What kind of path is it for a company to go public?

Going Public In 2017, the FMCG industry is discussing going public with unprecedented enthusiasm. Tao Huabi said: "We will never go public because our company has sufficient cash flow and we don't engage in deceptive practices."

It seems that going public is synonymous with deception. The main supporter of this theory is Huawei, a Fortune 100 company that has not gone public. However, among the world's top 100 companies, only Huawei is not listed; all others are. Do you mean to say that the whole world is deceptive, and only Huawei is normal?

Going public represents a role change for the company's owner, from having the final say to being governed by the board of directors. In simpler terms, previously the company belonged to the owner, who could do as they pleased; now it belongs to all shareholders—though few truly take responsibility for them.

Listing can raise more funds, laying the foundation for breaking through bottlenecks. For example, SF Express went public to raise funds to build its delivery system.

In the past two years, the FMCG industry has hit rock bottom. All companies feel their cash flow is insufficient, and some shortcomings are exposed due to funding issues. Some ambitions have to be shelved because of financial constraints.

At this moment, "going public," which companies once dismissed, has become the only magic weapon to unblock their "meridians." However, companies now find that in the past, capital providers begged them to list, but now when they truly want to list, others are indifferent.

In the future, which of these companies will be the first to go public? Let me analyze for you.

Wahaha: Starting Anew Recently, Zong Fuli's failed acquisition of "China Candy" (a penny stock) has caused a stir. After all, Mr. Zong once said, "Wahaha will never go public." Zong Fuli's acquisition of "China Candy" was clearly a strategic move for Wahaha's backdoor listing. However, Miss Zong's lack of understanding of Hong Kong penny stocks led to failure. But the failure has no significant impact on Wahaha.

This year marks Wahaha's 30th anniversary. Going public is undoubtedly of great significance to Wahaha. In recent years, Wahaha has often been embroiled in verbal battles. Critics say its sales have been declining year after year, with no new products or highlights. They spend a lot on advertising without making a splash. Without public relations, relying solely on Mr. Zong's speeches to boost Wahaha's image is clearly insufficient.

Supporters argue that Wahaha's cost accounting is different; if the Hongsheng division led by Zong Fuli is separated, overall sales have not declined, and it remains China's number one beverage brand. Wahaha's joint distribution system is still the best business model in the domestic market.

Indeed, Wahaha's actions have been much quieter in recent years. The last time they launched new products on a large scale was in 2012 with Qili and Gevas. In the five years since, Wahaha has been silent in the media. They still launch one new product a year, but without any impact, often stopping after a month or two if there are no results.

Is it only we outsiders who think Wahaha needs to change? Doesn't Mr. Zong know? That's impossible. However, change requires substantial funds and time. Some things are like Emperor Qianlong not being able to accomplish them, so he had to leave them for Emperor Jiaqing to handle.

When Danone left Wahaha in disgrace, capital players realized they couldn't gain control from Mr. Zong with their own strength. This left Wahaha with only one path—going public—to gather more "stepping stones" for its dreams.

When Wahaha celebrated its 25th anniversary, it established the Wahaha Boutique City. This year, on its 30th anniversary, although the listing gift failed, the direction is correct. I believe Wahaha will emerge with a new image.

Among the many companies, I am most optimistic about Wahaha's path to listing.

Six Walnuts: Plagued by Negative News Hebei Yangyuan's Six Walnuts has never been so eager to go public. This is already the third time Six Walnuts has attempted an IPO.

There is an old Chinese saying: "Things should not be done more than three times." Xiangpiaopiao, which sold enough to circle the Earth, finally succeeded in its IPO on the third attempt. Compared to Xiangpiaopiao, Six Walnuts' biggest drawback is the negative news that has plagued it in recent years.

Since being reported by so-called professional counterfeit fighters for fooling consumers and the claim that walnuts improve intelligence being false, Six Walnuts' path has gone astray. Instead of addressing the issue, they sponsored various intelligence programs like "The Brain" and "Challenge Impossible."

This is a classic case of being led by the nose. The more you try to prove you can improve intelligence, the more ammunition you give critics. Consequently, various parties began questioning whether Six Walnuts' marketing expenses were all spent on advertising rather than research and raw materials. They questioned whether Six Walnuts sells "walnuts" or "iron cans."

Moreover, because Six Walnuts applied to register its trademark based on the product's raw materials, this violates China's trademark law. As a result, Six Walnuts has not obtained a registered trademark, leading to a proliferation of walnut drinks in the market, and it cannot claim infringement.

Under multiple pressures, Six Walnuts' sales have severely declined. Distributors' profits were already thin, but previously, with good sales, they tolerated issues for the sake of money. Now, these problems are harder to smooth over. The onerous terms imposed on distributors are no longer as easily accepted.

A few days ago, a cross-ocean lawsuit by an American company went viral in the FMCG circle. Media outlets are discussing how long Six Walnuts can hold on.

Currently, Six Walnuts' IPO application is still under review. Can it turn around like Xiangpiaopiao? The public opinion is very unfavorable to Six Walnuts. It's puzzling what Six Walnuts' PR team is doing.

