---
title: "From Ten Yuan a Bottle to a Market Cap of 500 Billion: Who Can Beat Haitian in the Soy Sauce Game?"
description: "Haitian is on par with excellence but still far from greatness. On October 30, after releasing its third-quarter report, Haitian Weiye, the 'soy sauce giant,' topped the trending list. The report showed revenue of 17.086 billion yuan in the first three quarters, up 15.26% year-on-year, and net profit of 4.571 billion yuan, up 19.2%."
author: "辛夷"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2020-11-11"
language: "en"
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# From Ten Yuan a Bottle to a Market Cap of 500 Billion: Who Can Beat Haitian in the Soy Sauce Game?

> Haitian is on par with excellence but still far from greatness. On October 30, after releasing its third-quarter report, Haitian Weiye, the 'soy sauce giant,' topped the trending list. The report showed revenue of 17.086 billion yuan in the first three quarters, up 15.26% year-on-year, and net profit of 4.571 billion yuan, up 19.2%.

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Haitian is on par with excellence but still far from greatness.
On October 30, after releasing its third-quarter report, Haitian Weiye, the 'soy sauce giant,' topped the trending list.
**The report showed revenue of 17.086 billion yuan in the first three quarters, up 15.26% year-on-year; net profit of 4.571 billion yuan, up 19.2%.** Equally striking as this report card is the company's market value exceeding 500 billion yuan, and founder Pang Kang's personal wealth of 195 billion yuan, ranking 11th on the Hurun list.
It can be said that Haitian Weiye, the company that 'brews soy sauce with the flavor of Moutai,' lives up to its name.
For ordinary consumers, it is the 'sea' (Hai) of vast products that accommodate all flavors; affordable and accessible, hidden in every household's kitchen, quietly contributing.
For the capital market, it is the 'sky' (Tian) with a market value once exceeding 650 billion yuan, unattainable; no one expected that a condiment with a shelf life of less than half a year would become a valuable asset for preservation and appreciation in the financial arena during inflationary times.
From a 9.9-yuan bottle of soy sauce to a leading blue-chip with a market cap of hundreds of billions, Haitian's business code is simply contained between the sea and the sky.
**-01-**
**Endorsement**
The more traditional the industry, the stronger the endorsement of history and culture. Haitian, which started with soy sauce, is no exception.
As early as over 3,000 years ago, soy sauce appeared in the diet of the Zhou emperor.
According to the 'Rites of Zhou: Heavenly Officials: Shanfu,' the 'soy sauce' at that time referred to oil produced by mincing animal meat and fermenting it, called 'hai' (醢), and there was even a heavy-flavored version made by adding animal blood, called 'tan' (醓).
These two 'meat sauces' are what the 'Book of Songs: Greater Odes' describes as 'tan and hai are offered, either roasted or grilled.'
By the Northern Wei Dynasty, Jia Sixie's famous work 'Qimin Yaoshu' can be regarded as the culmination of China's sauce culture, summarizing at least 30 types of sauces and sauce products.
In the following 1,600 years, 'Qimin Yaoshu' continued to lay important foundational technical conditions for soy sauce production.
The time when soy sauce production technology became perfected can be roughly pushed to the Tang Dynasty. At that time, soy sauce was not only a flavor enhancer in people's lives but also a common prescription recorded in medical books by the 'King of Medicine' Sun Simiao. Moreover, soy sauce was introduced to Japan during frequent cultural exchanges in the Tang Dynasty.
It is said that among the representative figures who participated in spreading 'sauce' were the eminent monk Jianzhen, who crossed to Japan six times, and the Japanese monk Kukai, who made a brief appearance in 'Legend of the Demon Cat.'
Although 'soy sauce' entered the emperor's feast thousands of years ago and even became a sought-after export, its production method was always based on minced meat. It was not until the Song Dynasty that the method of fermenting soybeans and wheat matured, and it first entered civilization's memory under the name 'soy sauce' in Northern Song texts.
This soy sauce, closer to modern technology, later spread to Vietnam, Thailand, the Philippines, and India with the Ming Dynasty's 'Zheng He's voyages'; and was further brought to Europe by British colonists in South Asia, developing into the famous Worcestershire sauce, also known as 'spicy soy sauce.'
By the Qing Dynasty, soy sauce had become an indispensable dining companion in Yuan Mei's 'Suiyuan Shidan.' 'Chicken breast, skin removed,' dip in soy sauce; 'pig's trotters with wine,' dip in soy sauce; 'pine mushrooms soaked,' still dip in soy sauce. Many 'sauce gardens' of various sizes across the country also emerged during the Qianlong period.
