The new version of "Win in China," recommended by Jack Ma, Liu Chuanzhi, and Shi Yuzhu, has premiered, exploring the way of corporate competitive strategy in an era of surplus. It broadcasts real business war history, showing the bloody battles on the front lines, which is highly inspiring and has attracted strong attention from entrepreneurs and business leaders.
This time, the new "Win in China" makes a comeback. The renowned producer Wang Lifen led the team, spending nearly a thousand hours to craft a three-episode business documentary. The Feihe milk powder episode of the new "Win in China" restores the true face of business warfare, analyzes the logic behind the company's successful transformation, and brings us inspiration: in today's increasingly fierce global competition, how can domestic brands overturn foreign brands?
At the Feihe "Win in China" press conference, the 40-minute Feihe business documentary meticulously produced by the new "Win in China" team moved all the guests. Dong Mingzhu, who attended the press conference, said on the spot, "When I have a grandson, I will definitely let him drink Feihe milk powder."
In the first half of 2017, Feihe's high-end milk powder sales soared by 200%, with overall growth exceeding 45%, making it the "No.1 Asian brand in the global infant formula market."
The following is a condensed transcript of the new "Win in China" content:
In 2017, for a considerable number of entrepreneurs, they were still in the economic winter. Behind the vicious results is the red ocean of homogeneous competition and the blood sea that drains corporate cash flow. Xie Weishan, Chairman of Junzhi Consulting, pointed out: "In all walks of life in China, there are price wars, bloody price wars. Corporate profitability is declining on a large scale."
Entrepreneurs cannot see the smoke of gunpowder, but they are on the battlefield. When human society entered the information age and competition intensified unprecedentedly, none of us were prepared. Listening to thunder in silence, in order to present as truthfully as possible how companies escape the quagmire of homogeneous competition, the new "Win in China" program team found cases in this era of surplus where competitive strategy has yielded results.
We came to the vast Northeast Plain and found Feihe, which has been making infant formula for 16 years in the FMCG industry, and conducted hundreds of hours of interviews. "More suitable for Chinese babies' constitution" is the new product feature that Feihe milk powder re-established. In the 2008 melamine incident, although its product quality was qualified, Feihe grew against the trend in an environment where people generally did not believe in domestic milk powder, and Feihe infant formula became the No.1 domestic brand in market share.
Now, Chairman Leng Youbin and his team are preparing to fight in Beijing, Shanghai, Guangzhou, and Shenzhen, competing with foreign brands. Feihe has prioritized building customer awareness advantages, and centered on this, reallocated the company's corresponding resources. The power gathered by customer choices will determine the company's future.
• Adhering to Product Quality Bears Good Fruit
Leng Youbin, who has been making infant formula for over 30 years, never imagined that the fate of Feihe Dairy would be so closely linked to this news on CCTV's "Xinwen Lianbo" (News Simulcast).
"Recently, the General Administration of Quality Supervision, Inspection and Quarantine urgently launched a special nationwide inspection of melamine in infant formula. The phased inspection results are as follows: 22 companies and 69 batches of products were found to contain varying levels of melamine."
This was on September 16, 2008, when Xing Zhibin, who had not yet retired, delivered the longest on-air announcement in the history of "Xinwen Lianbo." That night, the program ran 8 minutes over its scheduled time. In the five years from 2008 to 2012, there were only 16 such overruns, each due to major national events. The importance of the melamine incident clearly rose to that level.
Leng Youbin recalled: "I was getting an injection that day, watching CCTV's 'Xinwen Lianbo.' I sweated in my palms for the first time. Actually, I already knew Feihe was not on the list, but I was still uneasy. All our people were at the company, and I was at home getting an IV. In the morning, all companies were on tenterhooks. If it was announced (that you were on the list), the company could go bankrupt instantly."
Feihe Vice President Wei Jing recalled: "For the company, it was a matter of life and death. It was like the college entrance exam now. It doesn't matter what score you think you got; it matters the moment they announce it."
CCTV's "Xinwen Lianbo" announced: "The 87 infant formula companies that have not yet detected melamine are: Heilongjiang Feihe Dairy Co., Ltd."
Even nine years later, Leng Youbin and his team still vividly remember the scene when this news was broadcast.
Wei Jing: "So when 'Xinwen Lianbo' broadcast it and announced that Heilongjiang Feihe was not on the list, everyone burst into tears."
Leng Youbin: "(We) hugged each other and cried."
