For 20 consecutive years of entrepreneurship, his 'three moves' have never failed, creating miracles by selling ordinary products at 'sky-high' prices. He is Du Guoying, a former Henan teacher and now the founder of the popular 'Xiaoguan Tea'. From Back-Back Best, Good Memory Star, E-people E-book, to the current 8848 phone and Xiaoguan Tea, Du Guoying has almost always used the same trick. Products that are not original, entirely OEM, relying on concepts, planning, and advertising bombardment, eventually become hits in the market. A review reveals that Du Guoying's brands typically have a popularity cycle of three to five years, and most are eventually sold to a new owner, after which the products gradually fade or lose their edge. This does not affect Du Guoying's ability to make a fortune. Currently, Du's focus is on the 8848 phone and Xiaoguan Tea. He has stated that the tea industry is his ultimate entrepreneurial dream. However, given his previous patterns, one wonders how long his dream will last. 1. The Anti-Human Back-Back Best Main Concept: No Hunchback Spokespersons: Triplet Sisters, Baby Vox, He Jie 'Back-Back Best' is undoubtedly Du Guoying's first successful product. In 1994, after two years as a teacher, Du Guoying, with a salary of 151 yuan, left his job and went from Zhoukou, Henan, to Zhengzhou to work at a counter. In 1997, he bought a posture correction belt technical solution from a professor at Tianjin University's Physics Department, entering the student supplies market. He named the product 'Back-Back Best'. At that time, there were already many similar products on the market. For example, the company Du Guoying worked for was an agent for a product called 'Yingzi Belt', and Du himself was responsible for its distribution, reportedly selling extremely well. That year, Du applied the same model to 'Back-Back Best'. The marketing approach was simple: spend heavily on advertising and hire celebrity endorsers. Jing Jie remembers that Back-Back Best initially used the triplet sisters Chen Jiayu, Chen Jiayao, and Chen Jiaying as spokespersons. Later, versions were upgraded, and in 2000, the Korean girl group Baby Vox was signed as the new product spokesperson. In the first three months of 1997, it achieved 30 million yuan in collections, and the next year sales reached 450 million yuan, making Du Guoying a billionaire at 25. However, as advertising was cut back, the product quickly lost attention. Later, Oak International 'picked up' the product and invited Super Girl He Jie, and the product is still sold today, though it's unclear how many people buy it. Even Du Guoying later reflected that Back-Back Best was an anti-human product. 2. The Comeback Product 'Good Memory Star' Main Concept: Learning Methods Spokespersons: Dashan, Lee Min-ho Du Guoying didn't succeed in everything. After making money from Back-Back Best, he invested in many projects, but most lost money, leaving him with 30 million yuan in debt. In this situation, he started his next project—Good Memory Star. It is said that due to lack of funds, he had to sell shares to Shanghai Oak International in exchange for capital and media support. In 2003, when Good Memory Star was founded, the student dictionary market already had products like Noah's Ark selling well. In the English learning machine market, there were 'e Percent' and the old brand 'Wenquxing'. The name 'Good Memory Star' was derived by taking one character from each of 'Good Translation', 'Easy Memory', and 'Wenquxing'. Unlike existing products, Good Memory Star's promotion focused on a learning method that engages eyes, hands, and brain. Du Guoying started with the Jinan market, then moved south to Wuhan, achieving 300,000 units sold and 200 million yuan in sales within six months. Good Memory Star also used OEM, and continued heavy marketing. For example, in Jinan, they bombarded with newspaper ads, and in Wuhan, they ran 150 full-page newspaper ads, overwhelming the locals. By the end of 2003, Good Memory Star was on CCTV, with sales exceeding 1 billion units, gradually capturing a multi-billion learning machine market, and successively signed Dashan and Korean star Lee Min-ho as spokespersons. Later, Good Memory Star was acquired by Oak International and remained active in TV direct sales. The product can still be seen online, but Du Guoying had already exited. 