Text / Hu Erhuo Coconut Palm's success is a classic tale. A failing state-owned enterprise, a tough leader, a series of desperate reforms, and finally, relying on first-mover advantage, it became the leading enterprise in the coconut juice industry. Over 30 years of reform, Coconut Palm transformed from a small factory with five consecutive years of losses into a beverage company with an annual output value of over 5 billion yuan, with its coconut juice product selling well for 29 years and gaining fame both at home and abroad. The company insists on not going public, playing it safe, but now with smoke rising on all sides and giants surrounding it, how will the old brand Coconut Palm respond? ● ● ● Reformer Wang Guangxing's Three All-In Bets Wang Guangxing had three "firefighting operations." The first was at Haikou Beverage Factory. Due to outdated systems and single product lines, the factory's warehouse was piled with over 800 tons of unsold liquor. In 1983, Wang Guangxing was transferred to Haikou Beverage Factory. Although he didn't understand beverage and liquor production technology, he relied on piece-rate reforms to turn the previously production-oriented factory into a production-and-management-oriented enterprise. The factory quickly turned around, making a profit of 1.08 million yuan the following year. The second was at Haikou Electronics Company. In 1984, Wang Guangxing was transferred to Haikou Electronics Company. Some thought he couldn't lead an electronics company with many senior engineers because he didn't understand electronics. But he again relied on reforms that rewarded hard work and punished laziness, making two of its subsidiary factories profitable. One factory director was even rewarded with 8,000 yuan, which was 133 times the average salary at the time. The third was at Haikou Canned Food Factory. Starting in 1981, the factory had five consecutive years of losses, and even after four changes of factory directors, the situation remained difficult. At its worst, the factory's assets of 7.2 million yuan were only 20,000 yuan away from bankruptcy, and its losses accounted for 82% of the total losses of industrial enterprises in Haikou City. The factory couldn't pay wages, and every month on the 20th, long lines of employees queued for medical reimbursement. In 1986, Wang Guangxing was transferred to Haikou Canned Food Factory, where he took the lead among state-owned enterprises nationwide in implementing the "break the three irons" policy—iron wages supporting lazy people, iron rice bowls leading to eating from reserves, and iron chairs burying talent. He held a meeting of all factory cadres and, in the name of the factory director, fired several of the most difficult workers. Eight days later, the factory announced the dismissal of three people, one of whom was the child of his old classmate. He also announced that the factory would undergo a major restructuring, splitting into nine sub-factories, each adapting to the market to find its own way. Wang Guangxing's series of reforms caused an uproar throughout the canned food factory, with all kinds of criticism directed at him. At that time, after work, people often blocked his way, and he had to take detours to get home. There were three or four complaint letters to the city government every week. His wife couldn't stand it and forced him to write a resignation letter, and his son also advised him to quit because too many people were speaking ill of his father. But Wang Guangxing gritted his teeth and persevered, saying, "Even if you put a handful of nails in your mouth, you have to bite hard." After a series of corporate reforms and employee guidance, in 1988, Haikou Canned Food Factory achieved a profit of 2.4 million yuan for the first time. Wang Guangxing once again staged a legendary story of single-handedly saving the factory with an iron fist. But Wang Guangxing said, "Reform is actually about being bold and feeling the stones to cross the river." ● ● ● A National Beverage That Has Been Popular for 29 Years However, the real miracle of Wang Guangxing and Haikou Canned Food Factory was the later invention of Coconut Palm coconut juice. Coconut is a major tropical crop. In the 1980s, China's coconut production had already reached over 100 million coconuts. Apart from some eaten fresh, they were mainly used to process traditional foods with low technological content such as coconut jam. Coconut farmers in Hainan found it easy to grow coconuts but hard to sell them, often suffering greatly. Wang Guangxing stubbornly decided to transform the canned food factory from producing pineapple cans to producing coconut juice. But there was a worldwide problem that had not been solved for decades—the oil-water separation technology. To break through this technical bottleneck, he, with only a junior high school diploma, led a group of technical workers with secondary education, and after 8 months and 383 experiments, they finally broke through the oil-water separation technology and successfully developed Coconut Palm brand freshly squeezed coconut juice. Wang Guangxing rewarded the technical team with 300,000 yuan. Next, facing old workshops and outdated equipment, Wang Guangxing ordered the demolition of old workshops, elimination of old equipment, and used the profits from coconut juice to build new production workshops in the Longhua factory area and the Second Industrial City. To address insufficient capacity and backward efficiency, Wang Guangxing introduced two 80,000-ton coconut juice production lines and multiple Tetra Pak coconut juice production lines. Facing a sales crisis, Wang Guangxing ordered the sales team to do ground promotion activities and held the "Coconut Palm Natural Coconut Juice World Tasting Conference" in Beijing. At that time, TV advertising was very effective, so Coconut Palm coconut juice frequently ran TV ads. In 1988, Coconut Palm coconut juice was recognized by the Ministry of Science and Technology and the National Administration of State Secrets