Wei Jing: "There was a radio in the car, and I called President Leng. I said, 'Leader, now I know, I am proud of this company.'"
Leng Youbin: "Oh, I was very moved when I heard that. It meant that the path we had taken over the years, our strategy was right, our direction was right, building our own pastures was right. No matter how hard it was, it was worth it. Why did I raise cows? Why did I build the industry chain? Because if there were no problems in the industry, it would be against the rules. It was so chaotic; everyone was adulterating milk every day. But I didn't expect such a big incident, affecting the whole industry."
Wei Jing: "After the 2008 incident, I think everyone reached a consensus: nothing can give way to quality. If quality is not good, the bigger your brand, the higher your risk coefficient."
The news that Feihe Dairy did not add melamine was like sunlight illuminating Feihe's future. Leng Youbin realized this might be the biggest business opportunity he had encountered since starting his business. Feihe Dairy's market prospects seemed to unfold before his eyes.
Leng Youbin: "As soon as it was announced that Feihe was not on the list, I pulled out the IV needle. I rushed to the office, and we held a national conference call overnight. One was to organize production, and the other was that the opportunity had come; we had to seize sales."
Sure enough, orders for infant formula came in like snowflakes. In 2008 and 2009, Feihe's sales revenue reached 1.8 billion yuan. Although Feihe products were severely backlogged later, after deep market cultivation and adjustment, it achieved continuous profits for three consecutive years from 2012 to 2014. When good times continued until 2015, sales revenue dropped sharply. Worse, the company could not find any effective measures to stop the decline.
• Intensified Competition, Feihe Mired in Price War
In the hand-to-hand combat of price wars with other domestic milk powder brands, Feihe seemed unable to see a path for medium- and long-term development.
Leng Youbin: "Competition in 2015 was extremely fierce. Almost all companies were making thin profits or operating at a loss. Buy four get one free, buy three get one free, buy two get one free, even buy one get one free."
Wang Lifen: "Everyone couldn't find competitive means?"
Leng Youbin: "Right."
Wang Lifen: "Just low prices, discounts, and selling cheap?"
Leng Youbin: "Right. Where is the profit for companies?"
Wang Lifen: "Do you think you can go down this path of discounts?"
Leng Youbin: "No. The biggest gap between Chinese brands and foreign brands is that we are promotion-driven. Foreign products are brand-driven."
Walking on the vast Northeast Plain, Leng Youbin saw that every road seemed viable, but he really didn't know which road could lead the company out of the 2015 price war predicament.
Leng Youbin: "We actually hired many consulting firms, but this transformation is harder than before."
The endless agricultural reclamation area here is Leng Youbin's hometown. He learned to raise cows and milk them at age 14 to earn money to support his family. After graduating in food engineering from Shanghai Institute of Technology in 1989, he worked at the Zhaoguang Farm Dairy Factory for 8 years, and at 28 he became the general manager of Feihe Dairy Factory.
In 2001, when Feihe Dairy was acquired, he exchanged 14 million yuan in debt for the right to continue using the Feihe brand. Borrowing 1 million yuan and bringing 100 people, he started his business in Kedong County.
In 14 years of entrepreneurship, he encountered countless difficulties, but every time he turned danger into safety. But this time, how to escape the quagmire of price war, he really felt helpless.
• Leveraging Competitive Strategy to Explore Competitive Opportunities
Leng Youbin: "Once I was at a gathering with my classmates, and he said you must use positioning. He said it's simple, crude, and effective."
Eager to find a way out of the low-price discount quagmire, Leng Youbin brought Wei Jing, who was in charge of market branding, to Shanghai Junzhi Consulting.
Xu Lianzheng, President of Junzhi Consulting: "His product quality can stand firm. He has taken the No.1 position in the ten provinces of the northern market."
Xie Weishan, Chairman of Junzhi Consulting: "I think his product is really no problem. Based on this, I think we are willing to assist such a serious company that makes products."
Leng Youbin: "Junzhi's market research took over three months, visiting consumers, distributors, and retailers."
Previously, Feihe's advertising slogan was: "Always Good Milk Powder."
Xie Weishan, Chairman of Junzhi Consulting: "For example, 'Always Good Milk Powder' cannot constitute Feihe's unique value, because in consumers' eyes, truly always good milk powder is imported milk powder. Then we found a point that foreign milk powder cannot follow: milk powder more suitable for Chinese babies' constitution."
