---
title: "Can Xiangpiaopiao Still Circle the Earth Several Times? The Helmsman Says: I Feel Wronged"
description: "Xiangpiaopiao, known for selling 1.2 billion cups a year and circling the earth four times, released its first earnings report after listing, showing revenue growth but a net loss of 54.586 million yuan. Chairman Jiang Jianqi expressed frustration that the market focused only on the net loss, not the revenue increase, as the company faces growth challenges after more than a decade."
author: "郑淯心 可杨"
publisher: "New Distribution"
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published: "2018-08-27"
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# Can Xiangpiaopiao Still Circle the Earth Several Times? The Helmsman Says: I Feel Wronged

> Xiangpiaopiao, known for selling 1.2 billion cups a year and circling the earth four times, released its first earnings report after listing, showing revenue growth but a net loss of 54.586 million yuan. Chairman Jiang Jianqi expressed frustration that the market focused only on the net loss, not the revenue increase, as the company faces growth challenges after more than a decade.

"Selling 1.2 billion cups a year, circling the earth four times, Xiangpiaopiao milk tea delivered its first earnings report after listing, but with revenue growth and net profit decline, the loss reached 54.586 million yuan. After more than a decade, Xiangpiaopiao faces not just sluggish growth."
"I feel wronged," Xiangpiaopiao Chairman Jiang Jianqi said with a wry smile to Economic Observer reporters. "Why does everyone only see the net profit loss, but not mention the revenue increase?" He had expected that after the semi-annual report was released, the market would be full of praise, because this highly seasonal company saw revenue rise in the off-season.
In Jiang Jianqi's office at Xiangpiaopiao in Huzhou, he wore a navy blue short-sleeved polo shirt and black sneakers. As we talked, in the factory, Xiangpiaopiao milk tea was still being loaded in boxes onto trucks. His office was the same as last year, without fine decoration or new ornaments; at this time last year, Xiangpiaopiao had not yet gone public.
On August 17, Xiangpiaopiao's semi-annual report showed operating revenue of 870 million yuan, up 55.38% year-on-year, while net profit attributable to the listed company was a loss of 54.59 million yuan. Jiang Jianqi attributed this to increased investment in liquid milk tea. "I think the essence of running a business is not just for profit; it should create customers and get them to buy products. But net profit is a constraint on enterprise development, determining future cost investment. Both revenue and profit should be balanced."
He also said that the current real economy operating environment is much harder than twenty years ago; at the market competition level, consumer goods are dazzling, and the role of advertising has been weakened. He is thinking about how to promote his new liquid milk tea product.
When Xiangpiaopiao's interim report was just disclosed, it attracted a lot of attention. An explosive article titled "Xiangpiaopiao is not selling well, losing 50 million in the first half, but spending over 100 million on advertising" made Xiangpiaopiao, a well-known private beverage company that once claimed to sell 1.2 billion cups a year and circle the earth four times, seem like a business cautionary tale as new brands in the tea drink market rise. "As soon as this news came out, everyone sent it to me. I gave them a smile; what else could I do?" Jiang Jianqi said.
**The Listing Path of a Zhejiang Merchant**
Xiangpiaopiao has been listed for nine months. On November 30 last year, Xiangpiaopiao listed on the main board of the Shanghai Stock Exchange. The issue price was 14.18 yuan, and as of the close on August 24, the stock price was 15.8 yuan per share, nearly at the issue price. Previously, after listing, Xiangpiaopiao gained four limit-up boards, reaching a high of 37.83 yuan per share.
However, Jiang Jianqi said he is indifferent to the stock price. "I'm not selling. If your house was 1,000 yuan per square meter ten years ago and now it's 100,000 yuan, you still live in that house."
