---
title: "A Dumpling-Triggered 'Cold' War"
description: "The article recounts the fierce competition in China's frozen food industry, focusing on the rivalry between Sanquan, Longfeng, and Wanchai Ferry. It details how Sanquan rose to dominance through strategic moves, including leveraging new national standards to outmaneuver competitors, ultimately acquiring Longfeng in 2013."
author: "路胜贞"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2015-10-01"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/a-dumpling-triggered-cold-war-d0ffcded/"
markdown: "https://xinjignxiao.com/en/articles/a-dumpling-triggered-cold-war-d0ffcded.md"
original_source: "https://mp.weixin.qq.com/s/CfThBeRD1wqBNdqonPTEjg"
translation: "https://xinjignxiao.com/zh/articles/%E4%B8%80%E5%8F%AA%E9%A5%BA%E5%AD%90%E5%BC%95%E5%8F%91%E7%9A%84-%E5%86%B7-%E6%88%98-d0ffcded.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/a-dumpling-triggered-cold-war-d0ffcded/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# A Dumpling-Triggered 'Cold' War

> The article recounts the fierce competition in China's frozen food industry, focusing on the rivalry between Sanquan, Longfeng, and Wanchai Ferry. It details how Sanquan rose to dominance through strategic moves, including leveraging new national standards to outmaneuver competitors, ultimately acquiring Longfeng in 2013.

“The goal is to become the industry leader. If anyone blocks Sanquan's path, Sanquan will eliminate them at all costs!” In April 2013, this rumor once again spread among many distributors in the frozen food industry, who spoke with envy and mythologized this legendary company. This long-circulating rumor seemed to have come true for Synear and also for Wanchai Ferry. Hearing the same words, Ye Huidé, who had founded Longfeng Food with his own hands, must have felt a mix of emotions. Because no one had expected that Longfeng Food, which originated from the more market-oriented regions of Hong Kong and Taiwan and operated according to international standards, would inexplicably “fall” into the hands of Sanquan, a company with humble grassroots origins.

**The First Encounter**
Before entering the mainland, Ye Huidé's Longfeng Dumplings had dominated Taiwan for 16 years. To break into the mainland market, in 1992, Ye Huidé established Shanghai Guofu Longfeng Company. Because the quality and taste of Longfeng dumplings catered to local demand, the Longfeng brand became well-known in less than two years. Originally planning to achieve 50 million in five years, the output value in 1994 alone reached 40 million.

At that time, Zhengzhou Sanquan was fully launching a product different from Longfeng: quick-frozen tangyuan (glutinous rice balls). Sanquan's boss, Chen Zemin, was not only doing booming business in Henan but also occupying central cities such as Xi'an, Taiyuan, Shenyang, and Jinan, and was even negotiating with some small supermarkets in Shanghai. The daily production of 30 tons of tangyuan could not meet demand.

The hot sales of Sanquan tangyuan made others envious. Ye Huidé realized that developing tangyuan products could provide Longfeng with a new growth opportunity.

Ye Huidé conducted a quiet investigation: the popularity of tangyuan was astonishing. Every day, many people queued in front of freezers in supermarkets in Zhengzhou and even Shanghai to buy tangyuan, and Sanquan simply could not meet the demand.

After further investigation, Ye Huidé made a new discovery: to save money, the machines Sanquan used to produce tangyuan were self-made by Sanquan's boss, Chen Zemin, with a daily output of less than 30 tons, far from meeting market demand. Supermarket purchasing managers often had to personally queue at Sanquan.

The business opportunity was within reach. Ye Huidé did not hesitate to buy the most advanced production line from Japan. But he was still not satisfied, so he personally modified the machine, tripling its capacity, which naturally brought huge gains. As a result, when supermarket purchasing managers saw that Longfeng tangyuan could meet demand, they flocked to Longfeng to purchase, and most of Sanquan's customers abandoned it.