Cai Fangliang, President of Feihe: "'More suitable for Chinese babies' constitution' versus 'Always Good Milk Powder.' For example, if I fight with a foreign brand, which one can win? It must be 'more suitable for Chinese babies' constitution.' That's obvious; this positioning is very good."
Leng Youbin: "We found a point that can communicate with consumers."
Xie Weishan, Chairman of Junzhi Consulting: "This unique value point is very, very important for mothers' needs, because everyone wants milk powder that is more suitable for their baby's constitution."
Wei Jing, Vice President of Feihe: "(This positioning) immediately highlights you from the entire milk powder competitive landscape. I am more suitable for Chinese babies. I think this is recognized by all Feihe people."
President of Junzhi Consulting: "Feihe is a company, but it represents a window for the entire domestic queue to speak out."
Wei Jing, Vice President of Feihe: "From the perspective of an industry leader, you propose a very differentiated positioning from your main competitors."
Xie Weishan, Chairman of Junzhi Consulting: "Whoever first establishes the first impression in customers' minds is most likely to associate it with your brand."
Cai Fangliang: "After 'more suitable for Chinese babies' constitution,' the differentiation from our upcoming competitors is completely clear."
Xie Weishan, Chairman of Junzhi Consulting: "And this unique value, competitors cannot follow. The more it goes on, the more powerful it becomes."
Leng Youbin: "At that time, people said that even if we didn't cooperate, this sentence alone was worth 10 million yuan."
The new positioning of "more suitable for Chinese babies' constitution" was highly recognized by the Feihe team. But recognition and execution are two different things, and no one expected that the implementation of the new positioning would be difficult at every step.
Xu Lianzheng, President of Junzhi: "In the first three months, the entire team was opposed, questioning, full of doubt."
• Implementing Competitive Strategy Encounters Heavy Resistance
The advertising slogan in the corporate positioning is the strategic focus after overall consideration. If the core team does not recognize it from a strategic height, but only treats it as an advertising slogan, the actual operation will be greatly compromised. This is an important reason why many companies, even with clear positioning, still cannot escape difficulties. So what about Feihe's situation?
Leng Youbin: "If you switch to brand building in one step, acceptance will be a relatively long process."
Wei Jing: "To continuously raise the tone of my brand, but it's not that one sentence can raise the brand's tone."
The idea of brand-driven approach obviously did not form a consensus in Feihe's core layer. At that time, Feihe's core team only recognized the slogan.
Xu Lianzheng, President of Junzhi: "At the end of 2015, I remember once we had a conference call with them. President Leng was there, and the senior executives were all there. I didn't care about their face. I said, 'This product, if you put it on a normal shelf, without saying the brand, I can tell which is a rural brand and which is an international brand.'"
Wei Jing: "You are an old-fashioned brand, a brand used by rural people."
Xu Lianzheng, President of Junzhi: "I said, 'Spend a few million to change the packaging; it's totally worth it. How much have you invested in advertising?'"
Cai Fangliang: "This is not good, that is not good. If everything were good, why would you come?"
Leng Youbin: "For example, when we change the storefront of terminal stores, some we wrap columns, some we wrap the whole store. This promotion costs a lot of money. It would cost 30 million yuan to change nationwide. But do you make this decision?"
Xu Lianzheng, President of Junzhi: "I said, 'Can you make your product packaging more international?' He originally was reluctant to set up a dedicated counter."
Leng Youbin: "We had already wrapped it very well, and you want to tear it all down and replace it with 'more suitable for Chinese babies' constitution.' Some managers said, 'We just did this; replacing it wastes money.'"
Xu Lianzheng, President of Junzhi: "I said, 'Is that what you call a brand? Don't run to the innermost place where no one can see you.'"
Wei Jing: "Teacher Xu and others are very assertive. In President Leng's words, you must listen to him, or he won't do it."
Xu Lianzheng, President of Junzhi: "The meeting content we set was over in 20 minutes. I said, 'You are really interesting. Discussing issues with you ends in 20 minutes. I said today's meeting content should take a day; it would be good if you could understand it thoroughly.' They said, 'We understand.' Okay, when we started working, I said, 'Do you really understand? Is this what you call understanding?'"
Wei Jing: "I think Teacher Xu said the meeting lasted 20 minutes or half an hour. I said, 'Teacher Xu, 60% of China's counties, I, Wei Jing, have been to at least 50%. You definitely haven't. The difference is here. Good or bad salespeople, Teacher Xu, you can't tell, but in front of me, I can tell at a glance. Do you believe it or not?'"
