Why Yili’s Sales Expense Ratio Fell to 18.58% Yet Channels Exit – One‑Code Digitalization

Profit Reconstruction: The Logic Behind the Surge

Yili’s net profit rose 36.8% year‑on‑year to CNY 115.65 billion despite revenue barely moving (CNY 1159.31 billion, +0.13%). The increase stems from three factors: the cessation of a CNY 30.37 billion goodwill impairment at Ausnutria, a 0.85% drop in operating costs, and an uplift in gross margins of three core product lines. Crucially, the sales‑expense ratio fell from 19.0% in 2024 to 18.58% in 2025, a gain largely attributed to one‑code technology cutting the traditional gray‑profit chain.

Gray‑Profit Elimination

In fast‑moving consumer goods (FMCG), marketing spend averages 15‑25% of revenue, but only 41% converts to sales; 59% is waste. The largest waste slice is hierarchical interception (22% of spend), meaning every CNY 100 of marketing money loses CNY 22 to channel layers. This intercepted portion fuels the core profit of many small distributors.

Traditional flow: "headquarters → regional → provincial → city → distributor → sub‑distributor → retail". Each tier skims a share, leaving less than one‑third of the original spend for actual sales activation.

One‑Code as the Core Driver

One‑code ("five‑code‑in‑one": pallet, box, inner‑box, outer‑cap, inner‑cap) tags each product from factory to consumer. Marketing funds are no longer routed through distributors; they are issued directly to consumers or retail stores via QR‑code redemption. Fees are tied to real sales activity—no sales, no fee.

Location‑based services (LBS) pinpoint the sales region of each code, automatically flagging cross‑regional sales and sealing arbitrage opportunities.

Functional Shift: From "Moving Goods" to "Digital Operations"

From 2025 data, Yili’s distributor count dropped by 210, especially in core South‑Central markets. The decline is not a channel failure but a role transformation. For three decades, distributors acted as "goods movers"—anyone with capital, vehicles and local contacts could profit from price differentials.

One‑code flattens the channel, allowing Yili to reach millions of retail points and billions of consumers directly (F2B2b2C). Consequently, the traditional "stock‑push, coverage" function loses value.

According to Liu Chunxiong, true digitalization follows a bC‑integration model (brand + distributor + terminal) rather than a pure F2C approach, preserving distributor value while redefining duties to regional logistics, inventory management, user community operation and store empowerment.

Efficiency Revolution: From “Messy Accounting” to Precise ROI

Industry studies (Kantar Consumer Index, China Chain Store Association) estimate that 37% of FMCG promotion spend (≈CNY 420 billion) evaporates due to management gaps. The three loss sources are channel interception, execution distortion (Bain: <60% promotion execution, 37% non‑compliant shelf placement) and blind ROI measurement (67% of firms lack data‑driven evaluation).

One‑code solves all three: fees flow directly to the endpoint, are released only after QR‑code redemption, and the system records redemption rate, conversion rate and sales uplift, enabling data‑driven budget allocation.

Yili reports a >200% ROI lift: actions that previously cost CNY 100 now achieve the same effect for CNY 30.

Core Misconception: Digitalization as Control vs. Enablement

Many brands treat one‑code merely as a cost‑cutting or consumer‑facing promotion tool, creating a zero‑sum “brand‑wins, channel‑loses” dynamic. The article argues that the technology’s true value lies in channel enablement—building a digital bridge that lets brands, distributors and retailers all benefit.

To shift from control to empowerment, brands must share part of the efficiency gains with distributors, providing digital inventory, CRM and analytics tools, and supporting financing (low‑interest loans, supply‑chain finance) to sustain the new operating model.

Conclusion

Yili’s 2025 results mark a milestone for FMCG digital transformation. One‑code is not a simple QR‑code giveaway; it is a systemic overhaul that re‑allocates gray profit, flattens channel hierarchy, and forces distributors to evolve from "movers" to "service operators". Brands that master this shift will secure a decisive competitive edge in the coming decade.