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"After three years of long waiting, Baixiang Foods, one of the instant noodle giants, finally gave up continuing its IPO. Behind this, on one hand, the sales of its main business, instant noodles, have almost stopped growing; on the other hand, the fresh noodle business, once highly anticipated, has not yet expanded beyond its home base of Zhengzhou, and has almost burned through huge investments." Today, major portals like NetEase and Tencent are all competing to report on Baixiang's termination of IPO.
As a Henan enterprise, Lao Na is somewhat familiar with Baixiang. Most importantly, Lao Na has been interviewed by this company six times in total. Yes, you read that right, exactly six times. Of course, among these six times, sometimes I rejected them, and sometimes they rejected me. For some enterprises, when we cannot understand them from the outside, going through interviews is actually a good opportunity to talk with people inside the company. Especially in these six interviews, Lao Na interviewed for different departments, including dried noodles, noodle workshop, and beverages. From these interviews, we can also see the company's development strategies for industries other than instant noodles.
When I was in junior high school, Baixiang was an obscure "Haohao Chi Mian" (a brand name). At that time, the instant noodle market was dominated by Hualong (the predecessor of Jinmailang), Kangshifu, and Uni-President. Kangshifu and Uni-President's prices were mainly concentrated between 1.5 yuan and 2 yuan, which was quite high for young people like me back then. Hualong's Sanxian Yi Mian was priced at 0.8 yuan, capturing a large share of the rural market. Later, Hualong wanted to raise the price to 1 yuan, but due to product strategy issues, the price never went up. Consumers' demand for instant noodles mainly remained on taste—this is why Kangshifu's braised beef noodles advertising slogan "It's this taste" has remained unchanged for over a decade. Similarly, Kangshifu's other products also struggled until Uni-President launched a new flavor—Laotan sauerkraut. Kangshifu, with its strong imitation ability and powerful terminal channels, quickly rose in the Laotan sauerkraut segment, just like Kangshifu's rock sugar and pear drink, which, although imitative, sold the best. Here, one has to admire Old Kang's powerful channel capabilities.
Consumers' deeper demand for instant noodles is nutrition and health. For example, Wugu Daochang once caused a stir in the instant noodle industry with the slogan "Non-fried, healthier," which led to a collective attack from the entire industry. Coupled with the company's capital chain rupture, Wugu Daochang was acquired by COFCO and has since been quietly surviving. Compared with Wugu Daochang's "no zuo no die," Baixiang is more aware of the unspoken rules—only praising itself without criticizing others. I say my product is nutritious, but I don't say others' are not, so it won't attract collective attention from the industry leaders. In 2004, Baixiang finally had a proper positioning—nutrition—and successfully launched bone soup noodles, priced directly at 1 yuan. As soon as the product hit the market, it achieved impressive results in Henan, Shandong, Hebei, and other places. Baixiang finally equated its brand image with the company name: Baixiang = nutrition (in Thailand, white elephants are revered).
Baixiang positioned its bone soup noodles at 1 yuan, which was beneficial for the company's development at that time because consumers' spending level had reached 1 yuan. So in those years, Baixiang developed smoothly, but only in the Central Plains region, after all, the 1 yuan price could hardly support the concept of nutrition. It's important to note that a braised beef noodle with taste as its selling point was priced at 1.5-2 yuan, and nutrition is clearly higher than taste as a concept. Just like JDB, when it positioned its product as "a beverage that can prevent heatiness," its price was about 1 yuan higher than cola and Kangshifu ice tea on the market at that time. Only such a price could support the product's positioning. Generally, once a product forms an initial price, it is difficult to adjust later because consumers have already recognized you as a product of that price in their minds. With the rise in raw material prices, the instant noodle industry mainly adopted the strategy of reducing net weight rather than significantly increasing retail prices. After several years of rapid growth, Baixiang found that although sales were increasing, profits were declining, and the national blank market had not seen major breakthroughs after years of cultivation. Baixiang mistakenly attributed the reason for its market gaps to being just a Henan brand without a high-end background (Lao Na is just guessing here; perhaps it was more for the convenience of listing). In 2009, Baixiang moved its headquarters to Beijing. After the move, due to issues like personnel salaries, a large number of employees left. After moving to Beijing, Baixiang's business did not achieve major breakthroughs, so it began to learn from the big brothers and make beverages—compared with the strategy of positioning instant noodles as nutritious, Baixiang itself didn't know what kind of beverages it should sell. It just wanted to imitate Old Kang's products. Compared with Evergrande's speed in launching water and poaching professional sales teams nationwide, Baixiang was much stingier in this regard—this is quite in line with the characteristics of Henan enterprises, wanting to spend little money to do big things. After several years, the beverage team was still not formed. Think about it: a product manager's salary of 10,000 yuan, a provincial manager's salary of 8,000 yuan, and the company still thinks it's paying high salaries—what kind of talent would such a company attract? (Perhaps Lao Na's level is not high, so the salaries offered to others are so low.)