Xu Lianzheng, President of Junzhi: "He said, 'We have been in this field for ten or twenty years.' I said, 'You have been playing for years, and all you know is discounts. What else can you do?' He said, 'President Xu, you can't say that; it insults our dignity.' I said, 'Dignity is when you beat foreign brands; that's dignity. What are you calling dignity to me? If I give you dignity, so what? Does the market give you dignity? I said if the market doesn't give you dignity, you have no dignity.'"
Wei Jing: "No consulting firm, strategy firm, or advisory firm can act like a savior, saying, 'Listen to me on this, and you will succeed.' I definitely don't think it's like that."
Cai Fangliang: "You can't say that once you have a positioning, everything before is denied. That's definitely wrong. Without previous accumulation, you couldn't have positioned. If you can't do it, try creating a new brand. Everyone will challenge you like that."
Xu Lianzheng, President of Junzhi: "I said, 'If you continue doing this, we won't cooperate with you.'"
Leng Youbin saw all these arguments. The consultant concerning the company's medium- and long-term strategic development and the team that had fought with him for over a decade were both important to him. His attitude directly determined whether the company's new strategic positioning could be implemented.
Wang Lifen: "At this time, when doubts came to you, how did you respond?"
Leng Youbin: "I would reach a consensus with our president. When there were conflicts, we communicated first. Once we reached a consensus, we would follow that requirement."
Wang Lifen: "In this process, what do you think is the principle for handling such disputes?"
Leng Youbin: "Do you really want to do what we plan for the next five to ten years? Positioning can give you a strategy for three to five years, five to ten years. Then you work hard toward this direction. I am quite persistent; I insist on doing it."
Leng Youbin: "The details are one step. In 2016, things hadn't changed yet; the bottom was still 2015's. Do leaders have to come and tell you every day? Look, it's still 2015's. You don't need to take notes; it's your brain problem, your thinking problem. We are responsible here; you must manage this area well. I tell you, if I come again and find you making excuses, I will deal with you seriously. I said one thing has excuses, one thing has excuses. Why don't you do it?"
Xu Lianzheng, President of Junzhi: "After two failed attempts, President Leng got angry. He didn't quite understand, saying, 'Oh, will this work? My product is still the same; changing the packaging will work. Then changing the display will work.' They would think like that."
• Determined to Build Brand, Short-Term Results Not Seen
Under Leng Youbin's strong push, the product packaging and brand display were finally changed according to the new positioning design.
Feihe milk powder, more suitable for Chinese babies' constitution. The packaging was changed, and hundreds of millions in advertising were spent. It should have been time for sales performance to rise steadily. But Feihe, from the core team to ordinary salespeople, experienced the hardest days.
After Feihe's strategic positioning, the company greatly increased brand investment. The only purpose of brand investment is to increase sales. If real money in brand and market investment does not bring increased revenue, that is a black hole every company fears. Would Feihe fall into this black hole?
Cai Fangliang: "Our brand investment was tens of millions a year, and later it was basically 6 or 7 times that."
Leng Youbin: "Spending money again, burning money."
Cai Fangliang: "If you invest, you must have output."
Leng Youbin: "By the first half of 2016, we hadn't completed our plan for early 2016."
Cai Fangliang: "From the beginning of the year to August, our terminal shipments barely changed."
Leng Youbin: "Running a business and market is for sales; we need to sell the volume."
Cai Fangliang: "Shipments in January were 400 million, and in August still 400 million. My shipments are what terminals actually sell, so the team faced unprecedented pressure and was very tired."
Leng Youbin: "This pressure is tiring to the heart. I think physical fatigue is nothing; it's psychological pressure."
• Insisting on High-End Route, Cutting Low-End Products Under Pressure
In 2016, not only did sales not increase in the first half, but because the positioning was high-end, low-end products unrelated to the positioning had to be cut.
This was adding insult to injury for Feihe's front-line sales performance assessors.
Leng Youbin: "If you want to do high-end, you have to cut low-end. We started cutting at the end of 2015. We cut a product called Feihui, which had nearly 500 million in sales and 50-60 million in profit. So we had to cut it. But our subordinates didn't understand."
Wang Lifen: "How did you face this resistance and still cut it?"
Leng Youbin: "Because what you want is a high-end image, you want to compete with foreign brands, so the product structure must be excellent."
Focusing on high-end products and cutting others directly affected the income of original sales staff.
Leng Youbin: "Performance was not completed, assessment indicators could not be met, and the team's confidence was greatly hit because they couldn't get bonuses."
