The retail landscape is undergoing a notable transformation, driven by shifting consumer behaviors and the increasing reliance on digital solutions. As observed by Li Zhong, the head of Tencent's Smart Retail Fast-Moving Consumer Goods (FMCG) solutions, there has been a significant emphasis on adapting to these changes. He remarked during a recent roundtable discussion themed “Innovate for Quality, Unite for Progress” that many sectors within the consumer goods industry are experiencing a slowdown in sales growth. Furthermore, financial performance reports from several consumer goods corporations reflect a concerning decline in profits. This trend can be linked to consumers adopting more cautious shopping habits, placing considerable pressure on the growth trajectory of the consumer goods sector. Nonetheless, this pressure often catalyzes innovation and drives businesses to seek new methods of engaging with consumers.

In response to these challenges, an increasing number of fast-moving consumer goods brands are leveraging Tencent’s ecosystem to construct their membership systems. By establishing direct connections with their consumers, brands are able to utilize data analytics to implement precise marketing strategies. Tencent's technological prowess facilitates the identification of offline sales opportunities in untapped locations as well as high-potential points, creating avenues for growth even in a challenging market. This approach allows brands to harness digitalization as a means of finding new avenues for expansion while simultaneously enhancing operational quality.

Many brands, especially in the coffee and tea sectors, are deploying the WeChat Work app to execute targeted marketing strategies through community interactions with consumers. Major dairy brands such as Yili and Mengniu are also utilizing the WeChat ecosystem to connect directly with consumers. They are establishing online-to-offline (O2O) channels and enabling in-store redemption, thus creating a more integrated shopping experience.

So, what compels numerous consumer brands to seek Tencent's support for their business growth? The answer lies in Tencent’s Smart Retail strategy, which not only offers strategic consultation and technological services but also facilitates a connection to the broader Tencent ecosystem, enhancing efficiency in digital upgrades for brands.

Li Zhong pointed out that Tencent Smart Retail's contributions to consumer brands are prominently evident in the marketing arena. Through private traffic management, brands can harness WeChat mini-programs to reach vast numbers of consumers—some even extending their reach to hundreds of millions. This influx into the private traffic pool enables brands to gain deeper insights into consumer behavior and foster co-creation initiatives with them.

On the public traffic front, Tencent propels member marketing activities that bridge public and private domains, allowing brands to capture traffic from social media landscapes, such as users' WeChat Moments, and integrate them into their private traffic reservoirs. By injecting private traffic and drawing insights from consumer demographics, brands can enhance their visibility and engagement in Tencent's public ecosystem, reinforcing their online connections with consumers.

Additionally, Li Zhong emphasized that Tencent's data products empower consumer brands to identify high-quality and untapped offline retail points. This intelligence enhances the strategy surrounding brick-and-mortar locations, allowing brands to optimize their physical presence in competitive spaces.

Furthermore, regarding supply chain management and backend operations, Tencent incorporates advanced image recognition and AI analytics technologies to assist brands in conducting quality inspections and analyzing product displays. The increasing number of merchants integrating with Tencent’s ecosystem continues to see a shift toward adopting Tencent Cloud services. With this, Tencent aims to facilitate seamless connections between AI capabilities and data applications, thereby assisting businesses in optimizing their operations.

Li Zhong conveyed the message that Tencent’s support spans marketing domains, supply chain efficiency, and foundational infrastructure, effectively protecting and propelling the digital transformation journey of many consumer brands, thus enabling improved operational quality in the process.

Unlocking New Capabilities through Digitalization

By leveraging Tencent’s connective capabilities, it is evident that numerous consumer brands are gaining access to new competencies. Li Zhong encapsulated these abilities within the framework of "starting from consumers and going to consumers." This dual approach fosters enhanced engagement and interaction between brands and their audiences.

The phrase "starting from consumers" emphasizes the capacity of brands to connect directly with their audiences via the Tencent ecosystem. Some brands boast a membership framework that comprises over a hundred million members, including a significant number of highly active participants eager to engage with the brand and share their insights. For instance, brands can host discussions with these active members in community forums to explore new product development directions, thus garnering valuable feedback during the creative stages.

Conversely, "going to consumers" delineates how, once a brand establishes a solid consumer base, it can use Key Opinion Consumers (KOCs) and User-Generated Content (UGC) to propagate its message across diverse contexts.

Today's advanced AI capabilities further empower brands to unlock augmented UGC skills. For example, OpenAI recently unveiled Sora, a sophisticated tool capable of automatically generating 20-second video content. Similarly, Tencent’s Hunyuan model offers video generation capabilities that make it possible for brands to create promotional materials that would have formerly required professional agencies. This democratization of content creation via AI enables brands to produce tailored marketing content swiftly and efficiently.

New Advantages for Expanding Overseas

The wave of globalization has seen Chinese consumer brands actively seeking to penetrate international markets, with a notable surge in popularity for tea and coffee brands like Mixue Ice Cream and Luckin Coffee in Southeast Asia over the past few years.

Through Tencent Smart Retail's analysis, several core factors were identified that contribute to the successful global expansion of these Chinese consumer brands. The first pivotal factor resides within their supply chain capabilities. For instance, Luckin Coffee has developed an extensive coffee procurement network that spans the globe. This robust supply chain infrastructure equips Luckin with competitive advantages irrespective of whether it is entering developing nations or highly developed markets like Singapore.

The second key element is the digital marketing expertise honed in the Chinese market, which has become essential for these brands' overseas ventures, according to Li Zhong.

Furthermore, Tencent is well-positioned to provide support for Chinese consumer brands looking to expand internationally. Its digital infrastructure demonstrated through existing services in gaming and WeChat Pay, has established a precedent for facilitating brands entering new markets. Through offerings such as Tencent Cloud, AI capabilities, and various applications, Tencent continues to stand as a pillar in ensuring the safe navigation of these brands through the complexities of international expansion.