Six Walnuts' current difficulties are largely due to its ineffective public relations. With insufficient crisis awareness and being led by the nose, it has given everyone too many reasons to question it.

In the future, it can only hope for the best. As a peer, I sincerely hope Six Walnuts can succeed in its IPO and reorganize its product and marketing strategies.

Finding a partner like Danone would be more helpful to Six Walnuts.

Chen Chunhua and Baixiang A few days ago, a friend asked me: "Have you heard of Chen Chunhua?" I was stunned and said no. Later, I realized he meant Chen Chunhua, the spiritual mentor in the FMCG circle. He said: "Chen Chunhua has come to Baixiang as COO, responsible for the company's listing business. And they have started internal fundraising by selling original shares."

It has been over three years since Baixiang's last failed IPO. In the past three years, Baixiang hired Trout & Partners to reposition its products. It has been slowly recovering from the damage caused by moving to Beijing and the failed bet with Fosun.

Baixiang initially seized the first pot of gold in instant noodle upgrades with its one-yuan bagged noodles. Later, its Big Bone Noodles, with a unique nutritional concept, made Baixiang a new regional powerhouse under the dominance of Kangshifu and Master Kong. It can be said that the bone broth concept of today's Tang Daren and Tang Da Shi was proposed after Baixiang. However, Kangshifu and Master Kong had better technology and more distinctive packaging. When Baixiang launched its bone broth noodles, the seasoning packets were still traditional, without a dedicated bone broth packet.

Baixiang's slogan, "Baixiang Big Bone Noodles, real bone broth inside" and "Drink the soup first, it's more fragrant," was a bright spot among all instant noodles emphasizing taste. The appeal of instant noodles has always been "delicious and convenient," but nutrition has also been a consumer pursuit. Baixiang Big Bone Noodles grasped this with bone broth noodles. Bone broth and noodles quickly captured a favorable position. Sales soared, reaching a peak in 2008.

Baixiang's biggest mistake was not telling consumers how to drink the soup. Instead of making a separate soup packet, they simply made the bone broth into a seasoning packet, so consumers couldn't easily drink it. This made consumers feel that Big Bone Noodles was just a concept, no different from other products.

Although when Hualong Yimian, Nanjie Village, and others were still selling at 0.8 yuan, Baixiang upgraded to 1 yuan per pack, seizing a favorable opportunity, this price point didn't match the positioning of Baixiang's bone broth. Later, Baixiang tried to raise prices, but Kangshifu and Master Kong's control was too strong, preventing Baixiang from breaking out of the Henan market.

"Iron-clad grassroots, flowing high-level" is how outsiders describe Baixiang. Over the years, Baixiang has hired professionals from outside for development. Unlike other companies where new leaders bring new teams, Baixiang's high-level management changes more frequently, while the middle layer is more stable. This has led to many policies not leaving the office because the middle layer always wonders when this person will leave.

Now, with Chen Chunhua, the most famous mentor in the FMCG circle, responsible for Baixiang's listing, I am more optimistic about Baixiang. After all, Chen Chunhua's network in the FMCG circle and influence in the capital circle are unmatched by others.

After the failure of the capital bet and three years of consolidation, Baixiang's mindset is now more stable. I wish Baixiang success in going public within the next two years.

Blue Moon: Silent Blue Moon's determination to go public is not strong, and it has not taken any substantial action. As the former number one laundry detergent brand (perhaps still), it feels like it's declining year by year.

After breaking with hypermarkets in 2014, Blue Moon tried different paths, but each required substantial funds. With more laundry detergent brands, lower prices, and higher fees from stores, how much money can Blue Moon invest in its dreams? Whether it's terminal distribution stores, community small shops, Moon House, Laundry Academy, or Machine Wash Supreme, all require significant funding.

This is exactly what Blue Moon cannot afford. If it had sufficient funds, it wouldn't have left hypermarkets. As a product that relies on stores for survival, such willfulness has hurt Blue Moon greatly.

After leaving stores, Blue Moon changed its mind daily, even resorting to employee fundraising schemes, with everyone as distributors and partners. After all this, although they collected some funds and shipped some goods, they lost employee morale, and sales naturally couldn't rise. Then one plan after another failed.

I wonder if Luo Qiuping regrets leaving hypermarkets and regrets the stage years ago when he was closest to listing. If he hadn't refused, perhaps Blue Moon would now have sufficient funds to support his dreams.

Among these companies, Blue Moon is the one that most needs to go public but has been the least active. There's no news about when they'll attempt an IPO, and it's unclear if Luo Qiuping even has such intentions. Blue Moon lacks communication with the outside world.

JDB: Joining Forces Why choose this image? Because in the past, JDB celebrated surpassing canned Coca-Cola sales to become China's number one beverage can. But times have changed. Coca-Cola sold its factories and now only produces concentrate. Although it still tastes the same, it's undeniable that Coca-Cola has also fallen from its pedestal. To be precise, in today's FMCG industry, who is still a god? No one!

