Qiaqia, which holds over 50% of the melon seed market, once sat atop the industry through its full supply chain operations. However, in recent years, melon seeds have seemingly become a growth bottleneck for the company. "Chen Xianbao, the head of the Industrial Division of Anhui Provincial Department of Commerce, actually resigned to sell ice pops. He must have lost his mind." Everyone was highly skeptical of the resignation of this promising 36-year-old official. In 1995, Chen Xianbao rented a shabby factory and launched a nunchaku-shaped ice pop inspired by Bruce Lee. Although the product was a hit, it didn't stay popular for long, as competitors flooded the market and squeezed its sales. How to break through? Chen Xianbao proposed an even more bizarre idea: "Sell ice pops in the Northeast!" "He must be crazy, trying to sell refrigerators to Eskimos," people continued to mock his efforts, predicting he would lose everything. But when he got to the Northeast, where every household had heating and everyone ate ice cream, the "Bangbang Ice" became an instant success, with turnover quickly exceeding 10 million yuan. Yet Chen Xianbao began to feel uneasy... 01 Founding Qiaqia At that time, Wangwang, the leading rice cracker brand, and Xizhilang, the leading jelly brand, had both entered the ice cream sector, and a siege was imminent. Chen Xianbao needed to find new opportunities quickly. This former industrial division head set his sights on a seemingly "disreputable" business—roasted melon seeds. This small-scale trade, which could be started with a simple stall, was highly competitive with thin margins. How could it become a big business? Chen Xianbao was confident: Anhui had a long tradition of roasted snacks, and he had the chance to become the national leader. In 1998, taking advantage of an opportunity for entrepreneurs to go on an out-of-province inspection trip organized by the Anhui provincial government, he scoured for roasted goods. He noticed that almost all melon seeds left hands dirty, caused internal heat, and lacked flavor. Others' problems are one's own opportunities. After much effort, he finally found a type of melon seed that didn't dirty hands and was flavorful. After carefully studying its production process, he had an epiphany: if he switched from roasting to boiling, wouldn't the problems of dirty hands and internal heat be solved? He blended Chinese herbs like licorice and mint, then boiled and roasted the seeds with them. After repeated experiments, he finally created a melon seed that was perfectly salted, didn't dirty hands, and didn't cause internal heat. With the product ready, Chen Xianbao struggled to find a good name. While pondering, the lively cha-cha dance in the square caught his eye, and the name "Qiaqia" came to him. The three water radicals in the Chinese characters also matched his positioning of "boiled a hundred times, fragrant with every bite." In September 1999, Qiaqia Food (hereinafter referred to as Qiaqia) was born. Relying solely on quality wasn't enough to stand out, so Chen Xianbao began Qiaqia's unconventional "out-of-the-box" marketing. Distinctive packaging to stand out on shelves. He chose yellowish-brown kraft paper packaging with a Chinese red base, making Qiaqia look steady, eye-catching, elegant, and high-end among the dazzling array of products. Adding excitement to boost repurchase by consumers and channels. Qiaqia pioneered adding collectible cards featuring Tang and Song poems, the Twelve Beauties of Jinling, and the 108 heroes of Water Margin. It was said that a complete set of Twelve Beauties cards once sold for as much as 200 yuan. After boosting consumer enthusiasm, to further motivate channels, Qiaqia introduced a "lucky box" promotion, with prizes ranging from 1 to 50 yuan in each box. This made supermarket stockers eager to restock, increasing product visibility and naturally boosting sales. Chen Xianbao knew traditional supermarket channels were powerful, but convenience was paramount for consumers buying melon seeds, so his ultimate dream was to distribute to every small shop and stall on the streets. The "lucky box" was the perfect way to boost small shop owners' enthusiasm, gradually building a vast dealer network beyond supermarkets. With product and channel support, Qiaqia melon seeds quickly gained popularity, with net profits exceeding 3 million yuan in the first year. At that time, Taiwan businessman Lin Ken's Zhenglin melon seeds, which started in trading, had sales exceeding 100 million yuan and were expanding overseas. Meanwhile, Zhenxin melon seeds were closely following Qiaqia, copying its packaging, selling points, and even its channels. With strong competitors ahead and pursuers behind, Qiaqia needed a clever move to rise. Seizing the high ground of public opinion and capturing consumer mindshare. To become the "Melon Seed