1 At 33, he staked his entire fortune, spent 9 years conquering rural areas to encircle cities, and sold 8 billion packets of instant noodles. He is Fan Xianguo, founder of Hualong Group. Born in 1960 in Longyao, Hebei, Fan Xianguo grew up in the heart of the North China Plain, a region known for wheat and corn for over a thousand years, with more than 10 specialty agricultural products. "Heilonggang chili peppers have thin skin, thick flesh, and a strong spicy flavor; Zepan white lotus roots are pure white, with one large and six small holes, and were a tribute to the Ming Dynasty court." Unfortunately, Fan Xianguo was born at the wrong time. During the three years of natural disasters, his parents could only eat wild vegetable roots to stave off hunger, and when starving, they resorted to eating guanyin clay. Poor Fan Xianguo never tasted white flour steamed buns as a child; having corn porridge once a week was a treat. Not only did he go hungry, but he also had to work in steel production. Standing only 1.3 meters tall, Fan Xianguo spent his days with his father tending the boiler, "with coal slag in his fingernails." The problem was that tending the boiler consumed energy, and the more he worked, the hungrier he got. He often felt dizzy from hunger. Once, he collapsed beside the boiler, scaring his father half to death. 2 It wasn't until 1978 that things began to turn around. That year, Fan Xianguo learned to drive a tractor at an agricultural machinery station. "With the gearshift, brake pedal, and trailer hitch," he became the best tractor driver at the station within two years. Over the next four years, he drove his hand tractor to more than 10 cities, including Xingtai, Handan, Baoding, and Chengde. The more places he visited, the broader his horizons became. In 1984, in Shijiazhuang, he saw someone selling old rock sugar at a stall on Shitong Road, "earning over 50 yuan a day!" "Small capital, big profit—much better than running transport!" Fan Xianguo's eyes lit up. He immediately spent 1,000 yuan to build a shed behind his house and started producing old rock sugar. "Mix white sugar with water and alum solution, boil to 150°C, pour into trays, cover with quilts, and let it sit for 7 days to form large crystals." Think about it—at that time, what did rural areas have besides potatoes and cabbage? Once people saw that old rock sugar was nutritious and could also be used medicinally, it quickly became a gift for visiting friends and relatives in the surrounding villages. Before long, Fan Xianguo became the largest sugar trader in the three surrounding counties. Over eight years, he saved over 200,000 yuan. 200,000 yuan was a huge sum locally. Fan Xianguo was full of confidence and immediately set about expanding his scale. Unexpectedly, southern cane sugar suddenly flooded north, "cheaper and purer," and his old rock sugar business quickly collapsed. 3 So Fan Xianguo considered switching industries, and soon instant noodles caught his eye. In July of that year, Kangshifu's first bowl of braised beef noodles rolled off the line in Tianjin, followed by Uni-President's Little Raccoon. "Instant noodles that can be eaten with hot water must be popular with travelers." So in March 1994, Fan Xianguo and three friends pooled 2.18 million yuan to establish Hualong Group, "determined to build a Chinese dragon!" To produce instant noodles, the first problem was raw materials. This didn't stump Fan Xianguo—Longyao is a national high-quality wheat production base, with arable land of 850,000 mu. "The gluten strength of the flour is 4 percentage points higher than other regions!" 4 Then Fan Xianguo used local materials, choosing local specialty agricultural products for the seasoning packets. "Add Heilonggang chili to braised beef, chicken leg onions to braised pork ribs, and Zepan white lotus root and small crispy fish as the seafood sauce packet." With flour and seasoning packets settled, the rest was easy! Soon, Hualong instant noodles were launched. But where to enter the market? At that time, although there were over 1,200 instant noodle producers in China, most were just supporting roles to Kangshifu and Uni-President. The two giants, with their brand and capital advantages, held over 80% of the market share, leaving the small factories to watch others make money. Competing head-on in first-tier cities like Beijing, Shanghai, Guangzhou, and Shenzhen would be a dead end with no chance of success. But the vast rural areas had plenty of space—many counties and cities were not covered by Kangshifu or Uni-President. "Start from the rural areas!" However, to open the rural market, low prices were essential. Fan Xianguo thus set a three-step strategy: "mass-market noodles to build market share, mid-range noodles to generate profit, and high-end noodles to establish brand image." Compared to Kangshifu's 3.5 yuan and Uni-President's 2.2 yuan low-priced products, Fan Xianguo launched Hualong Xiaozai at a price as low as 0.55 yuan. He also clearly marked "Braised Beef Noodles," "Braised Pork Rib Noodles," and "Seafood Noodles" on the packaging, using different colored bags to distinguish them. "The noodles are chewy, the sauce packets are tasty, and most importantly, they're cheap!" 5 By the end of the year, Hualong's revenue broke 5 million yuan. Fan Xianguo was confident and expanded to 8 production lines and 3 packaging lines. "Attention to detail is key; low price is most important." So the question was: why could Hualong be so cheap?