In 2017, Wang Laoji and JDB finally sat down quietly and focused on their own business. The herbal tea market is unprecedentedly calm. Perhaps both sides know that continuing to argue would only harm the herbal tea market. After all, herbal tea is not a mainstream product or market. It doesn't have the long cultural history of black tea, green tea, or oolong tea, nor is it a necessity for all Chinese people. It's just a beverage with strong Lingnan characteristics. Its current status is due to the flow of national culture and corporate operations.

But just like "sweet zongzi vs. salty zongzi," "sweet tofu pudding vs. salty tofu pudding," or "scrambled eggs with tomatoes with or without sugar," no matter how much northern and southern cultures merge, these differences cannot be changed. So, no matter how hard herbal tea tries, it cannot become a nationally popular beverage. The market has been developed enough. The market is only so big. It's not that if you kill your opponent, you'll capture all the share. Usually, when your opponent dies, your market shrinks, and your sales may even be worse than before.

Just like with instant noodles, if either Uni-President or Master Kong dies, the beneficiary is food delivery, not the other company. The decline in chewing gum sales—would you think it's due to mobile phones? The impact on beverages comes from those trendy milk tea shops.

So, with a broader perspective, JDB and Wang Laoji spent the whole year doing their own things. Wang Laoji innovatively opened a fresh-brewed herbal tea shop. I wish it success and hope this concept can be promoted in the southern market. Maybe they should learn from those trendy milk tea shops and consider whether herbal tea-style milk tea would be better.

JDB once lost the slogan "Afraid of getting heaty? Drink JDB" to Wang Laoji, but now JDB has re-adopted it. This should be a sign of reconciliation. The biggest goal now is not to steal each other's market share but to defend current share and find new opportunities. Just like after a war, it's time to rest and recuperate, not continue fighting.

Although some grassroots staff still see each other as enemies, such local friction is understandable. After all, not everyone can have a high level of vision. If everyone did, then everyone could be a leader.

JDB's listing work is also proceeding steadily. Whether Wang Laoji is helping is unknown. In this cold winter, joining forces is always more helpful than fighting. In the eyes of the capital market, there are no enemies or friends, only interests.

I can't go into too much detail, but I feel that within a year or two, JDB should become a new force among listed food companies.

Saky: The Dark Horse in Toothpaste Over the years, Saky has changed its slogan and product focus many times. To be precise, Saky hasn't found a more suitable way yet.

But this doesn't prevent Saky from being a dark horse in the toothpaste industry. And every year, it makes new breakthroughs. Without media advertising, PR copy, or a deep background, Saky is truly starting from scratch in such a competitive toothpaste market.

In September 2014, it received a 100 million yuan A-round investment from Legend Capital's Junlian Capital. In April 2016, it received a 400 million yuan B-round investment from Zhongding Venture Capital and others.

Before that, Saky relied on the personal charm of Wang Ziquan and Cao Rui'an. They successfully signed retired David Beckham as spokesperson, and after the contract expired, they chose Li Bingbing and Kris Wu. But Saky didn't spend heavily on TV media; instead, it focused on building grassroots promotion teams, especially their drive.

Every month, they conduct a "city battle," using short-term human wave tactics to boost sales in a city, telling distributors that Saky has potential if you provide enough personnel and they are professional enough.

Unlike Blue Moon's focus on first-tier KA stores, Saky's main focus is on local stores in second- and third-tier cities. Stores like Luoyang's Dazhang, Nanyang's Wandelong, Zhengzhou's Dennis, and Sichuan's Hongqi Chain have enough local influence, lower fees than first-tier stores, and more flexibility in negotiating activities, providing a battlefield for Saky's city battles.

This is an amazing company. In just ten years, it has left traditional brands like Liangmianzhen and Cold Sore Ling behind and gathered a large number of loyal fans.

But similar to Blue Moon, the boss is suspicious, sales channels are too narrow, relying on stores, and traditional channels are weak. To address this, Saky has been poaching personnel and distributors from traditional FMCG channels in recent years, as Saky's profits are more attractive.

After years of joint efforts by Yunnan Baiyao and Saky, people have generally accepted paying ten to twenty yuan for a tube of toothpaste. So opening community chain stores and mom-and-pop shops is just a matter of time. With the investment in JD Convenience Stores, Saky's future prospects are worth looking forward to.

Of course, under capital operations, Saky's ultimate goal is to go public...

Lao Na's Comment: This is an era of FMCG winter. No matter which company you are, no matter how big your past grudges, please put aside your differences and join forces. Your real enemy is not your competitor but other industries. Those industries are disrupting everything you are proud of now.

Look further ahead and be kinder to your peers; otherwise, you will die even more miserably. After all, peers will leave you some food, but those disruptors will not only take your food but also spit on your corpse: "These idiots, they competed among themselves and gave us the opportunity. We must never be like these idiots."

Every FMCG person's dream is worth defending. We must protect this ship so we don't fall into the water and have no boat to ride. I hope those companies that haven't considered it yet will quickly find their capital; otherwise, the ABCD companies that were once great will be your future shadow.

Finally, I wish every company with a dream success in going public...

Source: FMCG Front Page -END-