The chairman, born in Nanxun Ancient Town, Huzhou, still has the company headquarters in Huzhou. He lives a minimalist life. According to people around him, Jiang Jianqi works on weekends, occasionally meets friends, has no hobbies like golf, does not buy houses or cars, and goes to stores himself for research. He is thin with sunken cheeks, and when talking about the milk tea business, his eyes light up and his tone is high, with the obvious traits of a Zhejiang merchant, deeply interested in business. When talking about marketing and packaging, he gestures with his hands and leans to one side.
After listing, Jiang Jianqi formulated a five-year plan to strive for revenue exceeding 10 billion yuan by fiscal 2021. He breaks down the goal into annual targets, then distributes them to various departments, layer by layer. He admits he is a goal-oriented person. The company's three vice presidents report directly to him, and any changes to distributors or suppliers require his signature approval.
The top shareholders of Xiangpiaopiao are all "insiders." Jiang Jianqi is the largest shareholder with 58.99%, his younger brother Jiang Jianbin holds 9% as the second largest shareholder, and among the top ten shareholders are his wife Lu Jiahua and his only daughter Jiang Xiaoying, holding an absolute majority position.
Before listing, Xiangpiaopiao did not introduce external investors. Jiang Jianqi is conservative in this regard. He believes that his company has ample cash flow; what would be the purpose of bringing in institutions? He is also cautious in secondary capital operations, rarely contacting brokers or investors, leaving these matters to the board secretary Gou Zhenhai. The company has a strategic investment department, just established this year, with only two people. His own shares have not been pledged or reduced.
**Entrepreneurship Across Two Generations**
Xiangpiaopiao is inevitably seen as a family business. Jiang Jianqi does not agree with this; he hires professional managers.
Recently, Lu Yifu, the general manager of the marketing center, left Xiangpiaopiao less than a year after joining. He had served as the sales head of JDB's North China region and had notable achievements in expanding JDB's northern market. Regarding his departure, Jiang Jianqi said that important positions have a one-year probation period. Lu Yifu has strong execution ability, but the position of general manager of the marketing center at Xiangpiaopiao is more management-oriented. Later, Lu Yifu resigned due to personal and family reasons, and the company agreed to his resignation after consideration.
Currently, Jiang Jianqi's only daughter, Jiang Xiaoying, works at the company as the product manager for Lan Fong Yuen. In 2017, Xiangpiaopiao launched two liquid milk tea products, "Lan Fong Yuen" and "MECO" milk tea. Lan Fong Yuen is one of the oldest existing Hong Kong-style milk tea shops in Hong Kong. Xiangpiaopiao obtained the exclusive right to use the Lan Fong Yuen brand and launched this cup-style liquid milk tea, while also launching "MECO" milk tea targeting younger users. In 2018, Xiangpiaopiao launched a fruit tea, which has been on the market for one month, mainly targeting students.
Before joining the company, Jiang Xiaoying was an entrepreneur. During her studies at Zhejiang University, she ran a camping equipment rental business and founded the camping reservation management platform "Easy Camping" in 2014. According to public information, in June this year, the company completed a Series B financing round, with investors including Huadan Angel Investment, Renzhong Capital, Chuxin Capital, etc.
This entrepreneurial experience makes her father Jiang Jianqi proud. He emphasized that he never helped or guided his daughter's entrepreneurship, even when Easy Camping almost failed during its angel round financing and was on the verge of bankruptcy.
When Easy Camping was founded, it was the season for college graduates to find jobs. Jiang Xiaoying and her colleagues squatted at job fairs every day, specifically recruiting people who had already received offers from BAT companies. There was still half a year between receiving the offer and starting work. Jiang Xiaoying told them that if Easy Camping succeeded, they wouldn't have to work for others. Even if it failed, it wouldn't affect their ability to continue working for big companies after graduation. In this way, Easy Camping recruited technical staff from Alibaba, a product manager from Baidu, a marketing specialist from Tencent, and a BD from Vanke. These people eventually stayed at Easy Camping and formed the founding team.
