---
title: "David Wei: In the Next 10 Years, China Will Give Birth to at Least 100 New Consumer Companies Worth 100 Billion Yuan!"
description: "As the new consumption track heats up, the saying goes: 'Every brand is worth redoing in the future.' According to Harvest Capital, in the next decade, China will see at least 100 consumer companies with a market value exceeding 100 billion yuan. Harvest Capital has invested in unicorns like Anker Innovations, Pop Mart, Guoquan Shihui, and Shanghai Auntie, and in 2020 alone, it saw seven consumer IPOs, five of which surpassed 100 billion yuan in market value."
author: "混沌学园"
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published: "2021-10-30"
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# David Wei: In the Next 10 Years, China Will Give Birth to at Least 100 New Consumer Companies Worth 100 Billion Yuan!

> As the new consumption track heats up, the saying goes: 'Every brand is worth redoing in the future.' According to Harvest Capital, in the next decade, China will see at least 100 consumer companies with a market value exceeding 100 billion yuan. Harvest Capital has invested in unicorns like Anker Innovations, Pop Mart, Guoquan Shihui, and Shanghai Auntie, and in 2020 alone, it saw seven consumer IPOs, five of which surpassed 100 billion yuan in market value.

Source: Chaos Academy (ID: hundun-university)
**As the new consumption track heats up, the saying goes: "Every brand is worth redoing in the future."**
**According to Harvest Capital, in the next decade, China will see at least 100 consumer companies with a market value exceeding 100 billion yuan. Harvest Capital has invested in unicorns like Anker Innovations, Pop Mart, Guoquan Shihui, and Shanghai Auntie, and in 2020 alone, it saw seven consumer IPOs, five of which surpassed 100 billion yuan in market value.**
**David Wei, Chairman and Founding Partner of Harvest Capital, is one of the most popular teachers on the Chaos platform. With rich experience in traditional enterprise management and a diverse set of innovative practices, he is a master of integrating theory and practice. This time, he taught a course on new consumption at Chaos, packed with practical insights:**
  * **New Consumption "3D" Triangle Validation: People, Goods, and Places**
  * **Four Quadrants of Consumer Goods**
  * **Nine Labels to Build New Consumption Awareness**
  * **Three Major Categories of Products**
  * **Secrets to Opening Physical Stores**
  * **From Market Cap to Finance, Business, Market, and Organization: Starting from the End to Create a 100-Billion-Yuan Company**
  * **Six Key Moves for New Consumption**
  * **Category Killers for Companies Going Global**
**......**
**This new consumption cultivation guide is solid and practical, with a summary every five steps and a key move every ten, making it highly actionable!**
Instructor: David Wei, Chairman and Founding Partner of Harvest Capital
Supported by: Chaos Frontier Course
In 2020, Harvest Capital saw seven consumer IPOs, five of which surpassed 100 billion yuan in market value. We also believe that in the next decade, China will see at least 100 consumer companies with a market value exceeding 100 billion yuan.
So, in today's new consumption field, what characteristics do these 100-billion-yuan companies exhibit? What labels should they be tagged with?
Having these labels is like having the DNA to grow into a 100-billion-yuan company, but labels alone are far from enough. They need to grow in suitable soil, with quality fertilizer and the help of excellent gardeners, to become towering trees.
So, after tagging these labels, what excellent strategies fit this era?
# **New Consumption "3D" Triangle Validation: People, Goods, and Places**
Over 20 years ago, when I entered the consumer and retail industry, my mentor always told me that consumption never changes its essence: people, goods, and places. Not only must these three words remain unchanged, but their order must also remain unchanged.
About five years ago, a term was hot: new retail. But a large number of new retail companies are now struggling, some even forced to sell themselves. Why did new retail fail? Because new retail only addressed "places."
Is the place important? The answer is yes. But the place must come after people and goods. **To do new consumption well, the first priority is to gain insight into the new demographic, then position the goods, and finally focus on the place.**
So, what does a 100-billion-yuan company look like?