King," the whole country needed to know Qiaqia. "CCTV is the best window to the whole country!" Holding 3 million yuan, Chen Xianbao slammed the table and decided to borrow 1 million yuan to spend 4 million yuan on prime-time advertising on CCTV. With the ad "Qiaqia fragrant melon seeds, boiled a hundred times, fragrant with every bite," Qiaqia became a sensation. The factory was always bustling, and products were in short supply. In 2000, thanks to the advertising effect, Qiaqia's sales exceeded 100 million yuan. Riding the wave of consumer rise, in 2001, Qiaqia's performance soared to 400 million yuan. After gaining fame, it also launched a "one county, one dealer" plan for offline channels. After years of deep cultivation, it achieved nationwide coverage, developing over 1,000 dealers and about 400,000 terminal outlets. Qiaqia gradually topped the melon seed industry. 02 Quality is Life "Products are money, quality is life; we can't sacrifice quality for money." Despite Qiaqia's soaring performance and established brand, Chen Xianbao remained cautious. As a former head of the industrial division of the commerce department, he knew that compared to traditional roasting masters, industrialized production processes were the cornerstone of stable product quality. But at that time, the melon seed industry was too small, and there were no ready-made production machines. So he produced while exploring, proposing requirements, drawing blueprints, and then commissioning machinery manufacturers to make custom equipment, blazing a new trail. Qiaqia made many proprietary machines: cleaning machines to remove dust, shriveled seeds, and impurities; indented cylinder machines to remove small seeds; graders to automatically sort seeds into wide and narrow categories; sieve machines to remove fine stones; and color sorters using infrared imaging to eliminate moldy seeds... These carefully selected seeds then go through boiling, air drying, air cooling, inspection, packaging, and spot checks before leaving the factory. If any batch has even 1% moldy seeds in a spot check, the entire batch is reworked. Chen Xianbao said: "We should learn from McDonald's; all products should be standardized. The taste should not depend on 'master chefs' but be regulated by systems, processes, and documents to ensure quality." To produce absolutely high-quality products, standardized processes alone are not enough; the quality of raw materials determines the ceiling of product quality. Shortly after entering the industry, a small act of kindness by Chen Xianbao opened a deeper moat for Qiaqia. In 2001, the "poisonous melon seeds" incident in the roasted snack industry made Chen Xianbao more vigilant about quality. Coincidentally, that autumn, the raw material production area in Inner Mongolia experienced continuous rain, causing large quantities of melon seeds to mold. To maintain Qiaqia's quality standards, the Inner Mongolia batch had to be rejected. But Chen Xianbao thought: if he didn't buy, what would happen to the farmers' livelihoods in the face of such natural disasters? Caught in the middle, Chen Xianbao was torn. In the end, he invested 12 million yuan to import an advanced sorting machine and organized 1,000 workers for further selection. He also added promotional messages on the packaging to cherish the farmers' hard work, hoping consumers would be understanding if they occasionally found a bitter seed. Chen Xianbao inadvertently turned his attention to the very upstream of the supply chain. To make good products, you need good raw materials. Melon seed cultivation depends on the weather, which not only severely affected Qiaqia's quality stability but could even ruin the hard-earned brand. For Qiaqia to develop, it had to integrate and control the entire supply chain. So he established a seed company dedicated to experiments in trial planting and hybridization, pioneering the "industry integration" revolution. Many advised him against heavy investment in R&D, suggesting that raising raw material purchase standards would be more cost-effective. But Chen Xianbao had a bigger vision: established companies like Huawei and Gree kept rooting into the dark, and he believed that only through technological accumulation could he solidify his position as industry leader. Through repeated trials, hybridization, and trial planting, Qiaqia surprisingly developed the HK306 variety, which yields three times more than ordinary melon seeds, with a per-mu yield of about 450 jin, and has special attributes such as high yield, cold resistance, and off-season planting. This scientific achievement was firmly controlled by Qiaqia, becoming a "secret weapon" that competitors found hard to surpass. A few years later, when competitors realized that "those who get quality raw materials win the world," Qiaqia's industry position was already unshakable. As