Seizing the momentum, Ye Huidé immediately decided to purchase ten production lines and planned to penetrate the entire East China market.

This was tough for Sanquan, which had lost business. With no money and no technology, Sanquan struggled to find a countermeasure.

At this time, a new competitor was also eyeing the moves of Sanquan and Longfeng. This competitor was Hong Kong's Wanchai Ferry, which held over 40% of the frozen dumpling market in Hong Kong and operated three dumpling factories.

Similar to Longfeng, influenced by Western marketing concepts, it focused mainly on the most upscale hypermarkets locally.

But Wanchai Ferry did not act rashly. It was clear that once it entered the mainland, it would inevitably clash head-on with Longfeng, potentially resulting in mutual destruction.

However, at that moment, Longfeng and Sanquan were locked in a fierce battle in the tangyuan market, leaving no time for other matters, and the dumpling market gap was a rare opportunity.

Wanchai Ferry immediately realized the opportunity. In 1997, without hesitation, it established its first dumpling factory in Shanghai and quickly placed Wanchai Ferry dumplings in every hypermarket. Overnight, the Shanghai frozen dumpling market became Wanchai Ferry's domain, forcing both Longfeng and Sanquan's dumpling markets to decline. More critically, Sanquan's own backyard caught fire.

At this time, Synear, from Zhengzhou, seized the opportunity while Sanquan was distracted by its Shanghai campaign and had no time to attend to Zhengzhou. It launched thousands of tons of tangyuan, flooding local supermarkets of all sizes. Synear's tangyuan were only the size of a little finger's tip, almost twice as small as Sanquan's. Moreover, Synear adopted a “sticky” tactic: wherever Sanquan entered a channel, Synear would follow. With this clever innovation of going from large to small, Synear managed to snatch nearly 100 million yuan in sales from Sanquan. Subsequently, Synear launched quick-frozen soup dumplings, which became an instant hit, and took the opportunity to attack Shanghai. By 2001, Synear's sales exceeded 200 million yuan.

With Synear's sudden entry, the frozen food market became even more tense and crisis-ridden.

**The Shanghai Melee**
It was then that Sanquan and Longfeng came to their senses and stepped up defenses in their respective main battlefields. Shanghai radiated to Beijing, Guangzhou, Chengdu, and other key economic cities in China. Losing Shanghai would undoubtedly mean losing the national base.

Chen Zemin's Sanquan had fought its way to its current position through fierce competition in small shops. Naturally, he thought of counterattacking from the channel side, just as he had done in the Zhengzhou market. Chen Zemin knew well that no matter how famous a product was, it had to reach consumers to count as a victory. Based on its situation, Sanquan adopted a branch company system and increased distribution efforts in Shanghai's hypermarkets and convenience stores: as long as they could enter stores, sales managers had full autonomy to set policies. Sanquan hoped to rely on channel occupation to counter Wanchai Ferry and Longfeng and to block Synear's attack.

But unexpectedly, unlike the loyal small shop owners, hypermarkets were mostly arrogant. Even when they reluctantly agreed to let Sanquan in, they placed it in inconspicuous corners, mixed with small brands. Unfamiliar with the rules of hypermarkets, Sanquan suffered many hidden losses. It had to prepay large quantities of dumplings and tangyuan, with payment settled according to supermarket rules only after products were sold for a month. The substantial electricity costs for freezer displays were also required to be borne by Sanquan. Moreover, supermarkets even required Sanquan to station promoters, and Sanquan complied, sending many young and energetic promotion and stocking staff, with salaries paid through the supermarkets, adding to costs.

On the other hand, hypermarkets were extremely polite to the “foreign-style” Longfeng. Sanquan learned privately that Longfeng adopted a distributor agency system. These distributors were powerful “local snakes” in Shanghai with extraordinary relationships with hypermarkets, even buying out the largest freezers in supermarkets. Longfeng even signed exclusive agreements with these “local snakes,” naturally securing the best display positions in hypermarkets.