## **(一) People**
**1. New Demographic Structure**
Our first step is definitely to focus on the new demographic. The 25-year-old young people are the new demographic we care most about. Here, I have a piece of bad news and a piece of good news.
The bad news is that the total population of the post-95s, post-00s, and post-05s has actually declined in sequence, and the number of 25-year-olds is decreasing.
The good news is that with the increase in urbanization rate, from 2010 to 2020, the number of 25-year-olds living in cities increased by 20 to 30 million. For the same 25-year-old, living in rural areas versus urban areas can result in a consumption capacity that differs by several times.
Although the total population of the 25-year-old demographic is declining, the number distributed in cities has increased by 20 to 30 million, which means the new demographic structure will remain positive in the coming years.
**2. New Demographic Profile**
Harvest Capital started investing in consumption 10 years ago. At that time, we only focused on the post-85s, but now we only focus on the post-95s. Our focus has not changed; we have always focused on 25-year-olds.
Why is it enough to focus on the 25-year-old demographic, especially 25-year-old women, when doing consumption or investment?
Because if you thoroughly understand this demographic, your brand positioning will spill over.
18- and 19-year-old girls will look up to what 25-year-old women are consuming and want to follow in their footsteps. Women in their 30s hope to appear younger and will look down at what 25-year-old women are consuming.
At 25, they have been out of university for two or three years, may have boyfriends, and may soon marry, influencing their partners' consumption behavior. Before long, they may have children, influencing the next generation's consumption. Having left school, they are more willing and able to honor their parents, influencing the previous generation's consumption as well.
**So don't be afraid that focusing on 25-year-olds will narrow your product positioning; the needle must be fine enough to penetrate.**
Investment and entrepreneurship are the same: you need to seize the future, not the current, consumption mainstay. Because investments are held for 5, 7, or even longer, **you need to learn to wait at the next intersection rather than chase a car that has already started.** Entrepreneurship is the same; it's too late to target today's core and mainstream consumer group. What entrepreneurs can do is accompany the growth of the next generation of consumers.
**This is what the internet has taught us: always seize the young. For us, this young person is forever 25.**
**3. Differences Between Post-85s and Post-95s**
**The first change is in economic strength.** If the post-85s are the 1.0 of subsistence, then the post-95s are the 1.0 of moderate prosperity.
**The second change comes from the parents of the post-85s and post-95s.** The parents of the post-85s are generally not only children, but the parents of the post-95s are also only children. So the post-95s not only have no siblings, but also no uncles, aunts, or cousins.
**The third change is brought about by the development of the internet.** The post-85s are natives of the PC internet, while the post-95s have been exposed to the mobile internet; they are natives of the mobile internet.
In summary, because the post-95s are the 1.0 of moderate prosperity, the 2.0 of only children, and natives of the mobile internet, they have fewer siblings and relatives to please, and it is crucial for them to make themselves happy. So the core label for this demographic is: **pleasing oneself over pleasing others; fun and good-looking over practical.**
We have also summarized the post-00s; their three labels are the same as the post-95s, so we believe that brands and categories that can serve the post-95s well can directly target the post-00s without much change. By the post-05s generation, some changes may occur.
For the post-85s, practicality is very important. They highly value cost-effectiveness, and their favorite is "more for the same price." They also like 4-in-1 multi-functional products because they are cost-effective.
Today, we should reverse this approach and implement "less for the same price." Instead of emphasizing 4-in-1, we should split 1 into 4. Because for the post-95s, being practical is not enough; it must also be good-looking and fun.
**The key to being good-looking and fun lies in the product's "imageability" and "shareability."** What is the imageability rate? It is whether your product or the service it provides can be easily captured in a photo by users and displayed.
Many people say that driving traffic to products is too expensive. That's because your product lacks shareability, so you have to rely on hard promotion to get it seen. If your product naturally has a high imageability rate and strong shareability, others will naturally spread the word for you.
