Half Dead, Half Alive: Will 100 Companies Worth 10 Billion Emerge from Cross-Border Trade?#
#Omnivore
Highlights#
Large scale, high profits, attractive valuations. ⤴️ ^ea40a645
It’s just that the clothing category is not friendly on Amazon ⤴️ ^d6530cc7
Product combinations are needed, such as furniture—Amazon is not friendly for that either; as long as there is a product combination, Amazon is not friendly ⤴️ ^d31608e7
Trade, Industry, Technology ⤴️ ^9bb5c038
Pure factory types go directly into cross-border e-commerce; how to compete without a factory in the future? ⤴️ ^496af9cc
"De-Amazonization" ≠ independent sites, brand ≠ independent sites ⤴️ ^966d90df
Back then with Anker, we said don’t ask Walmart offline for resources; let’s first become the number one brand online at Walmart, and wait for them to come to us offline. After that, entering other platforms was also done by killing in from online. ⤴️ ^a241df77
The first task of an independent site is, to put it bluntly, to support the product R&D center ⤴️ ^782e8466
In the 2.0 phase, it’s managed by the independent store people. What does it mean to run a store well? First, it’s about increasing the visitors' stay time. If visitors spend more time in my store, I need to tag them to know how many products they viewed and how long they stayed. ⤴️ ^fff60ecd
The marketing department can get involved, and then we can scale up; this is the 3.0 phase. ⤴️ ^4232d8e3
Don’t look at time, just look at business numbers. ⤴️ ^114a2747
If we don’t help, it will definitely "die" ⤴️ ^30692570
Bed frames, wardrobes, refrigerators, auto parts, bumpers, and industrial products like meat slicers—there are large items in both industrial and consumer goods. ⤴️ ^14adf730
This article is from the WeChat public account: 品牌工厂 BrandsFactory (ID: BrandFactory2049), author: Fan Xiaqing, dialogue guest: Wei Zhe from Jia Yu Capital, original title: "Dialogue with Wei Zhe from Jia Yu Capital: Half Dead, Half Alive, Success 1%, Cross-Border Trade Will Produce 100 Companies Worth 10 Billion," header image from: Visual China
This article discusses the dialogue between Wei Zhe from Jia Yu Capital and Brands Factory on the future development of cross-border e-commerce, focusing on the high mortality rate and low activity rate in the cross-border e-commerce industry. The article points out that cross-border e-commerce has advantages in anti-cyclicality and foreign exchange hedging, predicting that at least 100 companies worth 10 billion will emerge in the future.
• 💼 Cross-border e-commerce is an anti-cyclical industry, not affected by domestic economic fluctuations, with a stable growth trend.
• 🌐 Large item capability will become an important development direction for cross-border e-commerce, including overseas warehouses, last-mile transportation, and after-sales service capabilities.
• 💰 Domestic leading brands entering the cross-border e-commerce market pose a challenge to other cross-border brands but also bring growth opportunities to the industry.
As a typical anti-cyclical industry, cross-border e-commerce is not affected by domestic economic cycle fluctuations. Over the past three years, the annual year-on-year growth rate of the entire cross-border sector has remained above 9%. It follows an independent trend, independent performance, enjoys high premiums, and has smooth A-share IPO exits.
Brands Factory and Jia Yu Capital's Wei Zhe had a dialogue discussing the future of cross-border e-commerce, hoping to provide assistance to everyone.
- "3 billion profit, within 10 times, let me invest 200 million, then I will spend time"
Brands Factory: In 2023, Jia Yu publicly disclosed 6 transactions; how many projects has the team looked at in total?
Wei Zhe: I have applied for about 20 projects here; I don’t know how many the team has looked at, but at least several hundred.
Brands Factory: Which project have you spent relatively more time on?