With its strong channels and brand influence, Longfeng confidently required distributors to pay cash on delivery. The ample cash gave Ye Huidé more funds for promotions and advertising. Regarding electricity costs, the experienced Longfeng cleverly incorporated them into supermarket sales rebates using “international rules,” invisibly saving a large expense. For promoters and stockers, Longfeng hired middle-aged laid-off women who were hardworking and paid less than Sanquan's young staff, and payments were not processed through supermarkets, avoiding another layer of exploitation.

With careful budgeting, Longfeng, like Wanchai Ferry, which also had hypermarket experience, achieved gross margins as high as 35%. In contrast, Sanquan and Synear's gross margins in hypermarkets were far below 30%, which was essentially losing money for publicity.

Thus, the channel war in hypermarkets ultimately became a duel between two masters: Longfeng and Wanchai Ferry.

Seeing that bearing channel costs was no longer a new trick, Ye Huidé had a brainstorm and decided to give freezers to supermarkets as gifts. This move was very popular with supermarkets, and Longfeng's display space expanded further. Wanchai Ferry, now backed by the deep-rooted American General Mills, was not short of money, and soon hundreds of thousands of freezers bearing the Wanchai Ferry logo entered supermarkets... This luxurious war left Sanquan and Synear stunned, and they both retreated in defeat.

In fact, this melee in Shanghai's frozen food industry put immense financial pressure on Longfeng as well.

At that time, Wanchai Ferry was backed by the deep-rooted American General Mills. Although Sanquan and Synear were temporarily suppressed, Sanquan had already spread the word that it would not give up until it captured Shanghai. With a strong enemy ahead and pursuers behind, Ye Huidé felt that to truly resist Wanchai Ferry's attack, he had to find another strategy. A financial war would inevitably lead to mutual destruction, leaving Ye Huidé in a dilemma. But an opportunity soon appeared. At that time, international giant Heinz was preparing to enter the frozen food market. Ye Huidé hoped to use Heinz's domestic channels to reduce investment costs. Heinz also hoped to leverage Longfeng to expand its mainland market share, so they hit it off immediately.

With Heinz's channel and financial support, Longfeng turned the tide and quickly suppressed Wanchai Ferry's momentum in Shanghai.

A mountain cannot harbor two tigers. Wanchai Ferry also realized that competing with Longfeng, backed by Heinz, could lead to mutual destruction. It decided to temporarily reduce its competitive intensity in Shanghai, avoid direct confrontation with Longfeng, and instead focus on building the Guangzhou and Beijing markets.

Without the direct threat of Wanchai Ferry, in 2004, Longfeng captured 13.8% of the market, firmly holding the top position in the frozen food industry. Moreover, with Heinz's help, it quickly entered the Beijing-Tianjin, Guangdong, and Chengdu-Chongqing markets.

**A Series of Stratagems**
The loss in Shanghai was a thorn in the side of Sanquan, which had always wanted to break out of Zhengzhou and expand nationwide.

Chen Zemin racked his brains to find a way to win back Shanghai.

Soon, the market-savvy Chen Zemin made a discovery: frozen tangyuan in supermarkets were all sold in vacuum-packed one-jin bags, with no bulk sales. A market opportunity emerged.

Chen Zemin directly packed dozens of jin of tangyuan into a large plastic bag and sent them to supermarket freezers. Consumers could buy as much as they wanted, sold by weight. However, this idea was questioned by his subordinates, for a simple reason: it had no technical content. If you can sell separately, competitors will follow suit.

Chen Zemin did not say much. He quietly went to Beijing to handle another matter.

It turned out that two years earlier, Chen Zemin had applied to draft the national standard for quick-frozen tangyuan, taking advantage of the opportunity when the National Standards Committee was preparing to formulate a tangyuan national standard. At this time, he had received intelligence that the drafting would soon begin.

Chen Zemin knew very well that the frozen food industry was emerging, and there were no regulations defining bulk or packaged sales. The new national standard left Sanquan enough room to maneuver.