Among them, Foshan, Guangdong, one of China's four famous towns, gave birth to the traditional brewing industry represented by the 'Foshan Ancient Sauce Garden.'
It is said that Foshan, located on the Tropic of Cancer, has a warm climate and abundant sunshine, very suitable for drying soybeans. As a result, soy sauce produced in Foshan has a mellow taste, not only sold throughout Guangdong but also radiating to Hong Kong, Macau, Southeast Asia, Europe, and America. It even sold out in Sydney's Chinatown, making it hard to find, and Foshan soy sauce had to impose a purchase limit of 'maximum 3 bottles per person.'
After the founding of the People's Republic in 1955, after various historical ups and downs, 25 large and influential ancient sauce gardens in Foshan merged, and the predecessor of Haitian Weiye, 'Haitian Soy Sauce Factory,' was thus reorganized.
The thousand-year history proves that soy sauce is an indisputable essential in Chinese kitchens, and the uninterrupted accumulation of craftsmanship is an important origin of Haitian's product strength. In the new China, where all industries were waiting to flourish, the Haitian Soy Sauce Factory was an old-brand player leading in history, scale, and product variety.
But due to crude production processes and uncontrollable historical progress, the Haitian Soy Sauce Factory remained in Foshan after its establishment, never sounding the clarion call to conquer the nation.
It still lacked a timing, a vision, and a strategist who could advance or retreat.
**-02-**
**Production Capacity**
Reform and opening up was a historical opportunity for almost all Chinese enterprises. Fortunately, almost at the same time, Haitian welcomed a visionary strategist.
In 1982, Pang Kang, a young man from Foshan who had just graduated from university, was assigned to the Haitian Soy Sauce Factory as a technician. This young man, who knew nothing about soy sauce, started from screening soybeans and participated in the entire brewing process step by step to avoid falling behind.
Before long, Pang Kang's skills became independent, and he was quickly promoted to deputy factory director within a few years.
In the 1990s, under Pang Kang's leadership, Haitian grew from a small local factory into a well-known large factory officially recognized as a 'National Second-Class Enterprise,' and timely caught up with the 1994 wave of state-owned enterprise restructuring. After several more transformations, Haitian eventually formed a controlling management team led by Pang Kang and fully transformed into a private enterprise.
The clarification of power relations gave Pang Kang room to flex his muscles, but the conflict between heritage and scale followed.
As an old brand with a century-old tradition, ancient brewing is the source of Haitian's brand reputation, and from a market perspective, it should not be easily changed. Moreover, other old soy sauce brands like Zhimeizhai insisted on traditional techniques and developed many seasoning products based on them, starting diversification early.
However, tradition is also a shackle.
On the one hand, the ancient method of drying soybeans directly in the sun and relying on craftsmanship for grinding and fermentation can easily pose safety hazards due to incomplete disinfection; on the other hand, the labor-intensive ancient brewing method also limits the pace of enterprise scaling.
Ancient fermentation
After much deliberation, Pang Kang finally overruled objections and spent over 30 million yuan in the 1990s to import a production line from abroad, and formed a technical team of over 100 people to tackle the strain problem in natural sun-drying.
Facts proved that the underlying technological reform not only solved food safety issues but also effectively improved the production capacity and efficiency of the factory. Ultimately, expanding production capacity led to step-by-step scale expansion.
**In 2005, with a technological investment of 1 billion yuan, Haitian achieved an annual production capacity of over 1 million tons, and also developed multiple product lines such as oyster sauce, sauce, vinegar, and chicken essence; in 2007, Haitian's annual net growth was equivalent to a second-place seasoning factory, widening the gap with many small enterprises in the industry.**
In 2014, Haitian, listed on the capital market, further expanded production capacity, investing in a 1.5 million-ton production base within a year of listing; by 2016, Haitian's production capacity was sufficient to cover the national market.
Modern drying pools
As of today, Haitian's soy sauce production alone accounts for 20% of national soy sauce production, almost six times that of the second place, making its leading position unshakable.
Compared with craftsmen who adhere to ancient methods, Pang Kang, with a technical background, may see things more clearly. Soy sauce technology has been passed down for thousands of years, and the technical threshold is not high. In the relentless commercial jungle, only stable product quality and large-scale production can ensure a narrow victory.