Wei Zhe: If you have 3 billion in profit, (valuation) within 10 times, and let me invest 200 million, then I will spend time. Just these three standards: ==large scale, high profits, attractive valuations.==
Large scale means the problems faced may also be significant. It’s easy to go from 100 million to 300 million, but difficult from 300 million to 1 billion; with 3 billion in profit, the basic problems faced by the founder are mostly solved, and I don’t need to intervene much. Also, the amount I invest may be relatively large, so the valuation you give must be attractive to me. Of course, if your valuation is very high, it’s not worth doing, right? Because at a certain scale, our team’s empowering ability cannot be effective.
Brands Factory: Does Jia Yu have a Silver Bullet strategy internally, and has there been such a project in 2023?
Wei Zhe: The "Silver Bullet" is not applicable to cross-border; it is mainly for the tech team. It addresses the issue of differing judgments on early projects within our fund. Cross-border does not need to have differences for two reasons: first, we do not invest in early stages; second, the stage standards we look at now are very clear, so there won’t be significant differences.
It’s normal to have differences in early tech projects. I come from a liberal arts background, so I can’t say that everything I deny is correct. We give the team a "Silver Bullet" opportunity; if the investment committee denies it, you can use 10 million to 30 million in funds to invest. But there are two requirements: first, the personal co-investment ratio must double; the co-investment for "Silver Bullet" projects must double; second, if the first "Silver Bullet" hits, you can have a chance for the next one.
I say I particularly hope you succeed with the "Silver Bullet," proving me wrong.
Brands Factory: Have there been any new directions that are particularly challenging?
Wei Zhe: There aren’t too many new directions in 2023.
First, we have never dealt with any inventory-based companies. This is not just now; back in 2017, we believed that even if inventory income is high and profits are high, it is not sustainable. When the group buying and store group models were massively shut down later, none of the many cross-border e-commerce companies under us were affected.
Second, what do you start with, Amazon or independent sites? From an investment perspective, we have never been entangled in this, and we advise founders not to be entangled; it should be based on category adaptability.
Categories determine everything. If it’s Amazon-friendly, then start honestly on Amazon. A typical example is Anker—standard products, single items, no need for much display, buying a power bank, headphones, or data cables theoretically does not require a product combination.
If it’s not Amazon-friendly, consider starting non-Amazon. The success of SHEIN is because the clothing category is not friendly on Amazon. Another example is furniture—Amazon is not friendly for that either; as long as there is a product combination, Amazon is not friendly.
This is similar to looking at Taobao-friendly and JD-friendly back in the day. JD-friendly is Amazon-friendly; JD is a supermarket, and Amazon understands itself as a supermarket, so it manages the entire platform as a single store.
Starting non-Amazon does not equal starting an independent site. Before doing an independent site, I would ask: "If I really give you an independent store, can you operate it?"
There are many places where there are actually opportunities to operate independent stores. I advise many companies to first practice on eBay; some categories can still sell on eBay today, not particularly well, but the cost of practicing is low, right? Selling clothes and wanting to do an independent site, practicing on eBay will help you understand how to manage a store. Amazon never gave you that opportunity.
So it cannot be said that investors like it, or that I have a brand dream and want to do an independent site; it still goes back to Amazon-friendly and non-Amazon-friendly categories. This was also a key point in our judgment back then, so we have never been entangled in this matter.
Brands Factory: Did SHEIN have any entanglements at the beginning?
Wei Zhe: We signed an investment intention letter with SHEIN. Xu Yangtian came to us for the first time, signing a pre-investment valuation of 130 million USD and a post-investment valuation of 150 million USD.
Brands Factory: When was that?
Wei Zhe: June 2015, seems quite early. Many people misunderstand SHEIN; today’s SHEIN has a platform mindset, not an independent site mindset; it’s just that the opportunity at that time made the customer acquisition cost for independent sites relatively low, and its product repurchase frequency is relatively high.
Not everyone can turn themselves into a platform because they do not have a very high-frequency category. For example, maternal and infant products are not high-frequency, and furniture is not high-frequency; these independent sites are very difficult.