  • First, proximity to raw material sources Fan Xianguo built his production base in Longyao, surrounded by over 10,000 mu of wheat fields. Wheat was sourced locally; workers could buy flour right outside the factory, saving 50% on transportation costs. The local people were also happy. Fan Xianguo's noodle factory consumed over 200 tons of wheat annually, and purchase prices remained firm even in bumper harvest years, giving farmers peace of mind. "Unlike outside buyers who take advantage of hard times." As a result, over 20,000 growers became loyal supporters of Fan Xianguo.
  • Second, deep processing of seasonings Besides wheat, the local one-stop seasoning processing saved Fan Xianguo over 2 million yuan in processing fees. In June 1996, over 20 local chili growers formed a processing alliance, collectively processing harvested chilies into chili powder, which they sold to Hualong's seasoning factory. "Growers' income increased by 20%, and Fan Xianguo saved 50% on processing costs."
  • Third, low labor costs By the end of 1996, Fan Xianguo had built Noodle Factory 2 and Factory 3, increasing annual output to 216 tons. Need workers? His second uncle back home was a village chief, and he quickly recruited over 200 laborers from the village. "We're all family," and Fan Xianguo's wages were once the lowest in Hebei. The villagers didn't complain: "No rush, if you make money, you won't treat us badly!" Indeed, with cost advantages, Fan Xianguo was invincible in rural markets, with annual revenue exceeding 50 million yuan, quickly becoming the sales leader in Hebei and Shanxi. 6 By 1997, Fan Xianguo set the "Marketing 600" plan: "Establish 600 wide-reaching, dense, and stable distributors north of the Yangtze River to lay the foundation for entering North China, East China, the three northeastern provinces, and the Central Plains." In May of that year, Fan Xianguo decisively sent 182 marketing staff to more than 20 provinces across the country. "Focus on major distributors, let go of small ones; focus on terminal markets, let go of small ones." With low-price advantages, he established over 600 sales networks. Then Fan Xianguo introduced three marketing measures to encourage distributors to grow stronger.
  • First, profit sharing. Fan Xianguo set aside 20% of annual profits specifically for distributor dividends. "The better the performance, the higher the year-end dividends."
  • Second, sales-based share allocation. Distributors could receive Hualong shares and become shareholders. "For annual sales under 200,000 yuan, 1 share per 10,000 yuan; for sales between 200,000 and 300,000, 1.2 shares per 10,000 yuan; for sales above 800,000, 2 shares per 10,000 yuan."
  • Third, shared wealth. In 1998, Fan Xianguo proposed the "100 Millionaires Plan": "Within 2 to 3 years, create 100 millionaires among distributors." Not only that, he also purchased 1,000 vehicles for use by 1,000 county-level distributors north of the Yangtze River. "Set up points in towns and distribute goods in rural areas." This was extraordinary! With 600 distributors working together, Fan Xianguo extended his reach to 220,000 mom-and-pop shops, grocery stores, and small kiosks across 794 counties in the north, covering over 600 million people. "On average, there is one Hualong kiosk for every 2,000 people." By 2000, 30 Hualong distributors had become millionaires. 7 In August 2000, Fan Xianguo also wrote wall advertisements along national highways, provincial roads, and township roads: "Hualong Noodles, See Them Every Day." Subsequently, he launched 14 series of instant noodles, including "Well-off Family," "Cook Them," "Jia Yi Mai," and "A Kid." In just four years, Hualong products covered 30 provinces and 1,918 counties, selling over 100 million packets annually, completing the strategic vision of "encircling the cities from the countryside." The time had come to "capture the cities." However, Kangshifu and Uni-President had not been idle, already holding 70% of the urban market share. Competing with the giants in the high-end market, surrounded by strong rivals, was no easy task. But Fan Xianguo had his own approach. He decided to abandon the Hualong brand. The sales director was anxious: "Hualong is so well-known now; it's a waste to abandon it!" "No, using it would be a waste of time." 8 Why? Over the years, Hualong's advertising had saturated second- and third-tier counties, establishing a mid-to-low-end positioning that was deeply ingrained in consumers' minds. So Fan Xianguo was determined to innovate and let urban consumers rediscover Hualong. "Rural