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Our reporter Tao Wei (chinatimes.net.cn) photographed the incident in Nanjing

"In the past few years, our business was always taken away by e-commerce. Since the establishment of Huitongda, we have both the convenience of online and the experience of offline. Goods are sent directly from the manufacturers to our town, and delivery and payment are also done online. The neighbors are very happy, and it has become easier to open a store." In the corporate exhibition hall of Huitongda Network Co., Ltd. (09878.HK), a corporate promotional video featuring small shop owners in townships and villages conveys to people what Huitongda is doing - providing supply chain services and digital support to mom-and-pop stores in the rural market.

By helping small shops, Huitongda has built a big business: in 2023, Huitongda achieved operating income of 82.433 billion yuan and net profit of 697 million yuan, a year-on-year increase of 25%.

"The flexibility, serviceability and stability of these town and village mom-and-pop stores are very strong, just like pearls. But when they are scattered everywhere, they are worthless and inefficient. So we proposed a 'pearl necklace' theory, using the Internet and digital technology to string these pearls together." Sun Chao, vice president of Huitongda Network and general manager of Huitong Digital Technology, said this in the "New Quality City, New Start" series of activities in pursuit of new quality productivity jointly organized by China Times and Jiangsu Intellectual Property Protection Center (Jiangsu Patent Information Service Center).

As of December 31, 2023, Huitongda serves 21 provinces and 24,000 townships across the country, with the number of member stores reaching 237,000. It provides SaaS+ services to 131,000 of these stores, helping traditional small stores upgrade to digital retail entities with the ability to open three stores: "offline physical store + online store + local community store".

Helping rural husband-and-wife shops to expand

"Our company was established in 2010. One of the founders, Mr. Xu (Xu Xiuxian), originally studied rural circulation. At that time, we discovered a problem: e-commerce has been on the rise for several years, but why rural areas still cannot enjoy the benefits of e-commerce? The products are expensive and not good, and it is difficult to enjoy after-sales service. So our company's earliest mission was to allow farmers to enjoy the same goods and services as those in cities," Sun Chao introduced.

During the entrepreneurial process, Huitongda discovered the node value of mom-and-pop stores in towns and villages. Although the mom-and-pop stores scattered in various towns and villages are not large, they are not only the "faucets" for industrial products to flow downward, but also the "routers" for agricultural products to flow upward. These stores do business with acquaintances in the rural market, with flexible operations and low costs, but they also have shortcomings, that is, these mom-and-pop stores are relatively backward in terms of supply chain digitization and marketing methods. In view of these characteristics, Huitongda did not focus its development model on establishing a chain, but through a membership system, it connected the small stores in towns and villages using the Internet and digitization to form a huge network.

Taking into account the weak bargaining power and inability of rural mom-and-pop stores to get good products, Huitongda first provided supply chain services. It actively collected orders from rural mom-and-pop stores (retail terminals) through SaaS tools such as "Super Boss", and then placed orders with upstream manufacturers after summarizing them on the Huitongda platform. It also cooperated deeply with upstream factories and nearly a thousand leading brands, and carried out a "B2F" model of "procurement based on demand and customization based on demand" with strategic cooperation brand manufacturers, providing rural mom-and-pop stores with more stable, effective and high-value products.

In addition to supply chain services, Huitongda also provides technology services to member stores. Through the service capabilities of SaaS tools such as "Huixianggou", it helps them establish online stores to expand sales channels and enhance the competitiveness of offline stores. Since many owners of rural mom-and-pop stores are around 50 years old, when designing technology tools, Huitongda will try to make the functions simple and easy to use.

It is reported that the annual sales growth of township husband-and-wife stores that have been Huitongda member stores for more than one year is about 30%.

“Rural Revitalization as We Understand It”

What makes Huitongda's business model different from many e-commerce platforms is that they have an offline service team to continuously train the owners, their wives and their children of husband-and-wife stores.

