Few baijiu brands have expanded from regional to national markets and even gone global as quickly as Jiangxiaobai. After seven years of market cultivation, Jiangxiaobai is no longer a 'simple and single' baijiu producer but a comprehensive liquor company with a full industry chain. At the 'China New Liquor Drinking Era' Jiangxiaobai x Tencent launch event held in Chongqing on April 9, Chairman Tao Shiquan stated that 2018 sales exceeded 2 billion yuan, securing tickets to both youth appeal and national expansion.

In the new drinking era under the internet backdrop, Jiangxiaobai proposed 'new life for old flavors' in the traditional baijiu industry, capturing young consumers who typically don't drink baijiu through precise market positioning. With momentum building, it has carved a path of transformation and upgrading for traditional liquor enterprises during the market downturn.

In March this year, at the 'Into Jiangxiaobai' meeting organized by New Distribution, New Marketing, and liquor industry communities, Jiangxiaobai's Chairman Tao Shiquan personally shared for the first time the business methodology behind Jiangxiaobai's seven years of entrepreneurship.

The following is the transcript of Tao Shiquan's speech:

Today, I'll briefly introduce Jiangxiaobai's business. I'll share from four parts: first, building a quality supply chain; second, Jiangxiaobai brand management; third, empowering channels; fourth, corporate culture, the Xiaobai spirit. Why this division? Because these four parts best reflect the underlying logic of Jiangxiaobai's entire industry essence.

01 Full Industry Chain Ecosystem: The Bottom Line for Enterprise Development

First, how to define a quality supply chain? Many innovative companies and internet firms think being asset-light is excellent. The lighter the company, the lower the investment, the higher the return, the quicker to pivot, and the less risk. But fundamentally, doing any industry well cannot escape the essence of 'good products.' What is the essence of the liquor industry? It's still providing high-quality products to users.

I once said that if we focus on 'change,' we will live in panic. Because everything in the world is in constant change, with new things emerging and old things dying; things in flux cannot be grasped. As business operators, we must see the 'unchanging' behind change and do 'unchanging' things.

The current business environment is fiercely competitive, constantly pushing us to innovate and chase. But a company cannot innovate forever; one day we won't be able to keep up. So I thought, if we want to build a century-old enterprise and seek long-term value, how do we find the unchanging in a changing world?

Jiangxiaobai has always been innovating, but our capabilities are not enough; we lag far behind some e-commerce giants. Like Alibaba and JD.com today, these two major e-commerce platforms are very strong in liquor sales and marketing, and there are new e-commerce platforms like NetEase Yanxuan that have emerged in recent years, all with strong capabilities.

For those of us who make products and brands, brand power is not as big as we imagine. The essence of a brand is to differentiate and identify; eventually, platforms can have similar endorsement capabilities and sell on their own. But one thing won't change for 30 to 50 years. No matter how good they are or how innovative, they always need enterprises to help achieve standardized, scaled supply chain production. If one day Jiangxiaobai's brand-building ability weakens, at least we can assist in production, do factory and supply chain integration. I think this is the safest bottom line for the company's future.

Jiangxiaobai has always been committed to building a full industry chain ecosystem, from farms to sorghum demonstration planting bases to brewing, packaging, and sales. Although the sorghum planting base is still small, about 5,000 mu, it will gradually expand to 50,000 mu, radiating to 100,000 mu in the surrounding area. Of course, we will also leverage social forces to develop towards agricultural industrialization. Frankly, doing this ourselves costs a bit more than directly purchasing raw materials, but why do it? Because in the future, we hope to create a place that enhances consumer experience and interaction.

I often say that we should look at what we do with a global perspective. If we follow the crowd and mechanically imitate others' business models, at best we'll 'become others,' but we'll never fundamentally innovate and surpass them to 'become ourselves.' In this regard, foreign liquor companies do better than us.

