Recently, the nationwide rush for electrolyte water made Genki Forest a fortune. But many don't know that the happiest winner was a Japanese pharmaceutical company. For this day, it had waited for decades, sitting on a cold bench in the Chinese market for over ten years. What's more frightening is that such Japanese companies are not alone. Forty years of persistence let the Japanese laugh last.

Japanese Zaibatsu Smile

"The keyboard is sparking from typing, there are too many buyers." At the end of 2022, a beverage called electrolyte water was snatched up by people across the country. On supermarket shelves everywhere, electrolyte water was swept clean. On e-commerce platforms like JD.com and Taobao, most electrolyte water showed out of stock or restocking. Although experts repeatedly said that electrolyte water should not be drunk as water, and many questioned that it was just a tax on IQ, this magical water, containing sodium, potassium, glucose, vitamin C, and claiming to be similar to human body fluids and promote recovery, still triggered a frenzy. On Baidu, the search index for electrolyte water soared nearly a hundredfold in just a few days. In the frenzy, Genki Forest became the biggest winner. Its subsidiary Alien electrolyte water saw sales on major e-commerce platforms surge more than tenfold. Not only Genki Forest, but many domestic brands including Nongfu Spring and Wahaha also made a fortune. While we cheer for this victory of domestic brands, many don't know that the happiest was actually Pocari Sweat, ranked second. Behind it is a Japanese zaibatsu, Otsuka Pharmaceutical, which produces medical injections. As one of the pioneers of electrolyte water, Otsuka Pharmaceutical had waited for decades for this day. In 1973, Rokuro Harima of Otsuka Pharmaceutical was hospitalized with diarrhea during a business trip to Mexico. There, he was surprised to see a tired doctor pick up a bottle of saline for injection and drink it heartily! Harima was inspired. "If there were a drink that could both quench thirst and supplement nutrition like an injection, it would be great." Harima returned to Japan with this idea. At his suggestion, Otsuka Pharmaceutical developed it over many years, testing over 1,000 prototypes, using citrus juice to mask the bitter taste of electrolytes, and finally launched Pocari Sweat electrolyte water in 1980. At that time, Japanese people might not have known that Gatorade in the US had developed electrolyte water over a decade earlier. But this magical drink quickly became popular across Japan, becoming the go-to for hydration after sports or fever. Subsequently, Pocari Sweat expanded into Asian markets and successfully entered Indonesia and other Southeast Asian countries after a severe dengue fever outbreak. However, when Pocari Sweat tried to leverage its success in Japan and Southeast Asia to enter the Chinese market, it hit a wall. In fact, since Pocari Sweat opened its first factory in mainland China in Tianjin in 2002, electrolyte water remained a very niche market in China for over a decade. It wasn't until recent years, with the rise of the national fitness movement, that this niche market began to break out. In 2021, Genki Forest launched Alien electrolyte water, sparking a trend in China. But the real trigger was the 2022 pandemic. After quietly entering China for over 20 years, Pocari Sweat finally saw the market explode.

Lurking in China for Decades

Pocari Sweat is not an isolated case. Over the past 40 years, many Japanese brands have quietly entered China, changing the landscape of the domestic beverage market. "The best tea is in China!" In 1985, when Yoshihiko Ueda received a promotional filming task from Suntory, he and the brand reached a consensus. This photographer, known for shooting ads for multinational giants like Hermès and Nike, was Japan's hottest commercial photographer. Choosing such a photographer reflected Suntory's high hopes of defeating its rivals. In 1980, Ito En, which started with a tea business, inspired by Chinese oolong tea, produced the world's first canned oolong tea, followed by green tea. Seeing the competitor's success, Suntory, as Japan's largest beverage company, couldn't sit still. How to cut off the competitor? Suntory came up with an idea: play the China card. Because in most Japanese eyes, Chinese tea is the best. So Ueda, with Suntory's entrustment, traveled across China to visit tea farmers. In just a few years, Ueda's footprints covered the country. In Fujian, he left a series of images: hundreds of tea farmers wearing neat white hats, skillfully fixing and rolling tea leaves. After that, Suntory filmed tea ads in China for 27 years, earning the title the brand in Japan's beverage industry that loves China the most. Suntory's China card indeed worked. Soon, its tea beverage revenue approached that of market leader Ito En. From 1985, driven by Suntory and Ito En, unsweetened tea drinks rapidly rose in Japan. The two giants, basking in success, began to think about conquering the Chinese market. In 1997, Suntory oolong tea entered the Chinese market. Two years later, Ito En established a joint venture in China. The two giants were confident, attempting to launch a water revolution in China. However, to their surprise, the revolution never came. Unlike the Japanese, Chinese people love tea but do not like this variant with a bitter taste. Instead, later imitators better understood Chinese tastes; with sugary iced black tea, Uni-President and Master Kong made a fortune in the mainland market. Thus, Suntory and Ito En "sullenly" sat on the cold bench in China for over a decade. The turning point came in 2016. That year, new national brand Genki Forest, with a sugar-free burn tea, successfully pried open the unsweetened tea market. Although this spring came a bit late, it excited Suntory and Ito En. After all, unsweetened tea accounts for over 70% in Japan, but less than 10% in China, with vast room for growth. Unlike Pocari Sweat, Ito En, and Suntory, who sat on the cold bench for over a decade, Japanese lactic acid bacteria beverage giant Yakult was in a fierce battle with Chinese brands from the start. As the pioneer of lactic acid bacteria drinks, Yakult was born in Japan as early as 1935. Its founder, Minoru Shirota, researched lactic acid bacteria tirelessly to address the poor sanitation and intestinal diseases in Japan at the time, eventually cultivating a strain later named Shirota strain. From there, Yakult began a world conquest lasting over half a century, attracting many followers. By the time it entered China in 2002, there were already many competitors. Besides Lebaishi and Wahaha, the then-popular Prince Milk was expanding production, building five major lactic acid bacteria milk production bases nationwide, with an annual output value reportedly reaching 30 billion yuan. Facing strong competition from local brands, Yakult was initially attacked from all sides, with daily sales of only 60,000 bottles. However, this Japanese giant remained calm, leveraging its technical advantages and unique Yakult Lady delivery model, and in 2011, it seized the top spot in the domestic low-temperature lactic acid bacteria market. Subsequently, dairy companies like Mengniu and Yili also entered, launching fierce attacks on the lactic acid bacteria market with their strong channel advantages. Yakult continued to advance steadily. By 2018, this Japanese giant held nearly 60% of China's lactic acid bacteria beverage market, selling nearly 7 million bottles daily.

