19 ASIAN LEGAL BUSINESS CHINA • 亚洲法律杂志-中国版 WWW.LEGALBUSINESSONLINE.COM/CHINA consumers with a wide variety of products and a convenient shopping experience. Social media and short video platforms have become important channels for consumers to obtain product information and make purchase decisions. Going forward, the growing middle class, the younger generation and consumers in lower-tier cities will continue to steadily power consumption resilience. Zhang Junxin is legal director of the legal department of Guangzhou Liby Group, one of the earliest and largest local Chinese companies in the daily chemicals industry which owns many brands that are familiar to, and that cover all aspects of the daily life of, Chinese consumers. Speaking of the performance of the consumer goods sector in the past few years and so far this year, Zhang points out that although China’s economic growth has slowed down somewhat in the post-pandemic era, signs of sustained recovery can already be seen and the growth of total retail sales of consumer goods is rebounding rapidly. “Last year, the omni-channel sales of FMCG declined slightly, but the overall trend remained stable. However, affected by the pandemic, consumers have become more cautious with spending, causing varying degrees of challenges to offline retailers. Therefore, the legal & compliance team will focus this year on risk management of accounts receivable to prevent credit risks,” says Zhang. Cheng Jin is head of legal & compliance of Zeiss Greater China. Germanheadquartered Zeiss has a wide range of business interests in China, focusing on, among others, consumer optics such as the market for myopia prevention and control lens. He says the pandemic has dealt a huge blow to the consumer goods market, and the entire industry is facing a reshuffle. “During the pandemic, many physical optical stores were forced to close, as a result of which some lesser-known brands exited the market due to severe lack of business. Further, the eyewear market saw a sharp year-on-year drop in business last December when infection peaked,” Chen notes. However, like many other industries, the consumer goods industry rebounded in the first quarter of this year. “With the pandemic subsidizing this January, the market recovered swiftly, largely back to 70 percent to 80 percent of the historical level in the same period. The peak winter holiday season in January and February was an added boost to the market, leading to year-on-year growth of over 40 percent.” As consumer goods business recovers at full steam, Cheng says that in 2023, the legal & compliance department will “better understand business strategies and needs, help business teams with business model transformation, and enhance the company’s brand influence.” Meanwhile, the team will continue to focus on legal and compliance risks for marketing and advertising of consumer goods, and support the steady growth of business in an active market. NEW SCENARIOS Although consumers are back, they are not returning to the old channels. In China, consumption is constantly being integrated with new scenarios and technologies. As a result, consumer goods companies must also constantly innovate and try “new ways to play the game.” Zhang shares with ALB that in terms of offline sales of daily chemical products, “the trend in China’s retail market sees the continued contraction of hypermarkets and the rapid development of new marketing channels such as convenience stores and communities.” At the same time, emerging online channels have a considerable impact on the field of chemicals for everyday use. In fact, as early as 2018, Liby already launched a corporate strategy to accelerate digital transformation and upgrading, established its own digital centre, and developed different digital products targeting C-end consumers as well as B-end dealers, distributors and retailers, such as “digital business fairs” and livestreaming sessions. According to Zhang, during this process, “the legal & compliance team has been actively participating in the cocreation of new channel business models and been empowering the development of new marketing channels. For example, we designed cooperation terms for emerging channel departments, released multiple business compliance guidelines, and directly got involved in addressing issues in business development as the legal project manager of multiple projects.” Zeiss has also noticed changes in its consumer optics business. In the past, the sales of its myopia lens products were mainly targeted at B-end channels. However, Cheng tells ALB that in line with the group’s global headquarters strategy, especially the continuous progress made by the Greater China region in building up its headquarters functions, “the company will continue to enhance its brand in Greater China to influence more consumers, so it has become imperative for the legal & compliance department to actively play its role in this process.” To this end, the team has been focusing on two aspects. “The first is to help the company transform to a B2C2B business model. The team is gradually building up local trademark strategic capabilities to more actively influence consumers. We proactively participate in the exploration and discussion of business strategies and models by business units, assist them in analyzing legal and compliance risks, and offer them solutions while preventing risks.” Second, more frequent interactions with consumers going forward also mean a heightened need to build up the company’s brand. Therefore, “from the perspective of brand promotion, we work closely with business units in advertising compliance to empower business teams to step up brand promotion within the scope of legal compliance. Leveraging ZHANG JUNXIN CHENG JIN GC CONVERSATIONS
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