Cai Fangliang: "Actually, our team's salary structure is basic salary plus performance plus excess reward. The excess reward is quite a lot, and that part was not available."
In 2016, Feihe had 25,995 employees, with 23,917 front-line sales staff. Performance assessment-related personnel accounted for 92% of the total company, meaning the vast majority of people could not get performance bonuses.
• Persisting in Competitive Strategy Finally Pays Off, Performance Soars
Leng Youbin: "In the third quarter, I discussed with my president: I'll give you a target, and you adjust the sales plan for the fourth quarter. If you meet the target in the fourth quarter, the bonuses for the first three quarters will be paid as usual."
Cai Fangliang: "Let everyone get rewards; we still need rewards because the team comes first at this time."
Wang Lifen: "So actually, you used the company's reserve funds to compensate for the performance during this silent period."
Leng Youbin: "If you want to implement this big strategy, the company must adjust."
Xie Weishan, Chairman of Junzhi: "You find that front-line sales guides are very willing to use the concept of 'more suitable for Chinese babies' constitution' to communicate with customers. We are not anxious; it's not that there is no dawn. First, there are customers who start looking for the Feihe brand, but it happens sporadically."
Leng Youbin: "The structure of high-end powder is constantly optimizing and improving. Look at the data. In the fourth quarter, starting from November, it kept going up. Distributors and salespeople saw confidence and hope."
Cai Fangliang: "In just five months, from September to November, terminal shipments grew by 30% to nearly 40%."
Leng Youbin: "At the end of the year, we held a large annual meeting. Those who met their targets went on stage to receive bonuses and red flowers, boosting morale."
This meeting was held every year before, but this year was extraordinary. The results showed that the company had found a new path for medium- and long-term development without relying on low prices and discounts.
• Heavy Investment in Focus Media Elevator Advertising, High-End Sales Growth Over 200%
In the first half of 2017, Feihe's growth continued.
Cai Fangliang: "From the perspective of Xingfeifan's brand investment, in the first half of this year, we invested in over 23,700 TVC hard ads in total."
Xie Weishan, Chairman of Junzhi Consulting: "For the mainstream population in first- and second-tier cities, we recommended Feihe use elevator media to precisely advertise its high-end product Xingfeifan, carrying out a saturation attack with over 100 million yuan. Through this precise and efficient placement, Feihe's feature of being more suitable for Chinese babies' constitution was precisely conveyed to the mainstream population in first- and second-tier cities."
Cai Fangliang: "Then we invested in over 174,000 buildings of Focus Media."
Xie Weishan, Chairman of Junzhi Consulting: "We found that elevator media covers the mainstream population in first- and second-tier cities on a large scale. Of the 400 million urban population, 200 million watch Focus Media. This coincides highly with the target group Feihe needs to break through. Elevator media has its unique value: in the elevator space that urban mainstream people must pass through, ads are played at high frequency, thus having the function of igniting the brand. These are exactly the communication resources Feihe milk powder urgently needs."
Leng Youbin: "Brothers and sisters, achieving such good results, thank you all."
Xie Weishan, Chairman of Junzhi Consulting: "Elevator media provided effective support for our Feihe high-end Xingfeifan series to achieve 200% high-speed growth in first- and second-tier cities."
Leng Youbin: "To strengthen and expand, in this process, we must protect ourselves. We must protect the Feihe brand, use the power of the brand, use this invisible power, and implant the Feihe brand into our consumers' minds."
• Decades of Adherence to Milk Powder Quality, Listing to Solve Funding Difficulties
While Feihe's performance was rising, one question kept circling in my mind: How is the quality of Feihe milk powder? Is it really suitable for Chinese babies' constitution?
To answer this question, I followed Leng Youbin to the Northeast Plain, where Feihe milk powder is produced, for a two-day interview.
The name Feihe (Flying Crane) comes from the red-crowned cranes that live in the Zhalong Wetland in Qiqihar. Feihe Dairy's headquarters is also in Qiqihar. Red-crowned cranes have high requirements for ecology. Leng Youbin hopes to build his milk powder production around this precious land of cranes.
With good air and water, raising cows and building factories here will produce high-quality milk powder.
Leng Youbin: "Red-crowned cranes are very precious. If the water or local environment is slightly polluted, they won't stay here. I built my factories around places with cranes, red-crowned cranes, white cranes, and wetlands."
After starting his business in 2002, because he was eager to make products, one year after starting, he laid the foundation of the old Kedong factory. During this period, Leng Youbin focused entirely on milk powder quality and basically did not consider marketing.
