspiration for other enterprises, but also injected new vitality and impetus into the development of the rural Chinese market. Looking forward to the future, we have reason to believe that Huitongda will continue to maintain its position in the industry, continue to maintain its innovative spirit and market acumen in developing a sinking market, and lead the rural consumer economy into a new era of more efficiency and prosperity.