Chongqing- Following the designation of Chongqing as a pilot zone in cross border e-commerce five years ago, and in tandem with the development of the Chongqing-Europe freight railway, Yu-Ou Ltd established the commercial mother-infant brand Momtime, for which the Online to Offline (O2O) business model was purposely designed.

The first major challenge was to identify a market that would be successful. While luxury goods, accessories, clothing, and general merchandise had been the main focus of Chinese e-commerce over the past 15 years, the quantity of market players has since resulted in stagnation.

Market research into consumer habits revealed low sales figures for non-essential imported goods, and that many individuals chose to physically travel abroad to buy products rather than entrust the task to merchants. However, such actions were not feasible in the case of high demand necessities, a fact which indicated great potential as a source of growth. It was for this reason that items of necessity became the focus of attention.

While demand for quality infant milk formula and other products of interest to this demographic were extremely high, consumer confidence was very low. The main reason was the lack of opportunities for direct experience before deciding whether to purchase, and a further demand was for the availability of professional staff in order to explain product features and dispel concerns.

Having identified potential in the mother-infant product market, Yu-Ou promptly filed an application with the relevant government department to operate on a trial basis, in line with the status of Chongqing as a pilot city in e-commerce.

The response was highly supportive, and as a result, Yu-Ou Ltd established the chain of Momtime branded stores. Products could then be imported from countries worldwide and physically displayed so that customers may experience them before deciding whether to purchase.

Yu-Ou is among the earliest companies to explore and apply the O2O (Online to offline) model. While competitors set up experience stores in the central locations of cities, they lacked substantive value because too few stores served too large a geographical area. In light of this, the strategy of Yu-Ou Ltd was instead to open stores in suburbs and malls nearer to their target clientele.

To date, a network of 1700 Momtime stores spanning 26 provinces has gained the wide trust of families. In fact, company analysis shows that about 60% of mother-infant product consumers still regard the offline experience as highly important, so further expansion in this respect continues to be a priority.

Overseas manufacturers wishing to access the Chinese market appreciate how mass production and circulation affects market prices within China. As a result, they approached Yu-Ou to assume the role of domestic marketing in the capacity of a supply chain business partner. At last year’s Import Expo, for instance, a deal worth 300 million dollars was signed with Danone.

The ultimate vision of Yu-Ou is to realize a one-stop service platform beginning at the production line, and continuing through the stages of importation, customs, warehouse storage, marketing, and sales. Overseas manufacturers need a partner in China that understands the domestic market environment in order to succeed in this manner.

A track record of successful partnerships in tandem with optimized customer service has in turn drawn the attention of further big-name brands willing to enter into cooperation. This is good news for future development because around 80% of the infant formula market is dominated by a small number of industrial giants who set industry standards.

At the heart of the Yu-Ou business model is a desire to make child-rearing in China both practical and affordable, especially in the first and second-tier cities where the high cost of living is a major consideration when planning a child.

On the question of logistics, both land and sea routes have been used for importation, but the Yuxinou Europe-Chongqing Freight Railway has made a great contribution to reducing both the cost and time involved during the overall importation process. This route has also proven to be reliable during the pandemic, a time when supply chains in this particular industry didn't suffer an adverse impact, either.

The recently formed Chengdu-Chongqing Economic Circle is home to the highest concentration of Momtime stores, numbering in excess of 400. There is also cooperation between logistics centers in the circle because of their suitability towards different categories of goods, which in turn can offer more economical storage options.

While the Economic Circle is still in an early stage of development, it is certainly an exciting prospect for the near future.

Traditionally, the cities of Chengdu and Chongqing have been in a state of competition, always keen on outperforming the other. This situation is expected to change over time, and many are looking forward to the day the region as a whole can work in tandem and benefit from each other in terms of support and favorable policies.