one of the earliest companies to enter the snack food industry, Qiaqia fully enjoyed the dividends of rapid industry growth with its first-mover advantage, reaching 2 billion yuan in revenue in 2008. In 2011, Qiaqia Food listed on the Shenzhen Stock Exchange, becoming the "first stock of Chinese roasted snacks," with annual revenue of 2.739 billion yuan. 03 Missed Opportunities In 2012, in the China Family Wealth List published by "Money Week," the Chen Xianbao family ranked first in Anhui with wealth of 3.067 billion yuan. But he didn't expect that at the height of his glory, Qiaqia would miss the e-commerce wave. In 2012, Baicaowei achieved online sales of 140 million yuan, while Three Squirrels and Bestore, backed by capital, began to make waves online. That year, Chen Xianbao, who didn't understand the internet and was already 60 years old, resigned as general manager, and his niece Chen Dongmei took over. After taking office, Chen Dongmei promoted a diversification strategy, investing heavily in beef sauce and jelly markets. However, these businesses were far from the main business, even in different supermarket sections, making synergy difficult. Moreover, leading brands had already firmly captured consumer mindshare, making a quick breakthrough very hard. Without firm strategic investment, failure was inevitable both online and offline. By 2015, apart from the main sunflower seed business, Qiaqia's other products were either loss-making or stagnant. Some said, "Chen Xianbao may not understand the internet, but Chen Dongmei doesn't understand Qiaqia melon seeds." In 2015, the retired Chen Xianbao made a comeback to try to turn things around. He divested from jelly, meat sauce, potato chips, and other sidelines, ending the diversification process and refocusing on melon seeds. That year, he launched new flavors like walnut and caramel, which quickly won over consumers' taste buds and initiated a process of price increases and upgrades. To appear more "internet-savvy," Chen Xianbao worked hard to catch up with trends: when blind boxes were hot, he made Qiaqia blind box gift sets; when beauty products were hot, he launched Qiaqia co-branded melon seed face masks... While fully focusing on the melon seed business, Chen Xianbao didn't take the time to look at the vast blue ocean of the nut market, missing another opportunity. During his three-year absence, Three Squirrels' revenue skyrocketed from zero to 2 billion yuan. During his years of focusing on melon seeds, Qiaqia's revenue (2016-2019) was 3.513 billion, 3.603 billion, 4.197 billion, and 4.837 billion yuan, respectively, while Three Squirrels' revenue was 4.422 billion, 5.524 billion, 7.001 billion, and 10.173 billion yuan. Qiaqia's melon seed business hitting a ceiling triggered pessimism in the stock market. It needed the next growth point. In 2020, Qiaqia's revenue was 5.289 billion yuan, and it set a goal to break 10 billion yuan in sales within 2-3 years and become the global leader in the full sunflower seed supply chain. This time, Chen Xianbao found Qiaqia's second curve—nuts—and aimed to seize the "number one nut" throne. Compared to Three Squirrels, Qiaqia had higher gross margins, net profits, more abundant cash flow, and overwhelming offline channel advantages, so it wasn't without the ability to compete. In 2021, Qiaqia's revenue from melon seeds, nuts, and other businesses was 3.94 billion, 1.366 billion, and 670 million yuan, respectively. Among them, nuts grew by 43.82%, the most impressive. But breaking into the nut market, where industry growth is slowing and giants are entrenched, is no easy task. Although Three Squirrels suffers from weak offline channels and a lack of full supply chain integration, that doesn't mean Qiaqia can completely replicate its melon seed success in the nut market. In the upstream of the nut supply chain, Qiaqia is also a novice, making it difficult to build a technological moat or price advantage in the short term. In terms of channels, although melon seeds and nuts can easily leverage each other, the fiercely competitive nut market has no large "virgin territory" left for Qiaqia to conquer. In the first half of this year, Qiaqia Food, the listed entity, achieved revenue of 2.678 billion yuan, up 12.49% year-on-year; net profit was 351 million yuan, up 7.25%. The day after the results were released, the company's stock price hit the daily limit down. With such performance, it's almost impossible for Qiaqia to "break 10 billion" in 2023. For Qiaqia to reach the top, it's destined to be a tough battle. Now Three Squirrels is learning from Qiaqia and investing heavily in offline channels, while Qiaqia is also striving to embark on the nut path. Let's see whether Three Squirrels becomes Qiaqia faster, or Qiaqia catches up on Three Squirrels' lessons more quickly. Source: Lishikuai Xiao (ID: lishikuaixiao)