3. E-people E-book Targets High-End Crowd Main Concept: A Tablet That Can Write Spokespersons: Feng Xiaogang, Ge You In 2009, Du Guoying shifted his focus from student supplies to high-end business electronics. In 2010, the first generation of E-people E-book was launched. Compared to the iPad, this product for high-end business people only differed in system and added a handwriting function. E-people E-book invited Feng Xiaogang and Ge You as spokespersons, using high-frequency TV ads to capture the target audience. You might notice that on CCTV and many TV stations during late-night hours, ads for this product can be seen, airing repeatedly for years. Moreover, this product is much more expensive than the iPad, so the profit margin is obvious. In January 2013, Tongfang Co., Ltd. (600100.SH) acquired 100% of Yiren Yiben for 1.36 billion yuan, about 26 times price-to-earnings ratio, through share issuance and cash payment. After the acquisition, Du Guoying became the largest individual shareholder of Tongfang, and his wealth soared. In the first half of this year, E-people E-book achieved revenue of 397 million yuan, with net profit attributable to the parent company of 39.2903 million yuan. With Tongfang's support, E-people E-book has now launched its 9th generation product. 4. The 8848 Phone for Nouveau Riche Main Concept: Privacy, Light Luxury Spokesperson: Wang Shi In 2015, Du Guoying launched his fourth brand, the 8848 phone, a product defined by the industry as a phone for the wealthy. When discussing this product, people unanimously describe it with one word: expensive. In Du Guoying's words, the 8848 is just a light luxury phone. The new product this year costs up to 23,000 yuan, with the lowest at 10,000 yuan. It is said that 250,000 units have been sold in two years, which is not impressive. If a domestic phone manufacturer had such low sales, they would struggle to survive. However, this extremely expensive phone has high profit margins. For example, selling 100,000 units of his M2 product yields profits equivalent to 10 million Redmi phones. This year, Du Guoying made a bold statement to increase sales to 500,000 units. Similarly, the 8848 invited former Vanke chairman Wang Shi as spokesperson, with ads bombarding CCTV. The target customers are the nouveau riche and tycoons. The needs for private calls, calfskin, and gemstone embellishments to 'show off' are exactly what the 8848 provides. As for the phone's specifications, they are at least one generation behind mainstream products. 5. The Controversial Xiaoguan Tea Main Concept: Tea Made by Masters Spokespersons: 8 Masters In 2014, Du Guoying stepped into the tea industry, almost overturning the traditional Chinese tea industry structure. This time, he didn't invite big-name celebrities but instead invited 8 tea masters to endorse the product. According to Chinese tea selling tradition, tea is usually sold by jin or liang, but this time, under Du's hands, it is sold by gram. With persistent presence on CCTV, many people noticed that Chinese tea companies had never promoted a brand so vigorously. Accompanying this were a series of doubts, but Du Guoying ignored the rising controversy from tea industry insiders. In the first half of this year, sales reportedly exceeded 300 million yuan, quietly entering the top three Chinese tea companies. In marketing Xiaoguan Tea, Du seemed to upgrade his product strategy. Although he doesn't produce the tea, he invited approachable tea makers to share their experiences in a heartwarming style, and created a tea-drinking concept, reigniting the purchasing desire of business gift givers. A small can of tea, 4 grams, brews a cup costing 50 yuan, which is not a big deal for the wealthy. Of course, Du predicted this year's revenue for Xiaoguan Tea to reach 600-700 million yuan, half of the Hong Kong-listed tea company Tianfu Mingcha (06868.HK). Extended Reading: The interest chain behind the 'sky-high' Xiaoguan Tea: each 'master' has a tea company behind them. Du Guoying, who usually deals with 3C products, is trying to disrupt the tea industry using 3C methods. Clearly, among all the products he has managed, this time 'Xiaoguan Tea' is more 'domineering'. The method remains the same: using high-frequency ads to 'educate' target