Brands Factory: What specific changes have there been in target selection?
Wei Zhe: In fact, many changes started in 2021; 2023 is just a result.
First, we began to pay attention to non-consumer industrial categories; second, we started to focus on the balance of "trade, industry, and technology" in cross-border e-commerce companies. Whether it’s a big seller or one that started on Amazon, they are all strong in "trade." Before 2023, Jia Yu had not invested in any cross-border e-commerce company with a factory; in 2023, all the investments we made were 100% with factories, having their own factories and R&D capabilities.
We have always placed great importance on R&D capabilities. Many founders (doing) independent sites or Amazon easily add 2% in marketing expenses. We advise them: change your thinking today. For a scale of 1 billion, adding 2%, 20 million in R&D. Many founders cannot make that decision. But I say good products will speak for themselves; if you put that 1-2% you add in marketing into the product, the effect will be better, the traffic will be better, and the gross profit will be better. Investing 2% in marketing may not yield good gross profit, and may even lead to discounts. Many of them also do not know how to spend that 20 million on product R&D; some may not even have an R&D team.
Generally, we do not invest in companies without R&D teams, nor do we invest in pure buying teams; because there is no barrier, you can buy just as I can.
Brands Factory: Zhiou and Anker were also sellers at the beginning; how was their development in "technology, industry, and trade"?
Wei Zhe: To be honest, we invested relatively early. We certainly (insist) on not having inventory and at least being a boutique seller with a buying model. When we looked at Anker, 10%-20%, or even a higher proportion of products were redesigned by the R&D team. There is still "technology"; I do not pursue perfection or say that this company must be 100% self-developed; that would be inefficient, right? The cycle is too slow.
So you can look at buying models, but they must have a certain degree of "technology." Back then, those group buying and store group models had tens of thousands of SKUs; how many of them had buyers? Some certainly could not even be called buying models; if they are not buying models, they are inventory models, which we do not look at.
Brands Factory: Was this standard in place when you first started investing in cross-border?
Wei Zhe: It has been there since day one; it’s our established rule. However, the concept of "trade, industry, and technology" was refined in 2022. But in 2022, it was just adding "industry." "Trade" and "technology" have always been our focus. Our requirement for "technology" is that the product R&D capability must account for a certain proportion of all your categories and continue to improve.
Brands Factory: How do you balance these three capabilities?
Wei Zhe: At the beginning, one leg may be thicker and longer; the important thing is to remind the company, what you started with, don’t neglect the other two parts. If you started with trade, even if you don’t immediately go to factories, you must first focus on R&D.
Of course, not all companies and categories must have factories. For those with relatively few SKUs and stable products, having a factory is a must; but for those in clothing, there is no need to have a factory, right? If there are many SKUs and rapid product iterations, it is certainly not feasible to have your own factory, but you must have influence over the factory. Look at how much effort SHEIN has put into transforming factories; although it does not own its factories, it controls many factories, not through equity but through orders and digitization; otherwise, there would be no SHEIN today. So SHEIN’s R&D, product development, and design capabilities are not weak.
To succeed, "technology, industry, and trade" must be balanced. I do not pursue perfection and say that it must be balanced from day one; but the founder must align with me, know which leg is shorter, and be willing to strengthen it.
Brands Factory: Are there more targets that meet this standard (with investments in "technology, industry, and trade")?
Wei Zhe: There are more and more; colleagues in the cross-border team can’t even find a place in the office; they are all out, and we now feel there are many underwater projects. I tell the team that cross-border e-commerce relying on capital expansion will not be invested in principle; cross-border e-commerce (companies) should have very healthy cash flow.
We see many companies with profits of 100 million, 200 million, or even over 300 million that have never raised funds. They may not necessarily be in Shenzhen or Ningbo; they could be in other places.
Why is "technology, industry, and trade" important now? Because another trend is: pure factory types go directly into cross-border e-commerce; how to compete without a factory in the future?