In Jiang Jianqi's view, the two have similar business styles: bold but cautious. However, unlike his daughter's entrepreneurial path, Jiang Jianqi's entrepreneurial journey was much harder.
After graduation, Jiang Jianqi worked at a state-owned enterprise in Shanghai and obtained a household registration, planning to settle in Shanghai. His younger brother was running a pastry business in his hometown, selling cakes, mooncakes, etc. Due to poor management, the business faced bankruptcy liquidation. After liquidation, it was found that the family was insolvent. As the eldest son, Jiang Jianqi decided to return to his hometown to take over the shop and share the debt.
Between 1996 and 1997, he tried a cold drink similar to Want Want's crushed ice, using a long tube filled with fruit-flavored drink. The brand of this popsicle was called "Old urchin," built entirely by Jiang Jianqi. It sold well in summer and quickly helped overcome the debt crisis.
He said that the Old urchin popsicle had a seasonal characteristic, with high sales in summer. In winter, workers had nothing to do, so Jiang Jianqi thought of making solid instant milk tea. He went to Guangzhou and Shantou to look at packaging and trademark designs, placed advertisements on Hunan Satellite TV, and participated in national sugar and wine fairs. Soon, Xiangpiaopiao milk tea got on track, but at this time, the popsicle business, with insufficient sales volume, became a drag, and Jiang Jianqi quickly cut it off.
However, the main sales season for solid instant milk tea is winter, with a peak around the Spring Festival. This characteristic also required Xiangpiaopiao to supplement its third-quarter report before listing on the stock exchange.
Xiangpiaopiao used the funds raised from the IPO to introduce automated production lines for liquid milk tea. Jiang Jianqi wants Xiangpiaopiao to achieve a balanced development between liquid milk tea and the existing cup-based milk tea product system. The production of liquid milk tea products largely complements the cup-based milk tea products in terms of off-peak and peak season characteristics, alleviating the company's operational pressure.
After listing, Xiangpiaopiao built a factory in Guangdong that can produce 168,000 tons of canned liquid milk tea annually. Jiang Jianqi said that liquid milk tea has higher costs than solid milk tea because the weight of each cup determines the limited distribution range, which requires him to continue investing in factories.
Jiang Xiaoqi, who serves as the product manager at Lan Fong Yuen, as the second generation of this "family business," is clearly given the hope of making the brand "younger."
**Where Did the Consumers Go?**
Xiangpiaopiao, considered to have "lost 50 million in the first half but spent over 100 million on advertising," is indeed generous in advertising and focuses on TV advertising. According to the announcement, in the first half of the year, Xiangpiaopiao's advertising expenses were 114 million yuan, up about 78% year-on-year, accounting for about 13% of total revenue.
In the second quarter, for example, Xiangpiaopiao sponsored two variety shows, "Running Man" and "Infinite Melody," and did product placements in "Ode to Joy" and "Two Lives." Xiangpiaopiao experienced a time when it needed to spend heavily on TV. After all, as early as 10 years ago, its competitor Youlemei had already invited Jay Chou to shoot TV commercials. Many consumers still remember the slogans "You are my Youlemei" and "So I can hold you in my hands." Xiangpiaopiao believes that its advertising strategy of "selling X billion cups a year, circling the earth once" was very successful at the time.
Taking "Two Lives" as an example, within four days of its premiere, the online click rate reached 220 million. On satellite TV, ratings were basically in the top three. Subsequently, the Weibo topic "#This Feeling Xiangpiaopiao#" reached sixth place on the Weibo topic list, with 3.52 million people reading the topic. "Brand power" is the key that Jiang Jianqi cares about deeply.
Xiangpiaopiao's preference for TV channels comes from past successful experience.