Now, the impression left by 'Zhimeizhai' and others on consumers and the industry has long faded, and only Haitian with massive production capacity can dominate most shelves nationwide and be compatible downward.
**-03-**
**Channels**
For any large-scale consumer enterprise, no matter how large the production capacity, it needs to cooperate with a large and efficient dealer team to spread products to deeper and broader market spaces.
And strong dealer development and management is exactly the advantage most praised by the industry.
As early as 2003, Haitian launched rural sales and established a sales policy of 'comprehensively developing county markets and starting rural sales.' In the same year, Haitian also began to promote the development of dealers in county-level markets.
Subsequently, Haitian implemented a sales network that combined distributors (creating channels) and dealers (facing terminals), reaching over 300,000 terminal outlets in a short time. To maintain control, Pang Kang specially trained a thousand-person team responsible for managing these dealers and distributors.
There are many details in this.
For example, the 'two-horse carriage' system. 'Two-horse carriage' means that Haitian does not set up a general distributor in each market but sets up at least two dealers.
**On the one hand, this facilitates headquarters control and prevents a single dealer from forming a local power; on the other hand, it creates a 'horse race effect,' stimulating several dealers to compete in sales under product homogeneity.**
The specific competition method is to issue monthly sales targets to dealers. Through such time-phased control, Haitian keeps the entire channel network constantly activated.
Another example is the 'payment first, delivery later' policy. As the name implies, this no-credit sales rule effectively prevents Haitian's own funds from being occupied by dealers. Reflected in financial reports, Haitian Weiye's accounts receivable has maintained a '0' record for many years since 2010, and inventory turnover days are also much lower than other companies in the industry.
At the same time, Haitian is not keen on using high rebate policies to encourage dealers to stock up. As a result, dealers without inventory burden have no need to engage in cross-regional dumping or disrupt prices.
To avoid vicious competition, Haitian further manages inventory for each dealer, not only setting up 24-hour daily reports but also setting a certain inventory ratio to prevent dealers from overstocking, thereby stabilizing the entire distribution system.
Beyond the institutional level, Haitian also increases investment at the technical level.
First, it spent 30 million yuan to establish an ERP system, and in 2011, it connected packaging equipment through the Internet of Things to build an intelligent production and packaging system. In 2013, when expanding production capacity by 1.5 million tons for soy sauce and seasonings, Haitian also introduced an intelligent robot loading and unloading system.
Haitian's three-dimensional warehouse
At this point, efficiency and production capacity were able to flow through Haitian's sales network, integrating dealers into Haitian's system, becoming the foundation for its long-term, stable, and rapid growth.
Financial reports show that as of the end of 2019, Haitian Weiye had 5,806 dealers, and its distribution network covered 100% of prefecture-level and above cities in China.
Moreover, compared with other competitors, Haitian's number of first-level wholesalers is nearly five times that of Jiajia, Lee Kum Kee, or Zhongju Hi-Tech. This means that if one person helps one of these brands sell goods, nearly five people help Haitian sell goods.
Now, Haitian, present in major national chain supermarkets, farmers' markets at all levels, and convenience stores in urban and rural areas, has achieved ubiquity.
Haitian has proven with practical actions what it means to 'walk someone else's path, leaving them no way to go.'
**-04-**
**Marketing**
Compared with production capacity and channels, Haitian's brand marketing is just icing on the cake.
Haitian's brand strategy began in 1992.
At that time, the seasoning industry had many brands, each occupying a corner without interfering with others. Among them, Haitian, based in Foshan, was the representative of 'Guangdong flavor.' In addition to these regional brands, many products in the domestic market were still sold in simple bulk or bagged forms.
The so-called 'modernization' was still a vague concept for seasoning brands at that time.
Based on insights into the external environment, Pang Kang chose to take the lead in establishing its own exclusive product brand and committed to upgrading 'Guangdong flavor' to 'Chinese flavor.'
To this end, Pang Kang launched a new corporate identity system in 1994, applied for a large number of trademarks and design patents, and also highlighted the 'Haitian' brand by changing traditional packaging.
To protect the brand and expand overseas markets, Haitian also registered trademarks in more than 60 countries and regions, including the United States and Canada. At the time, these layouts were forward-looking and directly contributed to the later recognition of the 'Haitian HAITIAN' trademark as a 'well-known trademark.'
By 1999, Haitian, which had just completed a series of brand identity upgrades, began advertising, and even placed ads during the time signal of 'News Broadcast.' Haitian thus became the first soy sauce brand to advertise during the time signal of 'News Broadcast.'