"We not only train store owners, but also the wives of the bosses and their children. We teach them how to put products on the shelves, how to launch events, and how to do live broadcasts. In fact, small business owners often worry about who will take over and inherit their business, because after their children finish school, they are rarely willing to return to the countryside from the city. We organized their children and did the "Xinhuo Plan" training. The children found that the business their parents were doing was also the new Internet economy and e-commerce business, which was also very promising. So many people were willing to go back and take over after training. In this way, the parents will do the original offline physical business, and the children and young couples will run online stores and do live broadcasts, thus passing on the business. We believe that the key to China's rural revitalization lies in people, especially encouraging local young people in rural areas to return to their hometowns to start businesses and find jobs, and to build and develop their hometowns well." said Wang Xinghua, deputy secretary of the Party Committee of Huitongda Network.

"With the expansion of large e-commerce platforms, the operations of many small mom-and-pop shops in towns and villages have actually been affected. But Huitongda adopts an empowerment model. We do not compete with these small shops for profits. We help them sell more and do better business. Our online and offline marketing activities will direct traffic to offline member stores. This model has also received strong support from local governments, because these mom-and-pop shops are registered locally, consumption is local, taxes are collected locally, and employment is local. Various factors do not flow out, and a virtuous cycle is maintained locally. This is not blood-drawing, but blood-making," said Wang Xinghua.

It is worth mentioning that Huitongda's model is exploring overseas expansion. According to Ni Yu, deputy general manager of Huitongda's smart business division, Huitongda is exploring local models in Southeast Asian markets and the African continent with different models. Taking Africa as an example, Huitongda and Huihong are working together to help local small stores carry out digital transformation.

"We have brought the original offline transaction model online, and at the same time combined the offline and online models to help him collect all the data. In the past, they did not have these data back, and all transactions were paper orders, which made it very troublesome to select suppliers. After going online, domestic suppliers can view the data online, which is actually a modern transformation." said Ni Yu.

Continue research and development to break through bottlenecks

Even though it has achieved a revenue scale of 80 billion yuan, the company is still continuing to improve itself. Against the backdrop of industrial upgrading and high-quality economic development, the company has continuously increased its investment in innovation. The R&D team of more than 600 people has focused on deepening digitalization and SaaS+ business strategies, independently developed the "Qiancheng Cloud" service product matrix, and independently developed a vertical AI big model to provide stores with an integrated e-commerce solution of "procurement, marketing, and sales", and produced a number of intellectual property rights. Their current research directions include: how to graft high-end R&D resources such as intelligent robots, how to effectively protect the results of software algorithms and business model innovation, etc.

In response to Huitongda's pain points, experts participating in the event made suggestions during the discussion. Yin Rui, a fourth-level executive of the Nanjing Branch of the Chinese Academy of Sciences and chairman of Nanjing Zhongke Qizhi Technology Co., Ltd., took the initiative to offer to help connect with the team of scientists. Dr. He Yu, a researcher at the Jiangsu Academy of Social Sciences, also made suggestions on improving the company's operations. The guests suggested that Huitongda make good use of the scientific and technological resources of universities and the Chinese Academy of Sciences inside and outside Jiangsu Province, carry out targeted cooperation around large models and underlying algorithms, intelligent logistics, etc., and lay a solid foundation for digital empowerment and upgrading of small and micro entities in townships. At the same time, the platform is used to reversely empower industrial chain innovation. By collecting terminal needs, jointly conducting secondary research and development with institutes, and jointly with industrial chain manufacturers to achieve reverse high-quality customization, promote industrial chain innovation and upgrading, and explore new paths for the development of new quality productivity.

"It is recommended that companies make use of the intellectual property system and enhance their awareness of intellectual property rights. Drawing on the practices of giants such as Amazon, companies can use copyrights, trademarks and patents to protect their innovative achievements such as software and business models, and use the protection center's fast track pre-examination to build a patent pool." Wang Yali, director of the Jiangsu Intellectual Property Protection Center (Jiangsu Patent Information Service Center), made such suggestions in response to the company's problems in intellectual property protection.

Editor-in-charge: Xu Yunqian Editor-in-chief: Gong Peijia