**(二) Goods**
What core labels should be grasped in the consumer field?
**First, try to do relatively fast-moving consumer goods and relatively durable goods.**
Harvest Capital has a unique classification of consumer goods, built on the two most important internet metrics: frequency and ARPU (average revenue per user), representing average order value. **Under this classification, consumer goods are divided into four types: absolute durables, absolute fast-moving consumer goods, relatively fast-moving consumer goods, and relatively durable goods.**
Absolute durables are products with extremely low replacement frequency and high average order value, such as refrigerators, washing machines, and air conditioners. These are heavily influenced by real estate and the economy. So from an investment perspective, we don't favor these products, and from an entrepreneurial perspective, we advise against touching them.
Absolute fast-moving consumer goods are products with extremely high consumption frequency and very low average order value, such as mineral water. They might be good for secondary market investment, but for primary market or entrepreneurship, don't touch them because the giants are too big.
Moreover, overall, consumption is upgrading, and the usage of some absolute fast-moving consumer goods will decline. For example, with more consumption of coffee, milk tea, and other beverages, the consumption of plain water decreases.
Coffee, milk tea, and hotpot are weekly or monthly active products for most people, essentially relatively fast-moving consumer goods. Relatively fast-moving consumer goods are definitely more expensive than absolute fast-moving consumer goods, but generally not more than a hundred or so.
Relatively durable goods are mostly concentrated in apparel and consumer electronics, such as electric toothbrushes, hair dryers, and earphones. The average order value is one to two hundred, rarely exceeding a thousand. These products are less affected by the economy; even if you're a bit tight, you can still buy yourself a small happiness.
For companies with a market value of 100 billion yuan, we favor relatively fast-moving consumer goods and relatively durable goods, especially relatively fast-moving consumer goods.
**Second, strive for legal addictive consumption.**
Legal addiction must first be legal, then focus on addiction. Addiction is not just a concept; it has data for reference, reflected in the fact that for retained users of a product, their ARPU increases rather than decreases. For example, online games: once you like them, the time and money you spend on them tend to increase.
**Any product where user ARPU gradually rises is naturally addictive.** Pop Mart's user ARPU has also been increasing year by year because human collecting can become addictive.
**Third, strive for a combination of equipment and consumables.**
Some products are naturally equipment plus consumables. E-cigarettes: the device is equipment, and the pods are consumables. Electric toothbrushes: the handle is equipment, and the brush heads are consumables.
**So, companies making equipment should think about how to make consumables; companies making consumables should think about whether they can make equipment.**
A hair dryer is naturally equipment without consumables. But on our advice, Soocas hair dryer developed a product with a replaceable essential oil nozzle. When consumers use the nozzle with essential oil, they feel their hair is being carefully cared for, which improves their mood.
Consuming four nozzles a year costs about 300 yuan, while the hair dryer itself sells for two to three hundred yuan. So Soocas has performed well this year because they laid down the equipment last year, and this year's revenue growth relies on consumables.
Conversely, consumable makers should also introduce equipment to ensure consumable consumption. For example, Guoquan Shihui faces the issue of hotpot being seasonal. In summer, people generally eat barbecue and skewers, and eat hotpot less. So since 2020, we've been thinking about whether we can launch barbecue and skewers in summer.
Most households have hotpot equipment; we just need to sell them consumables like beef, lamb, and meatballs. But for home barbecue, we need to solve the smoke problem of the grill.
To make summer barbecue work, Guoquan Shihui spent over a year designing a smokeless stove for two to three people. This is laying down equipment to drive consumable sales.
## **(三) Places**
When we talk about places, **we must first ask whether our product is e-commerce-friendly, e-commerce-unfriendly, or e-commerce-neutral.** This is not from an investor's perspective, but from a consumer's perspective.
Consumers go to the supermarket to carry a case of water home, which is heavy and not fun, so they order online and have it delivered. A case of water is e-commerce-friendly. If you're buying just one bottle of water? That's an e-commerce-unfriendly product.