It can be said that before 2000, Haitian's brand actions served cognitive breadth. Especially with the blessing of television media, which was almost in a monopoly position of information, and 'News Broadcast,' which was authoritative, Haitian successfully injected itself into the minds of people across the country.
At least in the soy sauce category, Haitian deepened the impression of a standard and safe brand through slogans like 'Haitian soy sauce, truly sun-dried good taste,' quickly establishing its 'national' status.
Entering the new millennium, Haitian shifted its marketing focus to brand upgrading.
Since 2003, Haitian formed a new brand identity system with the 'Haitian' characters as the main body, establishing the core brand value of 'One Family Under Heaven, Chinese Taste.'
Starting in 2007, Haitian made horizontal extensions based on upgrades, successively promoting the faster-growing sub-brands Haitian Oyster Sauce and flavored sauces.
Along with the elevation and expansion of the brand, Haitian chose to continue to invest in official media such as CCTV, mainstream satellite TV, and mainstream newspapers, and the promotional keywords gradually shifted from basic demands like safety and standards to higher-level values like health and quality, such as 'every soybean visible.'
Following the upgrade strategy, Haitian also launched a new strategy of driving brand building through product R&D and technical accumulation. Since then, Haitian soy sauce entered a period of rapid development in corporate intellectual property construction.
In the Internet and mobile Internet era after 2010, Haitian's main 'youthful' brand strategy remained steady.
In 2013, Haitian's industrial tourism project opened to the public. In 2015, Haitian played the nostalgia card for post-80s and post-90s consumers through the viral 'Remembering Childhood' advertisement, even launching the brand slogan 'Professional soy sauce maker for 300 years,' trying to get close to young people in terms of discourse.
Since 2016, Haitian has anchored its brand in the variety show field. Famous cases include sponsoring two flagship programs on Jiangsu Satellite TV, 'One Versus One Hundred' and 'If You Are the One,' and maintaining exposure by sponsoring popular variety shows such as 'The Challenge' and 'Cross-Strait Singing.'
Entering 2018, Haitian's sub-brands became frequent guests on major online variety shows.
For example, Haitian Rice Mixing Sauce, as a super sponsor of 'U Can U Bibi,' used MC Ma Dong's signature creative oral promotion to impress audiences; Haitian's oyster sauce and soybean paste repeatedly appeared in the third and fourth seasons of 'Roast,' and were called the most successful product placements on the show.
The 'right timing' of variety show placements brought benefits to the market growth of Haitian's diversified products.
Haitian's 2019 financial report shows that during the reporting period, Haitian soy sauce achieved revenue of 11.629 billion yuan, a year-on-year increase of 13.6%; oyster sauce achieved revenue of 3.490 billion yuan, an increase of 22.21%; and seasoning sauce achieved revenue of 2.291 billion yuan, an increase of 9.52%.
Although large advertising investments inevitably lead to rising selling expenses, it is precisely the large amount of brand exposure that gives Haitian the confidence that 'where there are people, there is Haitian.'
**-05-**
**Bottlenecks**
From tangible scale to intangible reputation, Haitian has it all. In the secondary market, the enviable valuation is probably the only flaw of Haitian as a big white horse.
But setting aside the financial perspective, Haitian's bottlenecks as a giant enterprise have gradually emerged.
From 2012 to 2018, the growth rate of the domestic soy sauce industry scale gradually declined from 11.45% to 9%, with growth slowing down. As an industry leader, Haitian inevitably went downhill.
**Financial data shows that after Haitian Weiye quickly exceeded 10 billion yuan in revenue after its listing in 2014, its base growth rate weakened year by year. From 2017 to 2019, Haitian's revenue growth rates were 17.06%, 16.08%, and 13.60%, respectively; net profit growth rates attributable to the parent company were 24.21%, 23.60%, and 22.64%, respectively.**
**According to a research report by Northeast Securities, although Haitian Weiye's soy sauce production capacity expanded from 840,000 tons in 2010 to 1.85 million tons in 2018, the unit price fell from 2,822 yuan/ton to 2,696 yuan/ton.**
In short, large production capacity did not bring correspondingly high unit prices.
In this context, Haitian, whose volume and penetration are basically saturated, can no longer rely on finding incremental markets for soy sauce to achieve high growth. The only feasible way is to rely on diversified products to seize other territories.
It should be pointed out that Haitian has had successful precedents in diversification, such as the aforementioned rapidly growing oyster sauce business.