customers and creating new concepts to conquer the audience. An outsider entering the tea industry may not fear big moves. Whether inviting 8 'masters' to stand on stage or packaging the product in small cans, as a so-called 'ice-breaking' journey for a traditional industry, Du Guoying inevitably faces mockery and criticism from the industry. He certainly doesn't care. He has publicly stated through multiple media outlets that Xiaoguan Tea achieved 300 million yuan in sales in the first half of this year, and the business logic of turning tea into FMCG. Enduring some criticism is nothing, as making money is the real deal. This seems to be in high tacit agreement with the 8 'masters', who jointly push this first light luxury tea product to consumers. Not only does it perform better than traditional tea companies on e-commerce platforms, but it is also promoting physical store recruitment in mature commercial districts of major cities. However, are these 'masters' real masters? Who actually makes the 'master tea' packaged in these small cans? Only in the comments on major e-commerce platforms can one vaguely sense the doubts and unease of many consumers. Are the 8 'Masters' Real Masters? As everyone can see, from the beginning, 'Xiaoguan Tea' has deliberately highlighted the 8 masters on its official website and e-commerce platforms, and tailored a graphic, text, and even video for each master. Not only on the official website, but also on the first pages and headlines of some search engines. Investigation reveals that the relentless promotion of the masters has only one purpose: to label Xiaoguan Tea products with the 'master' tag. However, the understanding of 'master' is too rough nowadays. You might even meet several 'masters' at a dinner party. Baidu Baike defines 'master' as someone with profound attainments and reputation in certain fields, or with special skills. In fact, Chinese people have a tradition of exaggerating, elevating, and worshipping such masters. As everyone may know, in the field of Chinese studies, Ji Xianlin and Ren Jiyu were respected as 'masters of Chinese studies', but ironically, both seriously denied this. Investigation reveals that among the 8 'masters' of Xiaoguan Tea, Zou Bingliang has deep attainments and contributions in the Pu'er tea industry, having been awarded the Lifetime Achievement Master of Chinese Pu'er Tea, and has long been recognized in the tea industry. The other 7 'masters', including Xie Sishi, Lin Zhenchuan, Qi Guowei, Wang Shunming, etc., mostly have the title of 'National Intangible Cultural Heritage Inheritor', some have tea taster titles, and some come from family traditions. But can they be honored as masters? Is Du Guoying and his Beijing Xiaoguan Tea Company being too hasty in gilding themselves? At least, the title of master should be an accumulation and judgment of industry recognition, professional influence, and personal virtue. Previous selections of Chinese culinary masters and chef masters also required criteria such as years in the profession, age, skill level titles, and nationally recognized (not local association issued) medals and awards, which can be verified on official national websites. In short, the essence of a Chinese culinary master is a master of culinary arts. From this perspective, 'master' is not a casual title. For Xiaoguan Tea, it's really important not to let these 8 masters become a joke. More worryingly, Xiaoguan Tea Company is immersed in the business logic of making money, and the 8 'masters' are gradually losing face, and some older ones may even lose their reputations. Most Xiaoguan Tea is Not 'Master-Made' Despite social criticism of 'masters', it doesn't prevent the masters from following Xiaoguan Tea's nationwide marketing. Now Xiaoguan Tea is more like 'Jicao 5X in Cordyceps', but for the tea industry, shifting from selling local specialties to fast-moving consumer goods is not impossible for Xiaoguan Tea. The masters are willing to follow Du Guoying's pace, possibly because it not only enhances their 'fame' but also benefits their own tea factories, given the market price is around 6,000 yuan. Zebra Consumption found that e-commerce platforms do not specify which factory produces these Xiaoguan Teas, only the place of origin, directly pointing to the locations of the 8 masters