Opportunities were fleeting. Almost overnight, Sanquan's over 90,000 tons of bulk tangyuan flooded into supermarkets and retail stores across Shanghai like an avalanche. Because they were bulk and sold by weight, the price was half that of Longfeng's.

You buy three jin, I buy five jin—this suited Shanghai people's tradition of being meticulous with money. Supermarkets of all sizes were packed with people, and Sanquan tangyuan achieved success in Shanghai at once. Within half a month, supermarkets were out of stock.

Seizing the momentum, Sanquan quickly replicated this in Guangzhou, Beijing, and Tianjin. Within just one year, Sanquan's sales suddenly broke through the billion-yuan mark.

Longfeng noticed Sanquan's unusual moves. Although caught off guard, it quickly came to its senses and immediately ramped up production of bulk tangyuan. Tens of thousands of tons of bulk Longfeng tangyuan also pressed into Shanghai's supermarkets. Even Wanchai Ferry, which had temporarily lowered its competitive intensity, could not remain calm and quickly deployed bulk tangyuan supply. A major battle seemed imminent. Unexpectedly, Sanquan suddenly stopped supplying bulk tangyuan.

Although puzzled by Sanquan's actions, no one gave it much thought.

In April 2007, a bucket of cold water was suddenly poured on the hot bulk tangyuan market. The Ministry of Commerce suddenly issued an unexpected notice: “Bulk quick-frozen foods without pre-packaging shall not be sold at store counters,” based on the “New National Standard for Tangyuan.” This news caught everyone off guard. Longfeng and Wanchai Ferry were forced to return large quantities of bulk tangyuan, leading to inventory pile-ups and cash flow difficulties. On the other hand, Sanquan stood out, with sales surging to over 1.4 billion yuan, exceeding Longfeng by more than 400 million yuan. Sanquan recaptured Shanghai.

It was then that Longfeng realized Sanquan was a tough opponent.

Ye Huidé decided to reluctantly withdraw from the tangyuan competition for the time being and return to the dumpling main market. However, there were obstacles to focusing on the dumpling market. Due to customs, the southern market had limited capacity. Moreover, Wanchai Ferry had already taken the lead in first-tier markets like Guangzhou and Chengdu, making it difficult to follow. The best choice was to go north. Longfeng set its breakthrough point in Zhengzhou, which happened to be Sanquan's home base.

As early as 2004, Longfeng attempted to enter Zhengzhou, but Sanquan immediately launched the Zhuangyuan Dumplings, positioned similarly to Longfeng, to block it. Sanquan's Zhuangyuan dumplings had larger capacity but were about 1 yuan cheaper than Longfeng's. Not only that, Sanquan signed Jiang Wenli as the spokesperson for Zhuangyuan dumplings at a cost of 1 million yuan. With ultra-high cost-performance and Jiang Wenli's enormous appeal, within just two months, Sanquan successfully blocked Longfeng outside the Longhai Line. Therefore, capturing Zhengzhou would not only boost morale but also give Longfeng a chance to avenge its Shanghai shame.

But by 2008, Longfeng had been fully taken over by Heinz, and Heinz had its own plans for Longfeng.

**Not in Control**
Initially, to quickly grow and further dominate the market, Longfeng joined forces with Heinz, but control of Longfeng had absolutely fallen into Heinz's hands. After Heinz acquired Longfeng, Ye Huidé remained chairman, but everyone could see that this was a transitional move by Heinz.

Ye's failure this time brought Heinz's plans to the surface: to open a new front in condiments, using sauces to drive dumpling sales, creating differentiated competition with Sanquan. Heinz's confidence lay in the fact that its condiment business had maintained double-digit growth in recent years. Heinz had already decided to de-emphasize non-core frozen food businesses outside the United States and focus on the global strategy of “sauces and condiments” and “infant food and nutrition.”