In 2007, Guangdong Strong Group launched the "Youlemei" brand of cup and bagged milk tea; Zhejiang Dahaoda Food Co., Ltd. launched the "Xiangyue" brand of cup and bagged milk tea. From 2009 to 2011, it was the most intense three years of competition between Xiangpiaopiao and Youlemei. At this time, Xiangpiaopiao proposed the slogan "Selling N billion cups a year, circling the earth once," which later became "A little hungry and sleepy, drink some Xiangpiaopiao," and its wide spread made most people recite it. "It focuses on functionality," Gou Zhenhai introduced. A cup of milk tea just relieves hunger between meals without bringing a large calorie burden.
Jiang Jianqi highly recognizes Trout's positioning theory, which mainly talks about differentiated competition, occupying the high ground in consumers' minds, making the brand the representative of a certain category or characteristic. When consumers have related needs, they will choose the positioned brand as their first choice, meaning the brand occupies that position. Jiang Jianqi believes that excellent brands are based on a clear strategic goal, good products, plus marketing and service, and through time, they can build a well-known brand.
But things are changing.
Luckin Coffee, less than two weeks after its establishment, began to "challenge" the traditional chain coffee giant Starbucks. On May 15, Luckin Coffee sent an open letter accusing Starbucks of suspected monopoly in China's chain coffee market. This may be the first time Starbucks has encountered such a competitor since entering the Chinese market. When Luckin Coffee was founded 244 days, it built 660 stores in one go and burned 1 billion yuan. On August 1, Luckin Coffee announced that by the end of 2018, the brand would open 2,000 stores nationwide.
Starbucks is also making moves, partnering with Alibaba to plan to provide delivery coffee services from 150 Starbucks stores in Shanghai and Beijing starting in September this year using the online ordering platform "Ele.me," and expand the service to 2,000 coffee shops across China.
Starbucks CEO Kevin Johnson said that the company plans to integrate Starbucks virtual stores into all assets under Alibaba Group and provide a "Starbucks experience" consistent with stores. The Chinese market is strategically important to Starbucks. On the other hand, new-style tea drinks like Heytea and Naixue's Tea are not to be outdone, continuing to expand stores. For tea drinks, choices are becoming increasingly diverse.
In this market, Xiangpiaopiao's marketing "lifeline" seems to be facing cross-dimensional competition.
Now, Jiang Jianqi is confused about advertising placement. Xiangpiaopiao adopts a distributor system, not directly contacting consumers but reaching retail terminals through distributors. He says the current operating environment is much harder than twenty years ago, with a dazzling array of consumer goods and weakened advertising effects. How to invest and maximize advertising effectiveness is what he is thinking about.
"Our placements are also being optimized, such as product placements in TV dramas. But what is the most important thing in all promotion? It is to ask a clear question: where are your customers? What is the user profile of Xiangpiaopiao?" In Jiang Jianqi's view, the main users of Xiangpiaopiao's solid milk tea are still in provincial and municipal cities, while county-level cities are markets with potential to be tapped. He believes that although consumption upgrading is widespread, there is still a large portion of people who are consumers of Xiangpiaopiao's basic products, and for these people, the effect of TV media still exists. "Ma Yun proposed new retail, and everyone still recognizes this view. We Chinese like to create some concepts. What is the so-called new retail? It is nothing more than transformation and upgrading." Jiang Jianqi has also been thinking about new retail recently and is leading Xiangpiaopiao to try some attempts.
To get closer to consumers, Xiangpiaopiao is discussing the application of vending machines specifically for Xiangpiaopiao products, as well as freshly brewed milk tea machines like coffee machines, which can be placed in parks, important scenic spots, hospitals, subways, and other places. Jiang Jianqi is eager to understand frontline market demand.
For Jiang Jianqi, the new retail he understands is that brand owners and consumers establish direct contact, bypassing distributors, so that brand owners can learn information such as consumer profiles and purchase frequency. "That is, brand owners can establish direct communication with consumers, bypassing the (original) channels. This will definitely be the case in the future."
But after bypassing the former distributor channels, what to do next is still something Jiang Jianqi is thinking about.
Source: Economic Observer
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