Because buying one bottle of water is more convenient at a convenience store or vending machine; e-commerce and delivery can hardly meet your need for one bottle. Of course, some products are no different whether bought online or offline; we call them e-commerce-neutral.
We believe color cosmetics are e-commerce-unfriendly. Because consumers need to try the product themselves and need a strong offline experience. We see high sell-through rates in live-streaming sales, but we don't see the return rates. Products with high return rates are e-commerce-unfriendly. E-commerce-unfriendly products need physical stores.
Regarding physical stores, we have our own methodology. We are least optimistic about medium-sized stores. Either be small enough or large enough; stores that are neither big nor small, neither up nor down, are the most dangerous choice in offline retail today.
# **Reject Small and Beautiful, Embrace High, Big, and Up**
What does "high, big, and up" mean? It means high goals, big aspirations, and fast speed.
## **(一) High Goals**
Regarding high goals, we have a mantra: **from market cap to finance, from finance to business, from business to market, from market to organization.** Let me illustrate with Guoquan Shihui.
**First, from market cap to finance.**
Guoquan Shihui is planned according to a 100-billion-yuan market cap. Normally, without any bubbles, a 100-billion-yuan consumer company achieving a P/E ratio of 25 to 30 times is very reasonable, which means achieving 3 to 4 billion yuan in profit.
Based on the profit margin, we can calculate that the company needs to achieve about 60 billion yuan in revenue. This is from market cap to finance.
**Second, from finance to business.**
At that time, each Guoquan Shihui store had an annual turnover of about 1 million yuan, so to reach 60 billion yuan in total revenue, they would need to open 60,000 stores. From the financial revenue target of 60 billion yuan, we derive the business target of 60,000 stores. This is from finance to business.
**Third, from business to market.**
Business targets need to be tested in the market.
Which brand has the most restaurant chains in China? The answer is Zhengxin Chicken Steak, with 20,000 stores. This shows that so far, the brand with the highest coverage in China has only about 20,000 stores. Guoquan Shihui's business target of 60,000 stores is not achievable in the market.
Can they still achieve 60 billion yuan in revenue? Yes, they can, by increasing each store's turnover from 1 million to 3 million yuan. Is the 3 million target reliable? We need to verify.
After verification, we concluded that this target is achievable.
**Fourth, from market to organization.**
Now, Guoquan Shihui has only one challenge left on the road to a 100-billion-yuan market cap: from market to organization. When our business targets withstand market testing, we need to see whether the company's efficiency and organizational strength can support the achievement of these business goals.
## **(二) Big Aspirations**
Many company founders say, "I want to build a 100-billion-yuan company and make it into the Fortune 500." But your employees might think, "I don't have shares; what does a 100-billion-yuan market cap have to do with me?" Similarly, this goal is meaningless to your customers. Instead, many will think, "How much will I be exploited? As your supplier, I'll be miserable."
So, you need to translate this goal into a big aspiration that **on one hand is valuable to customers, and on the other hand gives employees something to grasp when implementing.**
For example, in 2006 and 2007, Taobao's annual GMV was just over 60 billion yuan. We really wanted to reach 1 trillion, but we didn't shout out the 1 trillion slogan directly. Instead, we shouted the "Double Million" slogan: "Help 1 million merchants achieve over 1 million GMV each year."
Changing the way you say it makes others feel comfortable. On one hand, merchants feel the goal is related to them; they are grateful when they hear the Double Million slogan. On the other hand, in 2006, there were also 30,000 to 40,000 sellers with annual GMV over 1 million. Since 30,000 to 40,000 sellers could make it, with gradual progress, the number of sellers exceeding 1 million is achievable. Because the goal is reliable, employees feel they have something to grasp.
## **(三) Fast Speed**
On the battlefield, speed is crucial, and the same applies in business. **On the battlefield, victory relies on weapons and an iron army; in business, weapons are technology, and the iron army is organizational strength.** New consumption, like all other industries, needs to embrace new technology and organizational change.