and the tea categories they produce. Additionally, a rough review reveals that these masters have their own companies or are affiliated with certain groups. For example, Zou Bingliang is the founder, chairman, and major shareholder of Yunnan Haiwan Tea Industry; Wang Shunming serves as the director of Wuyishan Qi Ming Tea Science Research Institute (formerly Wuyishan Wuyun Rock Tea Factory), a company specializing in the cultivation, processing, and sales of Wuyi rock tea; Qi Guowei is the chairman and major shareholder of Hangzhou West Lake Longjing Tea Co., Ltd.; Gao Penglai is the legal representative and major shareholder of Fujian Gaojianfa Tea Industry Co., Ltd.; Xie Sishi is the chairman of Huangshan Guangming Tea Industry Co., Ltd., holding 100% shares and also the legal representative; Lin Nairong is the legal representative and major shareholder of Shanghai Zhongli Tea Industry Company and deputy director of Fuzhou Tea Factory; Lin Zhenchuan is the legal representative and major shareholder of Fujian Pinpinxiang Tea Industry Co., Ltd.; Zhang Chengren, although the dean of Dianhong Science Research Institute, is backed by Dianhong Group. Such a lineup is almost impossible for any domestic commercial company to gather, but Du Guoying achieved it. Since Beijing Xiaoguan Tea has not publicly disclosed whether it cooperates with the companies behind these masters, one can boldly assume that there is some connection behind this cooperation. Otherwise, why would the masters be willing to endorse Xiaoguan Tea? Is Xiaoguan Tea frequently selling tea under the masters' names without paying sponsorship fees? As for whose tea is actually sold, a customer service representative from Xiaoguan Tea's JD flagship store confirmed to reporters that these Xiaoguan Teas are made by the tea factories behind the masters, and not all are hand-made by the masters themselves; they are generally made by the companies and apprentices. So why use the 'master-made' label? A tea merchant friend of Tuo Ge in Wuyishan also confirmed that nearly 80% of Wang Shunming's Dahongpao tea output is produced by his apprentices. Reporters found that Wang Shunming not only cooperates with Xiaoguan Tea but also established cooperation with Zui Pin Pu Cha, an M2O brand experience store invested by Lei Jun, last year. In the future, Zui Pin stores will sell Dahongpao products personally made by Wang Shunming. For Wang Shunming, with multiple cooperations and his own tea business, producing a large quantity of qualified products requires more than individual effort. It is an objective fact that apprentices and studios are needed to increase output. Previously, Du Guoying revealed in a media interview that sales in the first half of this year reached 300 million yuan. But to complete 300 million yuan worth of Xiaoguan Tea, if the masters made it by hand, they would be exhausted. Therefore, Xiaoguan Tea's online store pages indicate which master 'supervised' each 'Xiaoguan Tea'. Source: Zebra Consumption (ID: banmaxiaofei) The 3rd (CFIC) China FMCG + Internet Conference will be held in Chongqing in November 2017. The conference will closely focus on the theme 'New Forces, New Ecology', inviting domestic 1000+ distributors, 500+ brand owners, 200+ B2B platform founders, 100+ investment and financing institutions to jointly explore new chapters of cross-border integration! Core Topics of This Conference:
How can the FMCG industry leverage B2B to achieve new growth opportunities?
How should the new supply chain behind new retail be built?
How can intra-city logistics help B2B achieve leapfrog development?
Highlights of This Conference:
The industry's first '2017 China FMCG B2B Industry Competitiveness White Paper'
Excellent transformation and upgrading distributor case sharing
Conference + Exhibition upgrade, Hall 6 Internet Technology Exhibition strengthens docking
Alibaba Retail Link, Puhua Logistics, Eternal Asia Supply Chain, Best Dianjia, Yijiupi, Haiding, leaders from various fields will deliver speeches and share pioneering views.
Registration is now open. Long press the QR code below or click 'Read Original' to register. Add friend with note 'Conference Registration'. Click the links below to review the highlights of the 1st and 2nd FMCG + Internet Conferences: 2016 'FMCG + Internet' Summit Forum -END-