Wei Jing: "I told him several times to take out money for marketing, but there was none. He moved all the money to the back end. He studied production lines, at least my milk source. Whether it's dry process or wet process, where does the milk come from? Where is the milk made into powder? He started to control quality from then on. As I said, President Leng, why don't you give me some money to fight the market?"
Wang Lifen: "Why did you risk everything to build factories?"
Leng Youbin: "Without a good factory, you can't produce good products, at least not stable ones. The biggest problem with domestic equipment is that one batch is good, the next may not be. It's not like our fully automated process control, where products from the first batch to the last are completely stable. Without building this factory, we would never develop.
Then I started looking for money. In 2003, we got a loan of 3 million yuan from ICBC. After borrowing, I said we must repay quickly. We were waiting for the next loan of 5 million, but after repaying 3 million, they firmly refused to lend more."
The pain of lacking money almost drove Leng Youbin to desperation. Without money, even with wings like a red-crowned crane, he couldn't fly to the sky.
Leng Youbin: "Because I was so tired then, look, I pulled this out. At that time, I had a big boil-like thing."
Liang Aimei: "He had what is called shingles. His nose was already rotten, maybe half rotten."
Leng Youbin: "I saw it wasn't good. I said I would rather die at home than outside. After half a month of injections, it didn't get better; I had a fever."
After returning home to cure his nose, he continued to look for money.
Leng Youbin: "A classmate asked me, 'Do you want to go public?' I said, 'Yes, but my factory is too small. Can it go public?' He said, 'Let them come and see.' They came to my Kedong factory. I thought there was no hope because it was such a small factory, just bought and renovated. When they came back, they told me, 'It's okay, the toilet is quite clean.'"
In 2003, Feihe Dairy was relatively small, with annual revenue of over 30 million yuan and assessed assets of over 100 million. But Feihe milk powder still went on the NASDAQ over-the-counter market.
• Quality Cannot Give Way to Cost, Huge Investment in Self-Built Pastures and Feed Mills
The clean toilet and tidy factory reflected Feihe's management level. This indirectly helped Feihe go public in the US at that time. After listing, Leng Youbin bought land, built factory buildings, and purchased imported equipment.
After building the factory, the quality of milk powder production was guaranteed, but Leng Youbin did not stop. Because he had raised cows and milked since childhood, he knew that the condition of cows directly affects the quality of milk. So Leng Youbin decided to raise cows himself and build pastures.
Wei Jing: "The factory here was built, and we thought we would have money for sales. But President Leng said no, I have to buy cows and build pastures. This investment is even bigger."
Leng Youbin: "Originally, we built milk stations. I said build a mechanized milk station, and farmers bring their cows to milk there to ensure no adulteration. They guarantee no adulteration, but the milk quality is poor because they don't feed scientifically. My family also raised cows, so I knew the root of the dairy industry is in the milk source. If you don't do well in the milk source, your products will never be good. If each household raises cows, feeding whatever feed is available or grass, the milk quality can never be controlled. Even without adulteration, the milk quality won't improve."
Wei Jing: "At that time, Chinese dairy companies that raised cows were rare, almost none. Especially for infant formula, no one did this. So at that time, the resistance and pressure were very great."
Cai Fangliang: "Actually, in the industry, there were not many positive comments. They all thought he was stupid. Isn't it cheap to buy bulk milk powder from abroad? At that time, they thought he was quite stupid."
Wei Jing: "When the cows came, you had to quarantine them for three months. That's all cost. Then you transport them to our pasture. Until they produce milk, during all this time, you have to keep feeding them."
Leng Youbin: "The ear tag number is the cow's pedigree. Under the cow is a chip that records daily feed intake and exercise. Our information system here is more advanced than the factory. Because cows can't speak, all their actions are reflected in the collected data. This needs large-scale processing; you can't watch each cow one by one. This pasture has over 10,000 cows, all managed by chips. If you find mastitis or other diseases, you must immediately separate the group. We split them from the large group into small cow sheds for the sick group to adjust."
Wei Jing: "If you go to our pasture now, you can hear light music playing for all milking cows. It must be played to help them relax their body and mind, making the cows happy."
Leng Youbin: "Cows are the foster mothers of humans. We don't allow hitting cows. You see, when they drive the cows, they pat them like this. Because cows eat grass and produce milk, we should treat cows well, just like we treat our mothers."