Guoquan Shihui, Shanghai Auntie, and Gloria are cases we have invested in, empowered with consulting, and are steadily on the path to a 100-billion-yuan market cap. All three cases used the same method: **starting from the end and stress testing.**
What does "starting from the end" mean? Guoquan Shihui's end goal for a 100-billion-yuan market cap is to open 20,000 stores, each with 3 million yuan in revenue. Starting from the end means treating this goal as the starting point.
To achieve these two core indicators, stress testing is needed.
When we invested in Guoquan, they had only 1,000 stores after 4 years; Shanghai Auntie took 7 years to reach 1,000 stores, with monthly new store openings fluctuating. So, we proposed a stress test for these two companies with a standard of 300 new stores per month.
This is a bit like driving a car: at 50 km/h, there's no problem; at 100 km/h, some parts start to have issues; at 150 km/h, more problems emerge. But without reaching a certain speed, you'll never know how many problems the car has. **The purpose of stress testing is to squeeze out all organizational problems at once.**
So, how do you conduct a stress test?
**Step 1: Qualitatively state difficulties**
**Step 2: Quantitatively state difficulties**
**Step 3: Ask for resources**
**Step 4: Set a timeline**
**Step 5: "Double regulation" alignment**
Six months later, it's time to witness the miracle. From the 7th month to now, except during the Spring Festival, Guoquan's monthly new store openings have been above 300, never falling below, because the entire organizational strength has improved.
Achieving Guoquan's two business goals is like walking on two legs: you have to take one step first, increasing store opening speed. Once a certain efficiency is reached, you don't pursue further improvement; instead, you take the second step, improving per-store revenue. We aim to achieve this goal in 24 months.
Shanghai Auntie and Gloria also adopted this approach, completed organizational stress tests, and achieved revenue targets. These companies are steadily on the path to a 100-billion-yuan market cap and are moving at a good speed. **When we help these companies sort out their strategies, we actually spend the most effort on improving overall organizational strength.**
# **Six Key Moves for New Consumption Enterprises**
Behind the methods I'm sharing with you are successful cases. It's not necessary to use all six moves; a new consumption enterprise is already very successful if it uses a few of them well.
**First: Eliminate off-seasons**
Shanghai Auntie's off-season is winter, so they introduced some hot drinks suitable for winter to ensure sales performance doesn't fluctuate much throughout the year.
Of course, many enterprises also have obvious peak and off-peak periods within a day. Small bars are empty during the day, and coffee shops are empty at night, so the business of "day coffee, night bar" has no intra-day peak or off-peak.
Finding ways to eliminate off-seasons is the first thing we should do in business and investment.
**Second: Equipment + consumables combination**
Soocas not only added an essential oil nozzle to its hair dryer but also put a rinse capsule in its water flosser, because it can increase consumables.
Of course, it's not just equipment plus consumables; it's that my equipment can only be paired with my consumables. This not only makes more money for yourself but also gives users a better experience.
**Third: Single store and private domain users**
The mobile internet era has given us the opportunity for single stores and private domains.
The most extreme example is ONLY WRITE. Its founder learned by watching Chaos courses. In the first month of opening, a store of over 100 square meters achieved a turnover of 10 million yuan.
But this is just the opening data; the opening is the peak, and it can't last forever. But that's okay; even if the data drops by half later, it's a huge victory.
In fact, the new consumption strategies I like today all reverse the thinking of my old retail days. **The true strategy for single-store private domains is not from low to high, but from the end to the beginning.**
**Fourth: Lower the experience threshold, small packages, multiple combinations**
Now the strategies of "more for the same price" and "4-in-1" don't work. What should we do? We need to lower the threshold, use small packages, and multiple combinations.
I really like Lamian Shuo, so I recommended my two sons my favorite flavor. But both sons said it wasn't good. I said, wait, there are more than this one; they have five flavors, try each one. After that, each found a flavor they loved, and from then on, our home always has two boxes of Lamian Shuo in stock.