Soon, Heinz sent Ke Juncai, who was familiar with the mainland market, to serve as Managing Director of Longfeng, and brought in provincial general managers to serve as presidents of the four factories in Guangzhou, Tianjin, Chengdu, and Zhejiang.

However, many of Longfeng's old employees believed that Longfeng had built its business on dumplings and tangyuan, and relying on condiments to drive Longfeng was simply a fantasy. Unfortunately, capital was strong and ruthless. Longfeng was just a pawn for Heinz and had to comply with Heinz's global interests and unified deployment. Helplessly, many old employees left. At this time, Ye Huidé could only watch as a large number of veterans departed, and the northern expedition seemed indefinitely postponed.

While Longfeng was embroiled in internal strife, Sanquan took the opportunity to expand its territory. First, it expanded production in Zhengzhou by 110,000 tons, and then established production bases in Jiangsu, Chengdu, Tianjin, and Guangzhou, quietly forming an encirclement covering the mainstream frozen food market.

Sanquan had always had a problem: although its scale was growing, profits were low, and its long-term presence in second-tier markets led many to perceive Sanquan as a second-tier brand. Sanquan had to compete for first-tier markets to improve profits.

At this time, Sanquan's helm changed hands quietly.

In July 2009, Sanquan Chairman Chen Zemin handed over the top position to his son, Chen Nan, hoping that the energetic Chen Nan would complete the layout of the high-end dumpling market and pacify the frozen food world.

Chen Nan acted boldly. As soon as he took over, he spent heavily to invite Dee Hsu (小S) to endorse Zhuangyuan dumplings, using an advertising war to open the way and elevate the Sanquan brand.

Chen Nan also used “slow-cooked soup” as a selling point, launching Sanquan Zhenxian Soup Dumplings. The longer-term arrangement was to continuously increase the proportion of high-end product sales. With these three moves, Sanquan's gross margin remained above 36%, with profits catching up to Wanchai Ferry.

With money in hand, Sanquan immediately adopted a large-scale strategy of giving away or leasing freezers to retail enterprises, placing nearly 30,000 freezers in retail stores of all sizes. To enter large supermarkets like Walmart and Carrefour, which were occupied by Wanchai Ferry, Sanquan offered more favorable payment terms: Wanchai Ferry settled every half month, while Sanquan settled every one to two months. The favorable credit terms were very popular with supermarkets. Soon, large and medium-sized chain stores such as Walmart, Carrefour, Metro, Tesco, RT-Mart, and Trust-Mart opened their doors to Sanquan.

Threatened, Wanchai Ferry immediately mobilized its defenses. Wanchai Ferry broke its tradition of not lowering prices: buy one pack and get 80g free, and all Wanchai products had a unified discount of 2 yuan off for every 20 yuan spent. In the end, Wanchai Ferry's product prices were not far from Sanquan's. With this disguised price cut, Wanchai Ferry entered the Northeast and North China markets, limiting Sanquan's growth.

Sanquan and Wanchai Ferry were locked in a fierce battle. Didn't Longfeng also want to join the war?

But Heinz's focus was on using Longfeng's channels to launch more than ten products, including Longfeng soy sauce, Longfeng light soy sauce, Longfeng oyster sauce, and dipping sauces, which greatly diverted Longfeng's attention. Meanwhile, Sanquan and Wanchai Ferry were meticulously developing new products like Northeast Dumplings and Beiguo Xiang. Longfeng had not launched any compelling new products for years, and consumers lost their sense of novelty.

Its dumpling market share further declined, dropping from 10% to 6%, and its markets in the Northeast, North China, Southwest, and Southeast shrank sharply.

**The Winter Solstice Dragon Slaying**
The period from the Winter Solstice to the Spring Festival is the golden time for frozen food. As the 2012 Winter Solstice approached, everyone hoped to use this period to turn things around. For Sanquan and Longfeng, this was especially significant.