- "De-Amazonization" ≠ independent sites, brand ≠ independent sites
Brands Factory: 2021 was a turning point for the industry. Now everyone is talking about brands going overseas; how do you view this?
Wei Zhe: Brands going overseas is not a sentiment; it’s a very long-term strategy. We will not invest in anyone doing this for sentiment. You cannot say I am a brand going overseas, so I don’t make money and can burn cash; that’s not rational.
Amazon was like Taobao back in the day, capable of giving birth to a batch of channel brands. Many people asked me what a good Taobao brand is. I said a good Taobao brand is one that can "escape" from Taobao.
Starting from Amazon to create channel brands is not a problem, but you still have to return to your category. However, if you say that I am a half-disabled person who has come out of Amazon, then what abilities do you need to develop that you didn’t need before?
Brands Factory: What abilities are very important when going out of Amazon?
Wei Zhe: Marketing ability. Transitioning from in-site to the entire network, half of the marketing ability is missing. IT capability; on Amazon, you generally just need to do well in the backend, and the supply chain and middle platform analysis do not require frontend capabilities; without building a site, there is no frontend. Logistics capability; previously, with VC and FBA models, you didn’t need to care, but now you have to build it.
From frontend IT and site building to marketing capabilities, each is missing half, and the last-mile logistics capability is almost entirely missing.
Brands Factory: But there are actually quite a few professional service providers that can do these; which are the core capabilities?
Wei Zhe: Can you definitely rely on external support for last-mile logistics? Not necessarily; after-sales service, returns and exchanges, these capabilities are missing when going out of Amazon, just like when going out of Taobao. So it’s important to be very clear about how many shortcomings you have when transitioning from a channel brand to a brand.
Who says brand equals independent site? We are the most opposed to that. How many independent sites has Anker built until now? But who can deny that Anker is a brand?
Brands Factory: How did Anker go through this process back then?
Wei Zhe: A good channel merchant gathers all brands; a good brand occupies all consumer-accessible channels.
Did some Amazon sellers do well at Walmart? Very well; they also did well at Apple and Target; consumers can buy Amazon products wherever they can reach. A good brand going out of Amazon, I often say you shouldn’t immediately build an independent site; the first thing is not to put all your eggs in one basket. Outside of Amazon, you should at least build a company with a scale equal to Amazon, right? Amazon is at most half the market; isn’t the other half waiting for you?
Back then with Anker, we said don’t ask Walmart offline for resources; let’s first become the number one brand online at Walmart, and wait for them to come to us offline. After that, entering other platforms was also done by killing in from online.
Brands Factory: When is the right time to build a site?
Wei Zhe: When Anker came out of Amazon, whether in terms of technology, financial strength, or team capability, it was the best time to build an independent site. But I told the founder at that time, your category is not a product that has value for an independent site, so there’s no need.
We are particularly opposed to independent sites but also particularly supportive of them. We oppose independent sites becoming your main sales channel, but we encourage everyone to have an independent site. The mission of an independent site is divided into 1.0, 2.0, and 3.0; if you haven’t done the first two things well, directly jumping to 3.0 is not feasible.
The first task of an independent site, to put it bluntly, is to support the product R&D center. I often joke that the first day of an independent site should be managed by the product R&D department; it is their tool and laboratory. 1.0 is about interacting with customers, researching products, and understanding and gaining insights into overseas consumers, as Amazon and Walmart cannot provide you with this data, and users cannot interact with you.
In the 2.0 phase, it’s managed by the independent store people. What does it mean to run a store well? First, it’s about increasing the visitors' stay time. If visitors spend more time in my store, I need to tag them to know how many products they viewed and how long they stayed.