I shared this story with the founder of Lamian Shuo, Sister Er. **Human preference for a product is not about the superlative, but the comparative.** So, Lamian Shuo should launch a multi-flavor combo pack; there will always be one flavor that suits consumers.
**Fifth: Fun over practical (shareability)**
After the product is ready, the team needs to first imagine an image that includes both the user and the product.
CUPSHE is an overseas brand. When analyzing images, this company showed two pictures: one of a woman at the beach wearing CUPSHE swimwear; the other of the same woman at the beach, wearing the same swimwear, but holding a dog. Which picture would people prefer to share?
The same beautiful model, the same swimsuit style, the same pose, but missing a dog affects the shareability of the image.
When a founding team studies product shareability to this extent, you can confidently invest in them.
**Sixth: People over bricks (membership system)**
Today, we need to count people, not bricks. The management of people should be greater than the management of products. So, how to build a core electronic membership system requires special attention.
# **Build Consumer Brands Like a "Religion"**
When it comes to new consumption, many people say they want to build century-old stores, serve hundreds of millions of consumers, and hope for extremely high customer loyalty. So, we should learn from religions and think about how they achieve this.
**First: Symbols**
A logo, a word, and a sentence—many companies insist on putting these three together. When that text appears, it means the brand's symbolic sense has not been developed at all.
We must dare to try our own symbolic sense.
**Second: Churches**
A religion needs a church as its base. In religion, there are two levels of churches: one is the cathedral level, distributed in major cities around the world; the other is small churches in prime rural locations. Apple's flagship stores always appear in the best locations. Besides flagship stores, Apple has a large number of distribution stores, small stores that can get close to users.
We need to think about how our church system is constructed.
**Third: Bible**
Many brands have their own definition, which is dogma. Shouting it every day won't make people remember; only a Brand Story can be passed down from generation to generation.
So, have you enriched and built your brand story?
**Fourth: Missionaries**
Your store staff should be your missionaries.
The first to inspire me was a French sporting goods company called Decathlon. Decathlon requires employees, from the president to the cashier, to demonstrate a sport during the interview, because it's a sporting goods sales company; only those who love sports can play the role of missionary well.
After I told this story to Wang Ning, the founder of Pop Mart, he quickly applied this to company management. He said they developed Pop Mart fans into store staff; fans serving fans surpasses any training. The CFO was even happier: after paying salaries on the 15th, half of the salary came back on the 16th, because employees went to buy things at their own stores after receiving their salaries. If even employees aren't die-hard fans of your products and services, it means either the product has a problem or the employees have a problem.
**Fifth: Ritual sense**
Religion places special emphasis on ritual. Apple's annual product launches are watched by countless fans worldwide; that's ritual. Of course, besides these big rituals, you also need to create small weekly or monthly rituals; don't always run promotions.
You want your users to use what method to complete the ritual sense of your products and services.
**Sixth: Leader**
Should a religion have a leader, that is, should the founder come to the front? Steve Jobs was actually a leader. A leader is a double-edged sword; it can be present or absent.
Building a brand like a religion, I call these six things 5+1: the first five must be done seriously, and the sixth is optional.
**Summary**
Big companies are not necessarily great, but great companies must be big.
Today in China, our definition of a big company is starting at 211 and aiming for 985. Many people ask, do you investors only look at market cap? The business and finance behind market cap represent your company's influence and the people you serve. Without such a market cap, you really can't be called a big company.
But why are big companies not necessarily great? Because no matter how big a company is, if it's not altruistic, it can't be considered great. Earlier, I mentioned setting high goals and making big aspirations. Are you achieving this goal for yourself, or for customers and employees, out of altruism?
The core spirit of religion is the belief in altruism. Just as a great religion must be altruistic, a brand that moves from big to great must be the result of adhering to altruism and long-termism.
**Are you "watching" me?**


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