Longfeng's sales had been declining for years. Chen Nan had long intended to acquire Longfeng, using its channels to complete the transformation from a low-end market player to a high-end brand. But his initial expression of interest was rejected.

Ye Huidé might have been holding a grudge. In the past, Sanquan was just a small brother, but now it seemed to be bullying others. Even if Longfeng were to be married off, it should find a suitable match. Clearly, Wanchai Ferry was more in line with Ye Huidé's original intentions. Some even began to notice that Ye Huidé was proactively meeting with Wanchai Ferry's leader, Zang Jianhe.

Chen Nan naturally knew that Sanquan's only heavyweight competitor in the future was Wanchai Ferry (Synear had already begun capital operations, focusing on liquor and real estate). Longfeng Food was also regional, in the Beijing-Tianjin-Shanghai area, while Wanchai Ferry was based in South and East China. If Longfeng and Wanchai Ferry joined forces, they would inevitably trap Sanquan north of the Longhai Line.

In the frozen food industry, the strong get stronger and the weak get weaker. If Longfeng and Wanchai Ferry combined, they might not only theoretically curb Sanquan's plan to enter the high-end market but also practically control the entire north-south market. In an emergency, Sanquan sent its best negotiators to intensify talks with Heinz.

But for Longfeng, the reality was not ideal. Although Wanchai Ferry and Longfeng both had market-oriented, international backgrounds and were both good at first-tier markets, their advantageous channels overlapped, with little complementarity. Thus, it was a case of unrequited love. Additionally, Wanchai Ferry considered that integrating Longfeng would involve dual-brand operations, requiring huge investment to leverage Longfeng, and would distract from its focused operations. Hesitating, Wanchai Ferry did not come to the rescue.

At this point, Longfeng had to make a final push to change its fate. Performance was the best way. The Winter Solstice was approaching. Traditionally, dumpling prices would rise every winter. If Longfeng could seize the golden period from the 2012 Winter Solstice to the Spring Festival and make a sprint, it might change its destiny.

But how could Sanquan not know the industry's rules? Raising prices would not help drag competitors down. Sanquan struck first: 1250g dumplings, originally priced at 36-37 yuan, were directly reduced to 25 yuan; other products were discounted by 20% across the board. Indeed, consumers flocked to buy.

Wanchai Ferry had no choice but to follow. To enter the northern market, it also refused to be outdone, directly reducing the original price of 36 yuan for 1000g family-pack dumplings to 26 yuan. Synear, Yunhe, Hai Bawang, and other brands of all sizes also joined the fray, and this battle was fought fiercely. This war caused all manufacturers to go against the norm and lower prices instead of raising them.

Man proposes, God disposes. Longfeng, which had hoped to turn things around at the Winter Solstice, saw its market share drop from 6% to 4%, and it lost 267 million yuan that year.

Finally, Longfeng met its end amid the fierce battle.

In February 2013, Warren Buffett acquired Heinz in one fell swoop. As for Longfeng, Buffett ruthlessly “cut off the wrist.” Although Longfeng still maintained huge brand awareness and dozens of factories, worth billions, the wavering Longfeng clearly had little bargaining power. Despite a thousand unwillingness, Longfeng reluctantly signed the “indenture” with Sanquan.

Ye Huidé, who had been elected president of the Shanghai Taiwan Association, had long withdrawn from Longfeng's actual operations, focusing on cross-strait public welfare.

Perhaps he had already seen through it: the future of the frozen food industry belonged to Sanquan and Wanchai Ferry. A dragon-slaying war in the frozen food industry seemed to be nearing its end, yet a storm seemed to be brewing again.

**-END-**

**Editor's PS:** The editor has selected 1,067 quality articles from nearly 1,900 published on this official account, categorizing them into 14 major categories and 57 knowledge points. These have been systematically compiled into a library for learning, covering first-line marketing management content, from market to customers, practical combat and management—all valuable. After following the official account, reply with the number “1” to browse and view related content.


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671