The assessment indicators are just two: the number of items per customer, not the average transaction value, and the repurchase rate. Strive to double these two standards compared to Amazon. Amazon has 1.3 items per transaction; independent sites should aim for 2.5 to 2.6 items. Amazon does not provide recommendations and links, nor does it give you any proactive repurchase actions; independent sites have user data and should actively promote repurchases. If Amazon has a repurchase rate of 15%, independent sites should aim for 30%. Why do these two things? Only high repurchase rates and high item counts can lead to high average transaction values that can withstand the marketing costs of independent sites.
Once these two things are done, then the whole company can scale up. The marketing department can get involved, and then we can scale up; this is the 3.0 phase.
I say everyone needs an independent site, but if it’s below 100 million USD, don’t build your own site; just use Shopify. Building a site requires maintaining a team; more importantly, this way you will know which parts of Shopify are not suitable for you; the independent site you imagine may not even be as structured as a small brand. I oppose hiring twenty or thirty people or outsourcing several million or even tens of millions to build a site; just use Shopify; it works for most categories.
Brands Factory: What are the cycles for the 1.0, 2.0, and 3.0 phases?
Wei Zhe: Don’t look at time, just look at business numbers.
Brands Factory: Is this method suitable for all categories?
Wei Zhe: No. For 3C categories, Anker didn’t build an independent site until it reached over 10 billion RMB; we have always advised against it. They have only been doing it for less than two years; previously, it was just a website without any sales behavior.
Some categories may have a faster rhythm than Anker; Cupshe’s category is non-Amazon-friendly, so its urgency for an independent site is higher and needs to be pushed forward.
Cupshe’s independent site is now very strong, but it has also gone through some detours; it wanted to launch its own site very early, but the spending was not controlled well. We pressed down and said don’t rush, don’t rush; why? It’s not a spending issue; it seems like it is, but actually, your item count is not enough, operations are not done well, and the average transaction value is low. An independent site cannot sell too expensively; do not raise the average transaction value; instead, raise the item count. Have your conversion rate, attach rate, and repurchase rate gone up? If these three rates are not up, you cannot exert force.
So we firmly pressed down the volume of Cupshe’s independent site, and now it’s healthy.
Brands Factory: Many Chinese consumer brands are starting to build their own channels overseas; what do you think about this?
Wei Zhe: This can be divided into two categories. Miniso’s products are offline-friendly, not online-friendly; for online-friendly, we will further ask if it’s Amazon-friendly or non-Amazon-friendly. For offline-friendly, you should honestly lay out offline channels.
So for the first category, Miniso is very correct. Because its average transaction value cannot support online, domestic e-commerce cannot do it, and overseas e-commerce cannot do it; you should just open stores honestly.
Brands Factory: Will there be more brands like this emerging in China?
Wei Zhe: No. It’s not that there aren’t many companies; it’s that there aren’t many categories suitable for this model.
- Domestic Leading Brands Going Overseas: They Are Wolves, Many Will "Die"
Brands Factory: Some domestic leading brands are entering cross-border. You recently mentioned that they are at the starting stage in terms of channels, production capacity, and supply chain. At that time, the description was: domestic leading brands going overseas are truly the wolves coming.
Wei Zhe: They are wolf breeds, little wolves; many will "die," if we don’t help, they will definitely "die."
We see that there are two major categories: one is universally applicable between China and foreign countries, and the other is not. From an investment perspective, we actually prefer "not universally applicable." Because universally applicable means that all Chinese supply chains, whether doing domestic trade or foreign trade, can be exported.
Anker unfortunately made a universally applicable product, and so did Zhiou. The ice-making machine we are investing in is not bought by Chinese people at all; Aike’s mobile refrigerator is used by very few Chinese people; the DIY products from Si Jiu Technology (a leading DIY company) are not used by Chinese people at all.
You can see that most of our investments are in non-universally applicable categories. If you come from a traditional industry, you must ask: is the product universally applicable? If it is universally applicable, first, the product does not need to be redefined too much, but the channel capability may need to be redefined. In China, it’s a distribution system; you need to ask which countries abroad can continue to distribute? In China, it’s franchising; can you use your own stores abroad? In China, it relies on e-commerce; can you continue to do e-commerce overseas?