In the 1990s, the dominant player in the oyster sauce industry was the old seasoning brand 'Lee Kum Kee.' When many domestic consumers didn't even know what oyster sauce was, Lee Kum Kee's signature product 'Old Zhuang Oyster Sauce' had already achieved mass production and quickly became a staple in the kitchens of major restaurants and hotels.
But the price of Old Zhuang oyster sauce was relatively high. In an era when national consumption power was generally low, Lee Kum Kee's aristocratic air made mass consumers hesitate.
It was the latecomer Haitian that seized this market gap.
It is reported that before solving the technical problem of 'oyster sauce dissolving in water,' Haitian eagerly launched low-end oyster sauce products of poor quality but cheap, mainly targeting the mid-to-low-end catering market that Lee Kum Kee looked down upon.
By 2000, Haitian made a technological breakthrough and finally improved the quality of oyster sauce, but the price was still only half of Lee Kum Kee's.
The early strategic positioning and later cost-performance strategy allowed Haitian oyster sauce sales to catch up with Old Zhuang oyster sauce. By the time Lee Kum Kee reacted, Haitian had already taken advantage of the opponent's strategic wavering, used its dense sales channels to quickly distribute, and eventually surpassed Lee Kum Kee in sales, becoming the new leader in the oyster sauce market.
Of course, Haitian's diversification has not always been so smooth.
Since 2014, Haitian has expanded into product lines such as fermented bean curd, vinegar, sesame oil, and pickled peppers through self-development, mergers and acquisitions, and other means. In August this year, Haitian launched its hot pot base 'Hotpot@ME,' officially entering the hot pot base industry.
However, these explorations seeking new growth points have not been ideal so far.
According to data from Haitian's online flagship store, the sales of most of its seasonings are only one-tenth or even one-hundredth of core products like soy sauce and oyster sauce, and the purchase volume of the new hot pot base product is only in single digits.
Apart from diversification, Haitian's attempts at high-end positioning in the soy sauce category are also not optimistic.
In 2013, Haitian launched a high-end brewed soy sauce series, priced at about twice the ordinary version. However, at this stage, seasoning brands represented by Qianhe, Lee Kum Kee, and Chubang have been cultivating the high-end soy sauce market for a long time, and foreign companies such as Japan's soy sauce leader Kikkoman and France's Danone have also entered the domestic soy sauce industry.
With strong enemies surrounding, it is not easy for Haitian to break through from the mid-to-low-end market to the high-end market.
Previously, media reported that Haitian's high-end soy sauce is not as high-end as the above brands, with low overall repurchase rates, and it is even difficult to promote in its own territory of Guangdong.
It can be foreseen that with the upgrade war in the soy sauce field, Haitian will face increasingly fierce new battles every day.
**-06-**
**Conclusion**
In any case, today no domestic seasoning company can challenge Haitian on the fundamentals, and high growth seems to be just the capital market's harsh demand on a stock.
But if we say 'Haitian has no sky' because of this, it is tantamount to praising it to death.
A basic fact is that the top 5 Chinese seasoning companies only have a combined market share of 20%, while Kikkoman in neighboring Japan alone has a share of over 30%.
Kikkoman Corporation has been established for 103 years and is a veritable Japanese 'old brand.' In its century-long history, Kikkoman started from the soy sauce category, continuously created functional products, and after World War II developed various seasonings suitable for Western dishes like hamburgers and turkey according to European and American tastes, thus breaking out of its own country early and becoming a world-renowned seasoning company.
Even without mentioning international celebrities, the fresh blood in the domestic seasoning market should not be underestimated.
In recent years, the improvement in consumer demand has gradually refined seasoning products on the market, and many new products have begun to emerge. For example, the lazy economy has pushed up convenient compound seasonings, the health trend of low oil and salt has given rise to low-salt soy sauce and low-salt bean paste, and the market's pursuit of organic has made organic soy sauce and organic sesame paste new favorites in the industry.
Based on product diversification, many new players have also smelled business opportunities. According to a data platform, the domestic seasoning track has flourished in recent years. In the first nine months of this year alone, 68,800 new seasoning companies were registered, nearly double the number five years ago.
The old brands on the other side guard the vast ocean, while the waves behind on this side are already visible in the distance. In the business world that is constantly thinking about change, no one can always live within their own city walls, because you never know which tiny fulcrum may pry up the new opportunities of the future industry.
The fall of legends usually begins with the absence of 'sky.'
Haitian is on par with excellence but still far from greatness.
Source: TideSight (ID: TideSight)


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