consumers value practicality, seeking cheap, convenient, and filling food. In cities, consumers care most about texture, taste, and psychological appeal." So in early 2002, Fan Xianguo decided to produce a new product made from pure wheat flour, named Jinmailang, "meaning golden wheat waves." The noodles were characterized by their "springiness," "resistant to cooking and soaking, with good chewiness." More importantly, Jinmailang broke through the "nutritional bottleneck" of instant noodles. "Add trace elements to the flour, and add natural bone and meat extracts to the seasoning and sauce packets." This time, Fan Xianguo raised the banner of nutrition and marched into the cities. 9 In July 2002, Fan Xianguo invested 20 million yuan at once to build the Jinmailang production base. "The annual wheat conversion equals the output of 60 surrounding counties, solving employment for 100,000 local people." Near the base, over 100,000 mu of specialized vegetable planting areas drove the processing industry. "One county opened 8 chili processing plants, producing 3,000 tons of dried chilies and 150 tons of chili pigment annually." With the right approach, within just one year, Jinmailang's sales in major cities exceeded 100 million yuan. As Jinmailang's sales kept rising, the two big brothers in the city were not happy. "On one hand, they distributed goods to rural areas to occupy Hualong's home base; on the other hand, they slashed prices by 30% to protect the urban market." The three-way battle was intense, and Fan Xianguo played his trump card: "In April 2004, Hualong Group formed a joint venture with Japan's Nissin Foods, establishing Hualong Nissin, with Fan Xianguo receiving over 1.5 billion yuan in investment." At that time, Nissin Foods was the world's first producer of instant noodles; founder Momofuku Ando developed the first packet of chicken-flavored instant noodles in Osaka in 1958 and is revered as the "Father of Instant Noodles." 10 So why was Nissin willing to invest 1.5 billion yuan in cash in Hualong? It turned out that Nissin was attracted to Fan Xianguo's production base. "Jinmailang has the largest raw material base in China, with the first workshop in the fields, annual output exceeding 10 billion packets, and sales growing at 40% per year." At that time, Fan Xianguo's sales network covered the whole country, "wide and dense." As a foreign entrant, Nissin had capital and advanced technology but couldn't establish a foothold domestically, so the two sides hit it off. As a result, Fan Xianguo secured 1.5 billion yuan with ease. Subsequently, Fan Xianguo and Nissin jointly developed "KK technology," producing thick, springy noodles with 50% increased thickness and 30% more noodles per packet. Fan Xianguo named it "Da Jin Ye" and invited actor Huang Bo to advertise: "Six packets equal seven, one box has four extra packets!" With the backing of a major player, Fan Xianguo began spending heavily on promotion. He invested 20 million yuan in intensive advertising on CCTV, with the jingle "Springy, springy, springy, the taste is superb" resounding across the country, and Jinmailang's sales broke 1 billion yuan. Then Fan Xianguo turned to sports marketing to bring Jinmailang to the international stage. At the end of 2004, he invested 50 million yuan to support a scientific expedition team's attempt to reach Dome A in Antarctica. The National Polar Expedition Office officially cooperated with Hualong: "Jinmailang Bone Soup Springy Noodles are the exclusive noodles for Chinese Antarctic expedition members." 11 Fan Xianguo spent 1.6 million yuan to produce a one-minute Antarctic advertisement, aired during CCTV prime time. "Eating the bone soup springy noodles is equivalent to drinking 600 grams of fresh bone soup." With 100 million yuan in advertising investment, the results were significant. Jinmailang wrested 30% of the market share from the two giants, with annual revenue exceeding 2 billion yuan. After that, Fan Xianguo opened a ramen restaurant. In 2006, he opened the first Jinmailang Bone Soup Ramen Restaurant in his hometown of Longyao. "Featuring signature bone soup ramen, using fresh ramen noodles and pork bone white soup, with an open kitchen and on-site preparation." Today, Hualong's annual production ranks first in the world, with 17 production bases nationwide, annual output exceeding 12 billion packets, and over 26,000 employees. The brand value of Jinmailang is as high as 8 billion yuan. "The world is changed by passion and impulse, and maintained by calmness and reason." That is Fan Xianguo. -END-