Southeast Asia has a good distribution system, so Bull’s overseas expansion continues with offline distribution in Southeast Asia, and the product does not need too much definition. Going to Europe and America requires redefinition.
Brands Factory: How to redefine products?
Wei Zhe: First, specification standards; the power strips in American homes are different from those in China; Americans have larger houses and longer wires. This is called redefining products.
I often say you cannot use the methods of large company divisions to do this; you should use the perspective of an independent subsidiary with VC investment: the company first invests 10 million in you, and then gives you 30 million based on what you achieve, step by step, with an investment budget for opportunities.
Brands Factory: For categories like E-Bikes that have emerged in foreign scenarios and are not universally applicable, what are the strengths and weaknesses of domestic leading companies compared to original E-Bike startups?
Wei Zhe: The supply chain may be cheaper, but the product design may not necessarily be good. If you think broadly, why aren’t traditional car companies going overseas with new energy vehicles? Theoretically, traditional forces should have advantages in making new energy vehicles, right? But you see they actually do not have advantages.
The E-Bike track has been quite popular in the past two years, but we haven’t done any; why? We look at the track. The core of the E-Bike value chain is the mid-mounted motor, which is controlled by a few companies; the rest have no core competitiveness; without core technological competitiveness, the value chain is still very low.
We have seen that none of them meet our evaluation standards for "technology, industry, and trade," including revenue, profit, and valuation; they are too outrageous.
Brands Factory: You rarely invest in particularly innovative brands like robots?
Wei Zhe: It’s not that we don’t innovate; we believe there are still new consumer categories abroad. Ice-making machines are a very new category, and mobile refrigerators are too. These categories have emerged in the past three years, and the average transaction value abroad is relatively high; but there are also many pseudo-propositions and pseudo-needs.
Brands Factory: Companies like Huikang, Aike, and Zhiou are actually part of the home goods category, right?
Wei Zhe: Completely different. We have never regarded it as home goods; we do not have the concept of home goods; but this (home goods) has a large scale, so we will definitely invest in many such companies.
We just ask a simple question: do you have electricity or not? At that time, I asked Anker this question—you may not know that Anker used to sell phone cases—I said if it’s not electric, don’t touch it.
In our view, there are just these two categories; these are two completely different capabilities. Aike and Huikang are electric; why electric? Because later we will talk about chips, intelligence, and automation; for non-electric, don’t rush; we compete on design, style, and combination.
Why this classification? It’s not for the sake of division; it’s very different for company strategy and the guidance of the next product development.
- The Reshuffle Has Just Begun; At Least 100 Companies Worth Over 10 Billion Will Emerge
Brands Factory: In the past two years, many funds have been less active, but Jia Yu has made many moves in 2023, and the cross-border team has doubled. How do you view today’s cross-border e-commerce industry?
Wei Zhe: Cross-border e-commerce may enjoy a relatively high premium in the future. The A-share market will gradually form a separate "cross-border e-commerce" sector. Why? Cross-border resembles consumption, but the understanding of companies within it, its risks, opportunities, and valuation systems are different.
First, the markets are different; we don’t touch Southeast Asia much; we look at Europe and America. China has its own cycle, and so does Europe and America; cross-border cuts into others’ cycles, so we position cross-border as a particularly anti-cyclical industry. What does anti-cyclical mean? It means I am not affected by the Chinese cycle, following an independent trend and independent performance. Counter-cyclical is very interesting, right? It means that in some Chinese industries, the worse it gets, the better I do; cross-border is not like that. We will also specifically layout counter-cyclical industries.