Why do Chinese people like French wine? Why do they think it's particularly high-end? Simple, because they have castles, wineries, vineyards, and a series of large-scale real economy entities. Essentially, Jiangxiaobai hopes to create a sorghum distillery similar to a wine chateau. Although it's very difficult, we persist. We will also build a sorghum museum at the distillery, connecting the upstream and downstream of the industry chain. We will try to enhance consumer experience through taverns. In the future, our brand must think about how to increase interaction interfaces with more users and create more touchpoints.

Full industry chain layout, from sorghum breeding to ecological agriculture, to technical R&D. We don't just study baijiu; we brew pure grain sorghum liquor, and we explore other types of liquor at different levels. In my view, reserving underlying R&D technology is for future layout, and it's very worthwhile. We have 11 nationally registered senior brewers. In the past two to three years, Jiangxiaobai has won 61 awards in various world-renowned liquor competitions, such as the Brussels International Spirits Competition and IWSC.

The large-scale upfront investment aims to provide new drinking methods with user at the core, bringing them pleasant taste and experience. In the traditional industry model, whether liquor tastes good is usually determined by the producer; they create a flavor and hope consumers accept it, rather than starting from users to cater to the market.

How does a liquor company become user-centric? It depends on whether it truly conducts forward-looking R&D and reserves technology from the user's perspective. For example, we launched 25° light sorghum liquor, which has significant technical barriers, but because it must meet future potential user needs, we weren't afraid and persisted, finally overcoming the industry's difficulty of reducing alcohol content.

Jiangxiaobai is an inclusive and open company. We don't think one company can make the world's best liquor; Jiangxiaobai is the same. We are just another different liquor. The most exciting characteristic of alcoholic beverages is their diversity, just like human appearance—there's no absolute beauty, only relative. Many liquor companies may see Jiangxiaobai as a competitor, but I have always believed that Jiangxiaobai is not anyone's competitor. The baijiu industry is different from the beer industry, which survives by squeezing competition—either you or me. The baijiu industry is one big family; we are all friends. When the industry thrives, when major companies thrive, when the light aroma category thrives, Jiangxiaobai can thrive.

There's a saying in Confucianism that roughly means 'We shouldn't care who takes our rice bowl, but truly care who gives us our rice bowl.' The current competition theory in the liquor industry is all about 'taking rice bowls.' What Jiangxiaobai truly cares about is who gives us our rice bowl, and whether users need us.

02 Having User Thinking: Unlocking the Secret to Brand Longevity

Around 2000, three innovative brands appeared in the baijiu industry: Shuijingfang, Guojiao, and Shede. They were high-end brands incubated from mid-to-low-end brands. Looking back at the past decade, there have been almost no innovative brands in China's liquor industry, and even if there were, few achieved scale and sustained growth.

Jiangxiaobai has proven in less than 10 years that there is still opportunity for brand innovation in the baijiu industry. A former CEO of Diageo, the world's largest liquor company, once said, 'All liquor without a brand is just water with a changed taste.' The metaphor is exaggerated, but it captures the essence.

From 2011 to now, consumers' needs, especially young consumers, have fundamentally changed regarding brands. Today's consumers need brands to give them a sense of individuality and belonging.

Many young consumers feel that a brand used by their grandparents is too old-fashioned, so they won't buy it. Some even show a rebellious psychology of 'the older, the less likely to buy.'

David Aaker, a pioneer in brand equity theory, said: Brand aging is like entering a graveyard; aging is the enemy of brands in stock competition. In fact, in today's consumption environment, the brand landscape we used to understand is not as impenetrable as imagined. Even traditional brands with historical heritage, even with high status, will face challenges if they don't innovate.

In recent years, a global trend has emerged called brand trendiness. Ten years ago, almost all brands used price as a benchmark to build high-price brand momentum. But now there's a clear shift: whoever is cooler and younger has brand momentum. The 'disdain chain' ten years ago was high price looking down on low price; now it might be trendiness looking down on conservatism. This happens in every field, like clothing brands.

Brands familiar to men in the past, like Valentino, Playboy, and Laochentou, now face the challenge of category aging. Even international first-line brands like Gucci are working on youthfulness. Today's user needs for brands are completely different from what we imagine, especially from what textbooks wrote. I think this is very valuable, and we've spent a lot of effort researching and practicing.