as the only national-level confidential product in the beverage industry. Coconut Palm coconut juice successfully became a "state banquet beverage" and entered Zhongnanhai. During former U.S. President Clinton's visit to China, he liked the coconut juice so much that he drank three cups in a row, which was widely reported by the American media at the time. Coconut Palm coconut juice, famous both at home and abroad, even saw the strange phenomenon of "water more expensive than oil" and "speculation" in coconut juice. In 1994, Coconut Palm coconut juice ranked first in sales among beverage companies nationwide, with orders booked three years in advance. After years of development, Coconut Palm coconut juice became the only domestic brand that could compete with "foreign beverages." In the eyes of consumers, coconut juice was once synonymous with Coconut Palm. Whether a product is successful can be known from the number of counterfeit products, and Coconut Palm coconut juice is definitely one of the most counterfeited beverages. ● ● ● Like Huawei, Laoganma, and Wahaha, Insisting on Not Going Public When an enterprise reaches a certain size, it usually seeks to go public and raise funds to further expand. But some enterprises have chosen the opposite path and still become industry giants with market values in the tens of billions. For example, Huawei, the world's largest communications equipment manufacturer. Ren Zhengfei once said a famous quote: "If we don't go public, Huawei might dominate the world." In Ren Zhengfei's view, going public would not only increase various costs but also change Huawei's current employee shareholding structure, which is not conducive to long-term development. In addition, after going public, a group of people would become wealthy, and their passion might decline, which is not necessarily a good thing. Laoganma, which is found wherever there are Chinese people. Tao Huabi has insisted for many years on "no loans, no financing, no listing, no letting others take shares, and no investing in or controlling others." She even proposed the "listing to raise money" theory, believing that "listing is cheating people's money," and for this reason, she repeatedly rejected local government proposals to go public. Laoganma's shareholder structure is also extremely simple: the eldest son holds 49% of the shares, in charge of marketing; the second son holds 50%, in charge of production; Tao Huabi herself holds only 1%. Wahaha is China's largest beverage company and is also a company that has not gone public. Zong Qinghou, a former richest man in China, said: "Wahaha doesn't lack money, and there is no need to raise funds through listing. We have 10 billion yuan in cash." In addition, he believes that "there are many listed companies that commit fraud," and although Wahaha, which is fully employee-owned, is not listed, its corporate governance is far better than some listed companies. Similarly, as a beverage company, Coconut Palm Group's reasons for not going public are somewhat similar to Wahaha's. As early as 2006, Haikou Canned Food Factory was renamed Coconut Palm Group, established an employee shareholding association, promoted property rights reform, and completely transformed from a state-owned enterprise to a private enterprise. In the early 1990s, Hainan Province mobilized Coconut Palm Group to go public five times, but after careful analysis, Wang Guangxing still felt that the disadvantages outweighed the advantages: First, going public would inevitably make employees focus on stock price fluctuations, leading to selling behavior, and after selling, their personal interests would no longer be tied to the enterprise, weakening cohesion. Second, going public could easily induce short-term behavior by management to grab benefits, which is not conducive to enhancing the enterprise's long-term development. Third, all loans had been repaid eight years ago, so there was no need to raise funds. Fourth, after going public, profits would be diluted, weakening the enterprise's development momentum. Some people immediately questioned Wang Guangxing: "Going public can disclose some financial data, and with supervision, you can't hide anything; not going public means one-man rule, and since Coconut Palm is a major taxpayer, the government has to give some face. Coconut Palm's refusal to go public is like burying its head in the sand." "If Coconut Palm Group went public, the leaders could legally get rich through the listing." In response to outside voices, Wang Guangxing shook his head and said, "Actually, before the restructuring, some people asked me to cooperate in buying Coconut Palm shares and promised me over 40 million shares and to keep my position. I'm old now; if I were after money, I would have gotten rich long ago." ● ● ● Internal Strife and External Competition, Giants Surrounding, the Sound of Being Besieged on All Sides Has Already Sounded In China's beverage industry, there are two famous slow bulls: North Lulu, South Coconut Palm. In the past decade or more, these two enterprises almost monopolized the markets for almond milk and coconut juice. It wasn't until Lulu was surpassed by Six Walnuts that Coconut Palm got a wake-up call. Coconut Palm has long dominated the coconut juice market, leading to insufficient competition in this category. In the past, the global per capita consumption of coconut juice was less than 0.5 liters, and coconut juice was even seen as a thing of the past. But in recent years, the annual growth rate has been about 20%, and in some markets, the growth rate of coconut juice has exceeded 50%. The market recovery seems to herald a storm. Since the 2013 Autumn Fair, brands such as Coconut Country, Coconut Cow, and Coconut Husband have appeared in Hainan alone. Nationwide, it's like bamboo shoots after rain: Special Forces, Happy Family, and Thai Coconut and other up-and-coming brands are accelerating their "encroachment," and old giants like Wahaha, New Hope, and Huiyuan are also laying out their plans. The