Moreover, cross-border companies receive payments in USD and EUR, which is a good hedge against RMB. When the RMB depreciates, theoretically, cross-border companies should rise; they haven’t done anything; costs are in RMB, and income is in foreign exchange. These factors make cross-border e-commerce a high-premium industry in the future. Under the same growth conditions, if they are all in the furniture business, companies like Zhiou will enjoy a premium, with a slightly higher PE multiple.
Investment must be based on exit; if the exit is unclear, we definitely won’t dare to invest. Now the country supports cross-border e-commerce and foreign trade; we all believe it’s a green light all the way, with smooth exit channels. Moreover, we are the most professional fund in the country focusing on cross-border e-commerce; since 2017, we have consistently separated cross-border from consumption, becoming more specialized.
Brands Factory: Looking ahead to 2024, what trends in the cross-border industry are you excited about?
Wei Zhe: We are currently focusing on large item capability, whether in industrial or consumer goods. Cross-border is entering a deep water zone; the deep water zone is not about building a strong brand but about "de-FBA."
I often say that "de-FBA" should happen before "de-Amazon." You can sell on Amazon, but you need to step out of Amazon; its costs have already become unbearable and are irreversible. Companies must clearly recognize that "de-FBA" is akin to "de-Google" for independent sites. You can temporarily stay on Amazon, but you need to step away from FBA. The core here is: large items originally could not enter Amazon, and conversely, opportunities lie here.
Which categories? Bed frames, wardrobes, refrigerators, auto parts, bumpers, and industrial products like meat slicers; there are large items in both industrial and consumer goods.
Brands Factory: Can large item capability be understood as full-link operational capability?
Wei Zhe: Large item capability lies in overseas warehouses, last-mile, and certain installation and after-sales service capabilities. We are very interested in who possesses this capability now.
Brands Factory: Actually, the requirements for cross-border practitioners have moved forward a step. Previously, new sellers had considerable opportunities; now is the entire cross-border facing a reshuffle?
Wei Zhe: A reshuffle will definitely happen, but I think it has just begun; at least 100 companies capable of achieving over 10 billion should emerge.
We have counted the 10 companies under Jia Yu. Last year, their total revenue exceeded 40 billion; the entire cross-border e-commerce in China last year was 1.83 trillion, growing by 17%.
Brands Factory: Now we can see many Japanese companies opening a large number of offline stores globally; they already have the capability for global layout. How far is China from this stage?
Wei Zhe: For domestic consumer goods, many tea drinks can be found in Mexico, so you have to differentiate by category.
Many Chinese brands have long reached the status of Japanese home appliances; if there were no overseas suppression, if you went to Europe, the largest billboard in any square would definitely be Huawei’s. So I don’t think Japan is that impressive; many categories of Chinese brands are not inferior to Japan. The reason Japan can survive is that they have small stores; large stores have all died. Isn’t 800 Partner dead? Japan has a lot of experience in small store operations.
In another five years, all Chinese tea drinks will spread across Europe, America, and Southeast Asia; Chinese brands will occupy more than three of the thousand-store chains in the U.S.
Brands Factory: Are you that optimistic?
Wei Zhe: Definitely.
Brands Factory: Will Jia Yu invest in these consumer brands?
Wei Zhe: Hu Shang Ayi will also go to the U.S.; why should I invest in a completely new one? The supply chain of Chinese brands has already been fully established; we can use the companies we invest in to go overseas; there’s no need to invest in a purely American tea drink startup.
We have looked at several companies in the U.S.; I said when Hu Shang Ayi and Gu Ming come, you will all collapse. You have no supply chain or product development advantages; packaging material prices are so high; your business is good now because I haven’t come; once I come, you will all "die," and you will definitely "die."
Tea drinks are definitely the first step; there are four thousand-store chain enterprises in our hands, and we will take it step by step.
Brands Factory: So now there are still many mid-tier factories and sellers; where is their space?
Wei Zhe: Half dead, half alive, success 1%.
This article is from the WeChat public account: 品牌工厂 BrandsFactory (ID: BrandFactory2049), author: Fan Xiaqing