Wei Jing: "The sleeping area is about 6 to 8 square meters per cow. So our employees will stand on the cement edge and let their knees do free fall, landing directly on the sand and straw. Then use your knees to feel. If your knees don't hurt, it's comfortable to kneel, and it feels soft, then the cow lying on it will also be comfortable. They drink underground soda water, pumped directly from a 120-meter deep rock well. In the Kedong and Keshan environment, the groundwater produced is naturally weakly alkaline."
With cows, what they eat directly affects milk quality, so Leng Youbin started building a feed mill.
Leng Youbin: "Without these lands, you can't raise these cows, and you can't get better milk. If the organic matter content is high, the cows become healthier, and only healthy cows produce good milk. More importantly, it's scientific ratio. The pasture has nutritionists who prepare the daily feed for the cows."
Along the way, Leng Youbin built two world-class factories, 8 pastures, and a 300,000-mu exclusive Feihe farm.
But the old problem of lacking money still followed him like a shadow, and the gap was getting bigger, so big that Leng Youbin could hardly find a solution.
• Adhering to the Chinese Brand Power Dream, Refusing Foreign Acquisition
After finding the direction, finding money was the next most critical hurdle. At the beginning of his business, when he lacked money to build factories, he solved it by going public.
This time, raising cows, building pastures, and building feed mills required even more money. This is often the darkest stage in every entrepreneur's heart. Many entrepreneurs give up at this point. Would Leng Youbin be an exception?
Leng Youbin: "At that time, I was all in debt, financing through listing. I had nearly 1 billion yuan in bank loans. The cows ate every day, and our cows' daily food standard was about 140 yuan. In addition to the silage we planted, there was also concentrated feed. Because people can skip a meal, but cows must eat every meal. Even if the company doesn't pay salaries, you have to feed the cows first. So the capital was extremely tight."
Leng Youbin: "In those years, I was very worried about bankruptcy. It was very possible. Once the capital chain broke, it would break."
In this nightmare of bankruptcy, a multinational company wanted to acquire Feihe. At that time, Leng Youbin truly had the idea of giving up.
Leng Youbin: "We talked many times, up to 5 billion, later to 4.8 billion. But after going home and sleeping, I thought, I still can't sell. It would tie me down, and I would have to work for them, not for myself. Because of my feelings here, if we had sold then, the Chinese dairy industry would basically have been taken over by foreigners. I gritted my teeth and didn't sell. My wish was not fulfilled. Actually, we wanted to build this business and change Chinese infant powder."
The time Feihe needed money most was 2008. In September of that year, the melamine incident occurred. Because Feihe milk powder was not on the melamine list, that year Feihe's revenue surged, increasing by 1 billion yuan. This 1 billion helped Leng Youbin overcome the most severe funding shortage.
• The Secret Behind Milk Powder More Suitable for Chinese Babies
In 2015, 2016, and 2017, Feihe won the gold award at the World Food Quality Evaluation, known as the Nobel Prize of the food industry, for three consecutive years.
In 2011, when Feihe moved all its factories back to the 47th parallel north in Qiqihar, the world's golden milk source belt, Feihe formed a two-hour ecological circle from grassland, pasture, and milk powder factory.
Wang Lifen: "Why is this suitable for Chinese babies?"
Leng Youbin: "Chinese genes differ from foreigners, diets differ, and habits differ. So our biggest investment in R&D is in studying Chinese breast milk. We collect Chinese breast milk at different locations across the country to analyze its nutritional structure, protein composition, fat composition, carbohydrates, and nutrient composition. We aim to make it as close to breast milk as possible. Every year, we find a topic in research to get closer to breast milk. For example, this year we are researching sugar."
Wang Lifen: "What did you research last year?"
Leng Youbin: "Fat. The year before, protein, carbohydrates, various intelligence factors, and later immune factors."
Cai Fangliang: "Feihe is the first to widely collect breast milk nationwide and conduct in-depth research, designing formulas based on Chinese constitution. Take iron for example: the US standard lower limit is 0.15, while China's is 0.42, a three-fold difference, fully demonstrating the difference between Chinese and foreign constitutions. Based on breast milk research results, we design formulas more suitable for Chinese babies' constitution."
Cai Fangliang: "Three to five brands, then we cover them with white paper and number them. Except for ourselves, consumers don't know. Several identical bottles, same amount of water, same water temperature. Scoop one spoon of each milk powder into each bottle. Don't shake or stir. See which powder can naturally settle and dissolve evenly. You will see a very wonderful phenomenon. In the end, Xingfeifan wins completely. Only Xingfeifan can achieve complete natural dissolution."
