Exclusive Interview With Lin Hanzhong, Deputy Secretary-General Of China Electronic Commerce Association: Flexible Management And Strengthening Brand Building Are The Solutions To Deal With The Debt Risks Of E-cigarette Companies

Exclusive interview with Lin Hanzhong, Deputy Secretary-General of China Electronic Commerce Association: Flexible management and strengthening brand building are the solutions to deal with the debt risks of e-cigarette companies

The Two Supremes connected with Lin Hanzhong, Deputy Secretary-General of the China Electronic Commerce Chamber (CECC), to discuss the causes and solutions to the debt problems in the e-cigarette industry.

 

Recently, many e-cigarette companies have experienced debt incidents, which has aroused concerns and discussions among domestic and foreign practitioners about the potential debt risks of the industry. As the world's leading atomization technology media and think tank, The Two Supremes connected with Lin Hanzhong, Deputy Secretary-General of the China Electronic Commerce Chamber (CECC), to discuss the causes and solutions to the debt problems in the e-cigarette industry.

Lin Hanzhong, Deputy Secretary-General of China Electronic Commerce Chamber (CECC) | Source: Provided by the interviewee

 

Enterprises are overly dependent on a single channel and have weak autonomy

 

Regarding the causes of e-cigarette debt problems, Lin Hanzhong said that the causes of the frequent debt problems of e-cigarette companies in recent times are complex and involve multiple aspects. He sorted out the four key reasons that triggered the debt crisis of e-cigarette companies:

 

Supply chain fluctuations and compliance costs: The instability of the supply chain and the increase in compliance costs are the main factors.
Strong channel dependence: Some companies rely too much on a single channel during the expansion process, resulting in financial management out of control.

Inventory backlog: Aggressive distribution strategies and poor inventory management have exacerbated the debt problem.

Internal management defects: Some companies have problems with their management systems, unreasonable resource allocation, and low operating efficiency.

 

Why do e-cigarette companies have relatively weak autonomy? Lin Hanzhong analyzed that this is mainly because when sales channels are highly concentrated or the degree of dependence on a single channel increases, companies may be constrained by market digestion problems in terms of independent decision-making. He emphasized that although the overall foundation and situation of the e-cigarette industry have changed, companies are still using supply chain and manufacturing advantages to expand overseas markets and strive for competitive advantages, but have not yet fully mastered the right to speak.

 

He further stated that we (domestic enterprises) have natural advantages in patents and manufacturing, but under the influence of changes in the global cross-border trade pattern and external marginal factors, the form of global trade has changed significantly.

 

In addition, the shortcomings of internal management of enterprises cannot be ignored. Lin Hanzhong mentioned that some enterprises have deficiencies in management systems, resulting in improper resource allocation and low operational efficiency, which in turn aggravates the debt problem.

 

Introducing flexible management to improve operational efficiency

 

In order to prevent systemic debt risks in the e-cigarette industry, Lin Hanzhong suggested from the perspective of corporate management that e-cigarette companies should introduce flexible management models to improve operational efficiency and reduce costs.

 

He explained that flexible management, as a flexible and adaptable management method, aims to respond quickly to market changes. By implementing decentralized decision-making, employee multi-skill training, information sharing, and flexible production, flexible management can improve the organization's response speed and efficiency, enable enterprises to have stronger resilience in the face of market fluctuations, and thus reduce financial risks caused by market changes.

 

Lin Hanzhong specifically cited SHEIN as a case. Founded in 2008, SHEIN has now become one of the world's largest online fashion retailers. The key to its success lies in efficient supply chain management and rapid product updates. Xiyin adopts flexible management strategies, such as fast response supply chain, data-driven decision-making and flexible production, to quickly adapt to market demand and maintain competitive advantage.

SHEIN｜Source: Xinhua News Agency

 

He also emphasized that enterprises need to carry out systematic optimization in terms of refined management, production processes and human resource allocation, and reduce operating costs through refined management and technological innovation, thereby improving the financial health of enterprises.

 

Go deep into the destination market to reduce risks

 

Regarding how e-cigarette companies can resolve debt risks, Lin Hanzhong emphasized that e-cigarette companies need to integrate more with the destination market to enhance their market competitiveness. He said that when companies open up new markets, they should fully understand and study local market demand and consumer preferences, and formulate targeted market strategies to enhance the market adaptability and competitiveness of products.

 

He suggested that companies can deeply understand market dynamics and adjust products and marketing strategies in a timely manner by cooperating with local distributors, conducting market research and consumer surveys, so as to better meet market demand and reduce market risks. Lin Hanzhong added:

 

"Companies need to work hard on digital marketing to achieve accurate matching of production and trade circulation. Specifically, the production and trade circulation of enterprises must be combined, and scientific and reasonable allocation must be achieved from pre-sale of production capacity to order management."

 

Strengthen brand globalization and localization operation capabilities

 

Lin Hanzhong also emphasized the importance of brand. He believes that companies not only need to strengthen their innovation capabilities, but also must enhance their brand's globalization and localization operations. Global operations require companies to conduct in-depth research on international market trends, grasp consumer needs, and create a brand image with international influence. Localized operations mean that companies need to have a deep understanding of the culture, habits, and consumer psychology of the target market, conduct marketing activities in a way that is closer to local consumers, and provide products and services that meet their tastes and needs.

 

Through the organic combination of the two, Chinese e-cigarette companies can achieve a wider market coverage in different countries and regions, enhance brand competitiveness, and thus stand out on the international stage. At the same time, companies also need to pay attention to brand building, enhance brand awareness and reputation, in order to win the trust and love of more consumers.

 

He said,

 

"Chinese e-cigarette companies need to move towards brand globalization, establish local IP design, marketing channels and logistics systems, and not just rely on traders for export."