Terrible Persistence

Over 40 years of reform and opening up, domestic beverages and foreign brands have fought a brutal life-and-death battle. In this process, American brands like Coca-Cola and Pepsi became household names in China. In contrast, Japanese brands' influence in China is little known. Compared to the decades of overwhelming advertising by Coca-Cola and Pepsi, Japanese beverage giants are so quiet they seem nonexistent. So much so that they are often mistaken for domestic brands. However, these Japanese brands have significant influence in their respective niches. Yakult has been the top lactic acid bacteria beverage brand in China for many years. Pocari Sweat electrolyte water ranks second only to Genki Forest on e-commerce platforms like Tmall. Even in the tea beverage market dominated by Master Kong, Suntory and Ito En occupy the high-end unsweetened tea segment. In Chnbrand's 2022 China Tea Beverage Satisfaction Ranking, Suntory ranked second. Compared to the Chinese market, Japanese brands have stronger global influence. As Japan's largest beverage company, Suntory's 2021 revenue reached 114.5 billion yuan, twice that of Wahaha and four times that of Nongfu Spring. Ito En has long dominated the world tea market. One of its green teas alone has annual sales of 13.7 billion yuan, breaking a Guinness World Record. More frightening than sales is the long-term persistence of Japanese companies on a particular market and strategy. Suntory filmed one tea ad for 27 years. Since its birth in 1980, Pocari Sweat has consistently used blue and youth as its brand promotion themes, never changing. Many ads have become classics, with even behind-the-scenes footage widely shared. This approach of Japanese beverage giants, compared to domestic brands' fast-paced product iterations and carpet-bombing marketing, seems somewhat clumsy and rigid. They have also missed opportunities; for example, Suntory watched helplessly as Master Kong's iced black tea raced ahead. The most extreme case is Yakult. Founded in 1935, in 87 years, it has produced only one single product. But with that one product, Yakult sells well in 40 countries and regions. During this period, many domestic competitors tried to overturn Yakult's market position with continuous new products and aggressive channel expansion. But Yakult remained unmoved. Facing a variety of new categories in the market, it stuck to its own approach for decades: one bottle, one team, one limited market. It is this terrible persistence that let Japanese beverage giants laugh last. Although ridiculed as conservative and unambitious, it does not prevent Yakult from sitting firmly on the top of China's lactic acid bacteria beverage market, selling 7 million bottles daily. Although they sat on the cold bench in China for over a decade and were intercepted by Master Kong and Genki Forest, it does not prevent: Ito En from dominating the world tea market, Suntory's revenue crushing Wahaha and Nongfu Spring, and Pocari Sweat from winning second place in electrolyte water sales. Behind them, former domestic rivals like Prince Milk and Xurisheng have either gone bankrupt or disappeared. Decades of quiet infiltration finally bore fruit.

There is an old Chinese saying: "Day by day, a pawn moves forward; effort is not in vain." In recent years, Chinese business circles have also seen a trend of pursuing long-termism. But Japanese beverage companies are the true models of practicing long-termism to the extreme.

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