• Competitive Strategy Shows Results, Achieves No.1 in Domestic Milk Powder Sales
In 2016, Feihe achieved the No.1 sales volume in the domestic milk powder market. But in provincial capitals and mainstream populations in Beijing, Shanghai, Guangzhou, and Shenzhen, imported milk powder was still chosen.
Since 2008, 65% of China's infant formula market has been occupied by foreign products, mostly for high-end consumers. Feihe's influence among these groups is weak, and the mountain of brand influence still stands in front of Feihe people.
Leng Youbin, who is busy running around the Northeast Plain, knows this very well. The current Feihe is like the sun still hovering on the horizon outside the window. The real sunny day will come when Feihe milk powder has strong influence among high-end groups in big cities like Beijing, Shanghai, Guangzhou, and Shenzhen.
Leng Youbin: "The so-called Feihe No.1 is nothing to boast about. Although our team has won battles, we haven't fought battles like Beijing, a fortress. We are not good at it; when we fight, we are a bit timid."
Cai Fangliang: "I have said many times in big and small meetings: even if you reach 10 billion or 15 billion, if you can't take first- and second-tier cities, and among them you can't take Beijing, Shanghai, Guangzhou, and Shenzhen, you are still a second-tier brand."
Wang Lifen: "I think on the product side, I am convinced by you. But now the competition is about winning the battle for user mindshare. Do you have an advantage on this battlefield?"
Leng Youbin: "It's difficult. Building consumer mindshare is not something money can achieve. I think this difficulty is greater than building the industry chain. Actually, it's harder than the Long March."
On March 1, 2013, Hong Kong strengthened enforcement of purchase and carrying restrictions, with a maximum of two cans per person. Violators, if convicted, could face a maximum fine of 500,000 yuan or even two years in prison.
Not only that, the United States, New Zealand, Australia, Germany, the Netherlands, and the Macau Special Administrative Region government have all imposed various purchase restrictions on infant formula. These news all point to a signal: Chinese parents with financial means still do not know or do not believe that domestic infant formula is safe, and even less do they know that Feihe is launching milk powder more suitable for Chinese babies' constitution.
Wang Lifen: "We do not exclude foreign brands. In a China that had the 2008 melamine incident, if a Chinese company can have a brand stand alongside foreign brands and win the battle, every Chinese person is cheering for you. Did you read this psychological resonance?"
Cai Fangliang: "As a dairy industry person, I feel the melamine incident is a shame, our sorrow. So there is a deep complex. This is also the true dream of me and my team: to completely win this battle against foreign brands. The ultimate goal is to win honor for the Chinese people."
Leng Youbin: "I am also a veteran, so we keep working hard to change Chinese consumers' impression of domestic milk powder. If we don't make Feihe truly the absolute leading brand, I will feel unwilling. I have completely treated it as a career, and I must win."
In every Feihe office building and factory, the most prominent place has a baby wall. On the wall are the children of Feihe management and employees. These children have been drinking Feihe milk powder since birth.
Feihe people hope to use their own children to endorse Feihe. In fact, in the past, no dairy factory in the country had 100% of its employees drinking their own milk powder, except Feihe.
Wang Lifen: "Which one is your child?"
Leng Youbin: "This one, this is the second child, with big eyes. She drank Feihe milk powder from birth until weaning. The first child also did, and she still drinks it. The first child didn't have such a good formula, and my second child didn't get to drink this formula either."
Wang Lifen: "At that time, really, no foreign brand was mixed in?"
Leng Youbin: "No, definitely not. I have this confidence. Not only me, but all Feihe employees' babies, our distributors' babies, suppliers' babies, and even the grandchildren of leaders who know Feihe, all drink Feihe milk powder."
"Win in China" selected three cases of traditional industries that, after falling into price wars, found new positioning and used methods of building user mindshare or brand driving to escape the quagmire of homogeneous competition.
But not every company is suitable for this. It has two basic prerequisites:
First, the product quality itself is first-class;
Second, the founding team's ability to implement strategy;
Without these two prerequisites, no matter how good the positioning or systematic the competitive strategy, it is difficult to implement.
At the end of the program, technological innovations such as artificial intelligence are dazzling, and in the business wave, thousands of sails are racing. Whoever truly realizes the arrival of the era of surplus, the arrival of user fragmentation, and the arrival of the buyer's market, and effectively finds their own competitive strategy, will win in China.
-END-