Hou Xiaohai on the Biggest Challenge of the New Era: The Market Has Entered an Age of "Fragmentation," Ending the Dominance of Single Blockbuster Products

At the "2025 China Entrepreneur Influence Annual Conference" held in Beijing from December 5 to 7, Hou Xiaohai, former Chairman of the Board and Executive Director of China Resources Beer, delivered a keynote speech addressing the multifaceted challenges businesses face today.

Hou identified three major challenges in the current economic landscape:

1. **Fragmentation**: The most significant challenge of the new era is the increasing division across consumer demands, demographics, products, services, scenarios, and experiences. Even within industries, companies diverge sharply in their strategies. - The era of relying on a single blockbuster product to dominate the market is over. Today, while core products still capture a large share, niche and personalized offerings must cater to fragmented demand. - Hou cited the beer industry as an example: "Now, we see craft beers, tea-infused or fruit-flavored variants, varying packaging sizes—from one-liter bottles to small cans and kegs. These didn’t exist a few years ago. This is the age of fragmentation, where personalization reigns."

2. **Restructured Commercial Foundations**: Traditional distribution models no longer suffice. Even with excellent in-store execution, consumers increasingly bypass physical retail, opting for instant delivery via e-commerce. - Industry dynamics have also shifted. While the top five beer producers hold over 90% of the market, craft breweries and imported brands disrupt this concentration, challenging established players.

3. **Internal Competition (Involution)**: - Overcapacity and price wars plague industries, exacerbating instability without resolving supply-demand imbalances. - Hou criticized the obsession with scaling up: "The era of chasing sheer size is over. Now, the focus should be on excellence—better products, brands, and sustainable business models."

Despite these challenges, Hou highlighted emerging opportunities: - **Innovation Through Iteration**: Continuous upgrades in technology, quality, and digitalization drive growth. - **Digital Transformation**: "In the next five years, digitalization will be pivotal for the revival of Chinese enterprises, especially consumer brands." - **Fragmentation Strategy**: Adapting to personalized demand. - **New Management Paradigms**: - **Collaborative Ecosystems**: Industry players must move beyond rivalry, fostering win-win partnerships across supply chains and even cross-sector alliances (e.g., collaborations with retailers like Pang Donglai or Hema Fresh). - **Lean Management**: Emphasizing efficiency, precision, and cost discipline. - **Green Development**: Not just a compliance task but a competitive edge, enhancing production standards and brand value.

Hou concluded that navigating these shifts requires embracing change—where challenges inevitably unveil new avenues for growth.