Mar 30, 2021|
In-Depth Report: JD’s Role in Building the Wuchang Rice Brand
by Rachel Liu
Over the past two years, JD has been working with Wuchang city in Heilongjiang province to build the brand of its iconic “Wuchang rice”, aiming to help customers buy authentic Wuchang rice with peace of mind on JD. This is how JD has done it.
In 2014, JD.com’s founder Richard Liu came up with the theory of “10 segments of sugarcane”, which refers to the 10 processes in the retail value chain. The first five processes are creation, design, R&D, manufacturing and price setting. The next five are marketing, selling, inventory, logistics and service. The brands are responsible for the first five processes, while retailers the latter. Liu believes the way to create more value as a retailer is to extend its business to more processes, including inventory, logistics, marketing, and even R&D, manufacturing and more.
Under this theory, JD self-built its logistics and warehouse network in China, and became highly recognized by customers for its fast delivery and high-quality service. Liu believes that the more a company does in an industry, the better it can bring value to the industry and serve its clients. It is the same for agriculture, an industry that JD attaches great importance to.
Agriculture is fundamental for the country’s development. When it comes to supporting the agriculture, one of JD’s approaches is to help build valuable brands for agricultural products, instead of merely selling products on its platform.
Building valuable brands is a win-win for both JD and farmers. For JD, going deep to the source of the agricultural supply chain allows the company to get high-quality products firsthand, without needing to go through multiple layers of resellers. For farmers, a renowned brand can make the agricultural products more valuable and bring more income to them who may possibly suffer from their high quality products being sold at low prices for lack of resources to target the right customers. For customers, products with brands are safer and more trustworthy.
RMB 70B Brand Value
For Chinese customers, Wuchang rice stands for high quality and premium. In the documentary A Bite of China, Wuchang rice is said to be the best rice in China. According to China Council for Brand Development, the brand value of Wuchang rice is now around RMB 70 billion yuan, and it ranks No.1 among rice brands in China. Wuchang rice became the first batch of products selected into the China-Europe Geographical Indications (An agreement made by China and EU to protect products in a specific reason).
Wuchang locates in northeast China. The special environment and geographical conditions make Wuchang rice tastier than rice from other regions in China. The black soil there is fertile and particularly suitable for the growing of rice. The annual precipitation of the area is around 600mm, humid enough for the growth of rice. The large temperature difference between day and night helps the rice accumulate more nutrition.
The temperature in Heilongjiang determines that farmers can only grow one batch of rice each year, allowing the land to rest and recover between harvests. It takes 138 days in total to nurture Wuchang rice from seedling to harvest. Farmers also raise ducks in the rice field. Ducks eat the weeds and pests in the field, and their swimming increases the amount of oxygen and water temperature for the rice to be grown in. All these conditions created the unique Wuchang rice.
The production of Wuchang rice follows national standard GB/T 19266, which is the highest standard for rice with detailed regulations covering the color, smell, taste, and manufacturing process.
However, it’s hard for customers to find authentic Wuchang rice on the market.Because of the high brand value of Wuchang rice, some vendors want to make use of the brand to add value to their products, or mix a small amount of Wuchang rice with other kinds of rice and brand it as “Wuchang rice” to sell it at an inflated price. It is estimated that there are 10 million tons of Wuchang rice sold on the market each year, but Wuchang can only produce 1 million tons of tice in total. How to buy authentic Wuchang rice has become a big problem for customers. The market disruption has significantly damaged the brand value of Wuchang rice.
Protect the Brand
“When we started to work with Wuchang in 2019, our aim was to help promote its brand across China, and provide customers a place to buy authentic Wuchang rice with peace of mind,” said Lizhen Liu, vice president of JD.com and general manager of JD FMCG.
The official offline sales channel of Wuchang rice is primarily located in Heilongjiang province, while customers from all over the country have great demand for Wuchang rice. Working with big online platforms like JD can help Wuchang rice reach more customers. JD’s “zero-tolerance” policy for counterfeits meets the Wuchang government’s need to protect this brand. Besides, JD has a great amount of customers looking for premium products and are potential customers for Wuchang rice.
After forming a partnership, JD first developed the Wuchang Rice Product Management Standard with the local government; the product is applicable to all brands. Only products that meet the standard can put the “Wuchang rice” label on their packages. The governments created the Wuchang rice tracing and anti-counterfeit platform in 2015, to trace the information of the whole production process. Only the products that are authorized by the blockchain tracing system can be launched on JD.
By scanning the QR codes on products’ packaging, customers can get all information on the product from seeding, planting, harvesting and processing. JD Logistics is also planning to work with local governments to include the last-mile delivery information on the blockchain. Together with its direct-sale model and self-owned logistics system, JD can ensure that all products that customers buy from the flagship stores are authentic. Now, eight local brands that produce Wuchang rice have launched their product on JD’s flagship stores.
“We are glad that JD, the Wuchang government, local brands and companies all have the same goal: To provide authentic Wuchang rice for customers. This is the foundation for JD’s success to promote the Wuchang brand,” said Liu.
As the platform that aims to provide authentic, high-quality products, soon after the Wuchang rice flagship stores launched on JD on October 2019, JD announced that it will deepen the partnership and introduce Wuchang rice to more Chinese consumers through marketing innovations and omni-channel cooperation.
“To protect the brand, we decided from the beginning that we would not sell rice lower than a certain price, and we only sell premium rice. The first month the stores were launched, sales of the products reached over RMB 200 million yuan, which gave us great confidence,” said Liu: “We soon worked with the government to launch the first Wuchang rice online shopping festival on JD.” During the past June 18 Grand Promotion, local government officials also joined livestreaming to promote Wuchang rice and attracted over 1.3 million viewers. Sales of Wuchang rice increased over 300% compared with before the live show.
To ensure that Wuchang rice can be delivered smoothly to customers’ tables, JD provides comprehensive logistics solutions for local brands covering warehousing, delivery, customer service and after sales service, cold chain and more, using technology to improve the efficiency of the fulfillment process. Even during the epidemic, JD’s logistics capability still enabled an adequate supply of Wuchang rice.
“Brands from Wuchang are very happy about their cooperation with JD and the support JD provided,” said Liu. “Now every time there are new products, brands would choose to launch on JD first.”
JD’s effort of promoting Wuchang rice brand brings benefits to all parties involved. For the local government, promoting authentic rice protects the value and price of the Wuchang rice. For farmers, the increase in brand value promoted the purchase price of rice, thus farmers’ income increased. For brands, their sales performance and e-commerce operations ability grew.
“We are using JD’s resources and abilities to help build more brands across different categories, such as the Chinese agricultural brand Shiyue Daotian (literally means October Rice Field), and milk brand Lacheer. Both have successfully improved their brand recognition by being on JD,” said Liu. JD is going deeper to the upstream of supply chain, hoping to improve the efficiency of the whole industry.
“The growing of rice industry in China is closely related to building valuable brands. JD and Wuchang government’s cooperation provided duplicable experience on building regional agricultural brands. I hope that more Chinese brands can be protected and promoted to all over the world.” said Jianwei Qi from China National Association of Grains.