In the past few years, we've done a lot of brand creativity, like product placements in popular TV dramas and movies such as 'Good Husband' and 'Chongqing Hot Pot.' We also make our own music, but unlike other companies' brand music, we use 'whether users are willing to actively share' as the sole criterion. Looking at the business world, many companies create a corporate anthem about diligence, innovation, and responsibility. But consumers don't care at all; that's just for internal employees. We make music to see if users care.

Jiangxiaobai goes deep into young people's interest areas, gains insights, and helps young consumers find a sense of belonging. For example, we do cross-border IP collaborations, co-creating products with Zhang Xiaohé and Tongdao Dàshén; we've held two youth art exhibitions, displaying some works by young artists at the distillery. This year, we plan to hold ten Jiangxiaobai YOLO Youth Culture Festivals, each with about 50,000 to 60,000 participants. So many people will sing Jiangxiaobai's songs together—it's spectacular. These will all be our brand content.

When we do something, we do it persistently and deeply. Why has Jiangxiaobai YOLO Youth Culture Festival become the number one brand in the music festival field? Because we've persisted for many years. In the first two years, it wasn't as influential as this year; the whole rap art scene hadn't taken off. But doing rap was something we decided on, and once we decide, we persist and invest effort to do it deeply. From music creation to on-site organization, we hold ourselves to international standards.

Regarding Jiangxiaobai YOLO Youth Culture Festival, many people see the result. In fact, making this music festival successful is challenging, and Jiangxiaobai has paid a lot behind the scenes. There's a saying: 'All beings fear the result; Bodhisattvas fear the cause.' We believe in returning to the simplest essence, doing one thing well, to the extreme, and persisting over time, and good results will surely come. Many companies give up midway due to lack of determination and confidence, which is a pity.

Jiangxiaobai is now a brand IP. Our anime 'I Am Jiangxiaobai' has run for two seasons. The first season had 200 million views. We didn't turn the anime into an advertising format; there's no product placement. Because in our view, Jiangxiaobai's brand image isn't clear enough yet, especially a three-dimensional image. A true IP should have character personalities and relationships. In the future, we'll gradually develop Jiangxiaobai's girlfriend and his brothers.

Many consumers worry about whether Jiangxiaobai will age. Look at enduring brands like Mickey Mouse, which has a 100-year brand history, but consumers don't feel it's old. Because it keeps innovating, making Mickey Mouse more emotional and warmer. Only then can true brand IP be achieved. Many people don't understand why Jiangxiaobai does anime. It's a way to build a three-dimensional brand image, creating more possibilities through anime.

03 Empowering Channels: Sharing Joy with Customers

Through efforts in 2017 and 2018, Jiangxiaobai basically achieved national coverage. At the retail terminal level, we've tried cross-border collaborations in many retail channels, like partnering with Yonghui for a late-night tavern, and with Lawson convenience stores to turn them into Jiangxiaobai anime-themed stores. On online e-commerce channels, Jiangxiaobai once ranked first in liquor category sales during the 11.11 shopping festival. Now we also do joint activities with Tmall and JD.com.

Internet technology development gives us an opportunity to reach C-end directly, but we don't only serve C-end consumers; we also maintain B-end. In 2019, we confirmed a strategy of walking on two legs: B-end and C-end.

Regarding the selection of offline distributors, the first principle is mutual matching, fit first; the second principle is sharing joy. Every distributor is a result of careful selection by Jiangxiaobai. No matter what, we treat them well and do long-term business with them. Our core philosophy is 'Those near are pleased, those far are attracted.' As long as they are our customers, we keep our promises. Even if they don't perform well, with slight gaps, we try to give them opportunities to grow. As long as they don't make principled mistakes, don't disrupt pricing, or divert goods, we generally don't voluntarily give up any customer.

This year, Jiangxiaobai will actively help empower customers. In 2017 and 2018, 99% of distributors at least made money. For B-end channel partners, we proposed the concept of a 'centralized ecosystem.' In China, if there's no center, things can't be done; once decentralized, chaos ensues. Running a business requires someone to take responsibility and lead. We hope customers center on Jiangxiaobai, encourage distributors to be professional and exclusive, cooperate with us, and grow the ecosystem and brand.

