This is an English adaptation of a FoodBud historical article originally published on February 15, 2022.
Hosen Capital argued in February 2022 that China’s food supply chain would not simply replicate the U.S. Sysco model. Its view was that the decisive battleground would be regional supply chains, customer-specific product portfolios, and physical package standardization.
Hosen Capital’s central claim was blunt: China would not produce a Sysco, at least not in the same operating form as the United States.
The reasoning was structural. The United States has lower population density, simpler taste profiles, long-consolidated retail, and deeply standardized logistics. China is different: regional variation is far greater, food preferences can differ almost like dialects, and local light industry grew out of smallholder agriculture, relationship networks, and regional supply-demand ecosystems.
In this framing, “regional” does not mean an administrative boundary. It means a consumption region defined by culture, taste, and ingredient fit.
The article also defined “food supply chain” broadly. It was not just ingredient distribution and not community group buying. It meant an efficient supply network serving retail networks and small and medium-sized foodservice operators: moving seasonal, good-tasting, regionally appropriate ingredients and food products to local small B-side customers.
That does not mean rejecting large customers. Rather, the point was to bring the efficiency and systems built for large B-side clients to smaller operators. Hosen Capital expected regional supply and regional consumption to still account for more than 30% of food circulation, while also being the most dynamic part of the market.
From a network perspective, regional supply chains were described as local traffic layers: they distribute core-network high-volume categories and aggregate local low-volume categories. Without local networks, the backbone network has no real foundation.
The article argued that supply chain companies are not merely logistics companies. Logistics is infrastructure. Strong supply-chain businesses can make money, but their profits must support reinvestment in facilities and systems, not just short-term results.
For foodservice operators, the core value is an effective product portfolio built on efficient logistics.
“Effective product portfolio” had two meanings:
The target customer group was B-side, especially restaurants, group-meal operators, and directly operated delivery outlets. These customers vary widely by positioning and price tier, and they are among the groups most in need of supply-chain services.
The article contrasted this with consumer delivery. As urbanization matures and communities stabilize, offline retail volatility should slow. The combined online-offline result, in Hosen Capital’s view, would be a two-part supply chain: a B-side supply network plus home delivery.
Home delivery has value, but mainly as fulfillment infrastructure. It must be optimized around households and connected to the ends of multiple professional supply-chain networks. The article argued that this last-mile layer creates fulfillment value rather than commercial-flow value, and therefore is unlikely to become the final source of differentiation by itself.
B-side supply and demand are both rational and professional. Connecting them is a many-to-many circulation-planning problem, involving aggregation, distribution, and routing. That complexity is exactly where supply-chain value can be created.
If solved well, Hosen Capital argued, the model could improve the whole industry, empower small operators, relieve pressure on producers, and create the next generation of leading companies. But the matrix is large and complex. It requires deep regional customer understanding, strong merchandise planning, full-process digital operations, and dynamic logistics optimization.
The article used “package” by analogy to an IP network packet, meaning both encapsulation and a standard unit.
Hosen Capital described a recurring due-diligence observation in cold stores, market stalls, and restaurants: goods packed in mismatched cartons, boxes, plastic bags, and loose containers, scattered on shelves or piled on floors. In that environment, operators may only know their true inventory during year-end stocktaking. Efficient turnover and portfolio optimization are difficult.
The article was also critical of overnight sorting in community group-buying operations, calling it a regression toward labor-intensive township-workshop practices rather than industrial progress.
By contrast, Europe and the United States were described as having a widely used “standard box” concept. Logistics efficiency can be measured by boxes delivered per mile. Most products can be packed into a standard box, while shipping, labels, and electronic data tell senders and receivers exactly what is inside and how it should be used.
This is similar to the packet principle in IP networks and to the role of containers. A broadly accepted standard box could improve warehousing and logistics efficiency while reducing sorting, unpacking, repacking, and consolidation work.
The difficult part is industry-wide adoption. Hosen Capital noted that containers and pallets became standard practices because they were used globally and then adopted naturally in China. Its argument was that Chinese food supply-chain companies now needed to align around their own common standards, whether led by industry associations or hub companies.
The broader lesson: digitalization alone is not the essence of supply chain. Efficiency and value are. Screens and data describe reality; they do not automatically improve it.
Hosen Capital said it knew several food supply-chain companies, including regional leaders that had reached meaningful scale but still earned only thin margins. More importantly, none had yet accumulated the full system capabilities needed to accelerate a self-reinforcing growth flywheel.
Over the prior few years, supply-chain companies had also been hit by fresh-food e-commerce and community group buying.
Even so, the article argued that the difficult period would not last forever. Model exploration had entered deeper waters, operating iteration had moved into finer details, and accumulated progress, scale expansion, and rational industry consolidation would eventually produce leading companies with Chinese characteristics.
Note: forward-looking statements and market expectations above are historical views from February 15, 2022.