In 2011, Yao Zhongliang thought he had found a treasure, bringing in Jiang Xingzhou and others who had failed in entrepreneurship. Jiang Xingzhou might have achieved good results at Jianlibao, but the development of Jianlibao was determined by the overall environment at that time. To assess Jiang Xingzhou's personal ability, I think looking at his entrepreneurial period seems more convincing. Of course, I don't know Mr. Jiang very well, and I'm not sure if this evaluation is objective, but at least Mr. Jiang's own entrepreneurial venture failed. Most importantly, after finding this treasure, can we put him in a position he is familiar with? Since we've decided to learn from Kangshifu and produce beverages, why not put Jiang Xingzhou in the beverage industry? No, Mr. Yao set up a company called Sunshine Golden Spike for Mr. Jiang, producing Fuxi steamed buns, noodles, etc. Yes, you read that right, it's Fuxi, the same name as the company that supplied expired meat to KFC and McDonald's. But this Fuxi Noodle Workshop didn't even wait for the Shanghai Fuxi scandal; it collapsed on its own.
Of course, Lao Na also interviewed for the planning manager position at Fuxi Noodle Workshop. I won't discuss the interview process here. After six interviews, the impression Baixiang gave Lao Na was arrogance. And when you chat with the interviewers (not just HR), you find that they don't know what their company wants to do or how to develop next. The whole logic is chaotic, and within this chaos, there are unrealistic demands. The feeling given to interviewees is that this company knows it wants to expand beyond instant noodles, but has no idea how to do it, and wants to achieve the effect of a 10 million yuan salary with a 100,000 yuan salary. For example, they would arrogantly say, "Our company cooperates with Japanese 4A agencies. You don't even have experience cooperating with 4A agencies." Oh my goodness, Lao Na's resume clearly states that I am just a product manager at a small company, so of course I don't have the ability to contact Japanese 4A agencies like you. But Lao Na has also achieved some results in product development at a small company. Can we talk about something practical? Fortunately, when the investigation into the Japanese background of instant noodle companies was underway, no one dug into your cooperation with Japanese 4A agencies (this is a bit petty of Lao Na, with some resentment from not being hired).
I've digressed again. From March 2011 to October 2012, that was Jiang Xingzhou's time at Baixiang. Of course, a batch of people came and a batch left. Fuxi Noodle Workshop now only has 6 directly-operated stores in Zhengzhou. And after that year, all of Baixiang's investments became sunk costs. Lao Na still remembers their bold words about entering Beijing. Actually, Baixiang already has a good foundation in Henan. Why not just call this noodle workshop "Baixiang Noodle Workshop"? That way, consumers can easily associate it with nutrition, and higher prices would be acceptable. But you insisted on calling it Fuxi Noodle Workshop under Sunshine Golden Spike, going around in circles. How can consumers recognize your brand? As for Jiang Xingzhou's position, it seems better to place him in beverages. After all, he and his team are more experienced in beverages. You gave him an unfamiliar industry, and he left in less than two years. Think about the loss to the company, which is clearly higher than the loss to the professional manager himself.
Now terminating the IPO, I think it's a good thing for Baixiang. Consider these years of turmoil as paying for youth. Go back to Zhengzhou, recognize your own abilities clearly. The beverage sector still has prospects. Recruit some good people, don't be stingy where you should spend, and don't waste money where you shouldn't. Strengthen your understanding of professional managers. Use the same vigor you had in cooperating with Japanese 4A agencies. You know, Evergrande even poached Zhang Hua from Nongfu. You should at least bring in one or two senior executives from C'estbon or JDB to save face. You know, achieving hundreds of millions in beverage sales is still easy (otherwise Evergrande wouldn't have started by talking about 10 billion). Henan still has many treasures. Henan has noodle products (Sanquan, Synear), meat products (Shuanghui, Zhongpin), and the most lacking is beverage industry enterprises. As for the noodle workshop, change its name, don't call it Fuxi anymore. Shanghai Fuxi has already tarnished those two characters. Of course, my suggestion is to close it if necessary. With that money, you might as well do slaughtering or frozen food. After all, competition in frozen food is still lower than in instant noodles. The competitors in frozen food are Sanquan, Synear, and Wan Chai Ferry, and their control over the frozen food industry is much weaker than Kangshifu's. Also, the frozen food industry lacks the concept of nutrition. Look at Sanquan and Synear—haven't they both listed (although Synear is suspended)? But it's still better than selling a noodle workshop. If you sell a noodle workshop, you'll stay in a few major cities in the Central Plains, and you'll still follow the old path of instant noodles.
All of the above are Lao Na's personal thoughts. I'm just a spectator who enjoys the excitement. If you like Lao Na's rants, please follow my public WeChat account—search for "纳兰醉天" (Nalan Zuitian).