A Strong Performance and Poised for Growth in The Chinese Market
COVID-19 spread very quickly throughout the world, and it brought many companies to their knees. But amid these challenges, Maximo Company adapted. The company turned the crisis into a turning point for change, using it to help fan the flames of experimentation. After surviving the crisis, the company has emerged in a stronger position than ever before in its highly competitive market.
In September 2019, Maximo signed a cooperative agreement with chocolate manufacturer Ferrero Rocher. This was a great accomplishment, and the team began making plans for an energetic marketing roll out during the peak sales season from Christmas through Chinese New Year.
However, all of these optimistic plans were thrown into the air as the COVID pandemic began to ravage the world. On January 23, 2020, on the eve of Chinese New Year, many people were back in their hometowns and preparing for the traditional celebrations. At just this time, news of lockdowns in Wuhan began to spread. As the news became worse and nervousness spread, hypermarkets were quickly emptied of their products by panicked citizens. Streets soon became deserted as people feared setting even one foot outside.
"Originally, I was so full of joy. We were fully stocked and expectantly awaiting strong sales as we entered the peak season for our new product. And then, all of a sudden, the pandemic threw everything into disarray," recalled Maximo General Manager Fengqin (Frank) Chen. We went from joy to bewilderment - the images and memories are still very vivid in my mind. Sighing, he said "2020 was a very hard year."
Chen said that 70% of Ferrero’s chocolate sales come from gift boxes. The peak season begins with Christmas, and extends through the Western New Year, the Chinese New Year, Valentine’s Day and China’s celebrations of International Women’s Day in March. However, because of the COVID crisis, beginning with the Lunar New Year, people no longer visited friends and relatives, they no longer exchanged gifts. “Performance did not decline gradually, it collapsed suddenly from the top of the mountain to the bottom of the valley."
Chen said that the value of their inventory was about RMB50 million, and a large portion of this inventory had a shelf life of less than five months. Chen noted that his hair was originally black, but during this crisis gray hairs began to emerge one by one.
The sudden outbreak of the epidemic caught everyone off guard, but acting passively and indecisively is not Chen’s style. He quickly assembled a team to take on this crisis. As the pandemic raged, the team had to race against time. They worked to coordinate promotional activities throughout the country, and were able to relieve the product backlog within three months. By solving the inventory crisis and selling the goods before they expired, the company overcame the biggest challenge it has ever faced.
"Although the process was very hard, I’m proud of what we achieved," said Chen, with some relief. “The pandemic gave us great challenges in 2020, but the government was able to bring the situation under control and life was able to return to something at least close to normal. Our team fought bravely, tirelessly and successfully. Those in our industry saw what we were able to achieve. As a result, many companies are visiting us and asking us to distribute their products. These new customers helped us report strong growth in 2020, and this year our sales should be up significantly once again.”
Chen listed some of the new customers that his company was able to add over the last two years. This includes well-known brands such as Hershey, Hormel Foods, and Shiba (personal care products), as well as three brands of milk powder – Abbott, Wyeth and Fonterra.
Maximo has achieved not only increased its volumes, it has upgraded in a qualitative sense. The company was awarded a regional agency by Hershey in 2020. Then, after several months of discussion, Hershey this year selected Maximo over many competitors as its agent for all of China.
Chen could not conceal his excitement. He pointed out that Maximo was established at the end of 2016. In the first two years, few were willing to hand over their brand to an unknown agent. But Maximo didn’t give up, and kept working hard. Finally, their efforts began to be rewarded with success. One of the great recent achievements was the new contract to be Hershey’s agent in China.
How significant is it to be named the general agent for Hershey in China? Chen explained that China is a vast market, and often brands will contract with dozens of distributors to cover it. “It’s a great achievement, among so many distributors, to be named the general manager of a major international brand for all of China,” said Chen.
Second, the cooperation with Hershey provides Maximo with connections to stores and distribution points throughout China, including 200 distributors that have online as well as offline capabilities. Chen said, “If a brand gives us their distribution business, we can sell their products through these 200 distributors across the country, and these distributors have channels to more than 100,000 stores. This is a great capability that we can now offer to a potential new customer."
Maximo has now established a firm foothold in the Chinese market, and the next step is to ramp up their operations further. Chen said that during 2020, despite the challenges of the pandemic, they were still able to double their sales. His hope is that they may be able to triple sales this year, lifted by an economic recovery and the company's new nationwide sales network. Improved profitability will help fund further investments in IT and other areas. By consolidating its new strengths and advantages, Maximo will be in an even stronger position.