I even hope that in five years, Jiangxiaobai will abolish the sales department. On one hand, I hope everyone can be their own boss; on the other hand, I hope the customers we find are professional and don't need management, only empowerment. If they lack funds, we support a bit; if they lack systems, we build systems. We use centralized methods to solve platform problems, allowing customers to grow on their own. In past practice, I found that younger customers seem more willing to accept new things and learn. I encourage customers to directly buy our products exclusively, or even co-create a brand. That's possible. I think Jiangxiaobai's future imagination lies in ecosystem, not mechanism.

In the past, we liked to control, be self-centered, and be the boss. When you tell others clearly what to do and what not to do, you can't expect them to innovate. So on the B-end, we hope to maximize the stimulation of overall channel innovation, hoping current customers grow bigger, even with capabilities growing on customers, not necessarily within our company.

The most interesting thing about Jiangxiaobai is not what we've done, but our methodology. Whether it's our ads, anime, or other aspects, we innovate all the time. Even our internal meetings are called 'liquor talk sessions,' where we drink a bit, have peanuts, and start self-criticism, truly thinking about solving problems.

04 Having the Xiaobai Spirit: Being a Better Me

Corporate culture is not about hanging the boss's slogans on the wall; those empty words won't be believed by employees. True corporate culture isn't described in words; it has a unique flavor. Working at Jiangxiaobai, you'll easily find that employees have a young mindset. This youthfulness is not about age but about attitude.

Regarding the Xiaobai spirit, I once said: 'No form over content; content over form is allowed.' Keep words small, do things well—that's the second rule of the Xiaobai spirit. In today's corporate development, there's a common phenomenon: companies like to highlight their high-end image and leave a professional impression. In society, everyone tries to play a persona stronger than their true self, which is exhausting. At Jiangxiaobai, we advocate the Xiaobai spirit, advocating keeping words small and doing things well, burying our heads in work without proving we're better than others. Some news reports say Jiangxiaobai wants to disrupt this or that, or achieve explosive growth. These are not Jiangxiaobai's language. Doing things well is our most important value system.

I think normal companies have the attribute of 'passable but not good enough.' If you can't pass, it means your fundamentals aren't solid—no cash flow, no revenue, no customers. Without others criticizing, you're done. Then we might think: is there a perfect company? The answer is no. Running a business requires a recognition: we are in a state of passable but not good enough, and we need continuous improvement. The whole is composed of independent individuals; as the whole advances, everyone needs to keep up, continuously improve self-awareness, and make ongoing improvements. Only by sincerely knowing our ignorance can we achieve self-improvement.

Jiangxiaobai has made many efforts to get where it is. Objectively speaking, was it done by Tao Shiquan alone? Obviously not. I might have done only 1%; the other 99% was done by everyone together. Over the past seven years, we've made many mistakes and detours, but we've shouldered responsibility. I think Jiangxiaobai's present is just a starting point; there are many areas where we need continuous improvement. This is the norm for enterprises and for Jiangxiaobai.

'Because of love, we can be among the best'—this is also the Xiaobai spirit. As a founder, when running a company, do we truly love the industry we're in? Love the products? Love the people around us? This is worth self-reflection. Even though Jiangxiaobai isn't a cultural communication company, why can we produce decent anime, music festivals, street dance, and graffiti? Even I, not trained in architecture, can work with everyone to build Jiangji Distillery. Why are we willing to do this, and why can we do it well? At the root, it's because of love. Because of love, we can be among the best.

In the process of innovation, too many people only see results, not the persistence and love behind them. They envy the fruits of success but don't delve into the process to persist and strive! In today's era, there are innovation opportunities in every industry. Whatever profession you're in, there's room for improvement in every field; you can do better. But there's a prerequisite: genuine liking. Within our company, almost all employees can proactively apply for job transfers. We believe that if you don't like what you do, you definitely won't do it well.

Because of love, we can be among the best—this is what Jiangxiaobai insists on!

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