first threat is Guangdong Susa Food, which produces Special Forces coconut juice. In just 8 years, Susa Food has established 7 branch factories, and in 2014 alone, sales in Jiangsu Province reached 500 million yuan, with a mature model market. Special Forces coconut juice abandoned the traditional thinking of coconut juice origin in Hainan and chose Southeast Asia instead, using camouflage packaging, boldly innovating, and channeling down to third- and fourth-tier cities, quickly sweeping the coastal and northern markets. Another challenge comes from Happy Family coconut juice from Zhanjiang. As the largest canned food enterprise in China, Happy Family Food has recently entered the coconut juice category strongly. Relying on years of canned food channels, Happy Family coconut juice quickly filled products in large and small supermarkets nationwide. It mainly uses imported Vietnamese coconuts, hired star Zhao Wei as spokesperson, and invested 350 million yuan in branding, coming on strong. (Special Forces coconut juice and Happy Family coconut juice) In the past decade or more, it has become a habit for industry leaders to copy the paths of small enterprises, resulting in a strange market phenomenon: small enterprises innovate and educate the category, while large enterprises play at counterfeiting, using brand power and channel power to directly harvest the dividends of new products, such as rock sugar pear juice and kvass. But Coconut Palm Group, which was the first to enter the coconut juice field, did not choose this path. Coconut Palm focuses on "state banquet beverage," uses iron can packaging, and largely limits the consumption scenario of Coconut Palm coconut juice to dining. The coconut juice industry has low entry barriers, severe product homogeneity, and Coconut Palm Group's slow response has allowed Special Forces and Happy Family and other coconut juice brands to rise suddenly. ● ● ● The Next Chapter for "Monopolist" Coconut Palm In 2015, Coconut Palm Group achieved an output value of 4.291 billion yuan, 2.6 times that before the restructuring. Over the past 10 years, as the industry "monopolist," Coconut Palm Group has chosen to obtain stable operating profits through low growth rather than risk aggressive market development strategies. But Coconut Palm Group, which is content with its own territory, has many problems. In the 1990s, Coconut Palm had all the advantages of time, place, and people, but it didn't seize the opportunity to develop into a diversified enterprise like an aircraft carrier, watching Chunguang Group grow with coconut candy, coffee candy, and coconut biscuits and other coconut processed foods. The reform heroes have become obstacles to reform. Coconut Palm is not Coca-Cola; it cannot dominate the world with a single product. The long-term popularity of Coconut Palm coconut juice is due to product scarcity, but coconut juice is not irreplaceable. As domestic beverage companies mature in product development, the recognition of coconut juice is weakening. Over the past 30 years, Coconut Palm Group has also made efforts to diversify, but apart from Coconut Palm coconut juice, products like Coconut Palm mineral water, volcanic rock mineral water, and natural mango juice have no novelty, "can only be sold locally, and cannot even leave Hainan." Among them, the chest model bottle of volcanic rock mineral water has been quite controversial: "The chest model bottle is vulgar, art and products cannot be combined so simply and crudely, suspected of violating the advertising law, and has a tendency of bad culture." As a miracle in China's beverage industry and a banner of Hainan's local industry, Coconut Palm's advertising has always been criticized, often relying on blonde, blue-eyed, big-breasted beauties to attract attention, which seriously deviates from the positioning of "state banquet beverage." (Controversial chest model bottle) Does this correspond to the old saying: "When well-fed and warm, one thinks of lust"? The problems in corporate culture construction are closely related to local regional culture. The reason why Hainan lacks large enterprises is related to the characteristics of Hainan's regional culture. Enterprises from small places all have the common problem of short-sightedness and working behind closed doors, only able to become star enterprises locally but difficult to take to a bigger stage. In addition, due to regional factors, Hainan enterprises emphasize integration rather than competition, and the lack of wolf-like aggression is an important reason restricting Coconut Palm's growth. The sea breeze blows gently, and coconut shadows sway. Now passing by the headquarters of Coconut Palm Group, the old-fashioned appearance of the building makes people sigh. Over the decades, Coconut Palm has not changed much, and now, surrounded by tall buildings, it is even easy to overlook. At the main gate, there is a sign with stern warnings: "The factory rules of Coconut Palm Group shall not change for 100 years." Source: Kuai Dao San Xia (ID: iyqkpd) -END- The best domestic FMCG distributor learning platform Focusing on providing professional, practical, and useful tutorials for enterprises and distributors Committed to helping Chinese FMCG distributors grow rapidly The most professional and practical knowledge base in the FMCG industry Reply with the red number below to get the corresponding content Reply with number 1 to view the complete knowledge base | 001 Excellent article selection | 002 Distributor market operations | 003 Terminal visit management | 004 Sales supervisor skills | 005 Sales improvement techniques | 006 Channel expansion | 007 Managing distributors | 008 Distributor development | 009 Distributor internal operations management | 010 Team management | 011 Efficient distribution techniques | 012 Sales manager's eighteen skills | 013 KA operation methods and strategies | 014 First lesson for new salespeople | 015 Internet, brand | 016 Distributor B2B transformation | [Long press QR code to follow]