Competition among enterprises ultimately boils down to competition for talent. Recently, it was reported that a personnel appointment document from Yurun involved multiple current employees of Shuanghui. After years of fierce rivalry, Shuanghui, Yurun, and Jinluo, the top tier in the ham sausage market, have not only never ceased their competition but have intensified it.

After vicious price wars, "clenbuterol" incidents, and "expired meat" scandals, Shuanghui, Yurun, and Jinluo have seen off the once-dominant "Chundu" ham sausage and have formed a three-way standoff. However, for these leading players, the tripartite balance is not the end of competition but the beginning of the next round.

-01- Talent War

Recently, it was reported that in Yurun's appointment document (Su Yu Ren Zheng Zi [2020] No. 41), a total of 9 current Shuanghui employees were involved, all of whom were business personnel from various regional offices of Shuanghui's meat products division. Due to the rapid spread of the appointment document online, 6 of these employees resigned from Shuanghui under pressure, while the other 3 explicitly stated they would not leave Shuanghui and refused to take up positions at Yurun.

In response, a Beijing Business Today reporter contacted Shuanghui and Yurun for comment, but as of press time, neither had replied.

Industry insiders generally believe that Yurun's poaching of talent from Shuanghui is related to the fact that in early August this year, You Mu, former president of Shuanghui, became a director and president of Yurun Meat Industry Group.

This industry veteran, who spent many years at Shuanghui, joined the company in 2001 and became its general manager in 2007. From 2010 to 2013, You Mu led his team to create a "golden growth period" in Shuanghui's history, with revenue crossing the 30 billion and 40 billion yuan marks. In December 2017, Shuanghui underwent personnel adjustments, demoting You Mu to vice president, with Ma Xiangjie, former general manager of Shuanghui Development's fresh products division, taking over.

In August 2018, the Shuanghui board passed a resolution for board re-election, establishing a new board led by Wan Long, which did not include You Mu. Subsequently, You Mu left Shuanghui.

"You Mu's departure laid the groundwork for Yurun to poach personnel from Shuanghui. Given his previous positions and experience, he not only understands the development of China's meat market but is also familiar with the growth paths of competitors," said Xu Xiongjun, a strategic positioning expert and founder of Jiude Positioning Consulting.

In fact, Yurun urgently needs new executives. In 2015, Yurun's chairman Zhu Yicai suddenly lost contact, and it was later revealed that Nanjing prosecutors had placed him under residential surveillance at a designated location. That same year, Zhu resigned as chairman. In 2019, Zhu returned, and in April of that year, his daughter Zhu Yuan became chairman and CEO of Yurun Food.

"Yurun's new CEO was poached from Shuanghui, so to revitalize Yurun's business, it is natural to poach from the familiar Shuanghui system. However, as a competitor and former employer, such large-scale private poaching is questionable," Shen Meng, director of Chanson Capital, told Beijing Business Today.

In addition to these adjustments, Shuanghui also "refreshed" its senior management. In February 2019, Shuanghui announced that, according to the company's management needs, Du Junfu would no longer serve as vice president and would be assigned other duties. The board decided to appoint He Jianmin, Sai Junxuan, Jiao Yongli, and Zhou Xiao as vice presidents.

-02- Vicious Competition

Beyond the talent competition between Shuanghui and Yurun, the market also includes Jinluo, and the "ham sausage war" among the three has never ceased. This inevitably brings up "Chundu," which introduced China's first ham sausage production line. In the 1990s, the Chinese ham sausage market saw a two-way battle between Chundu and Shuanghui. To further capture market share, both sides launched a price war on ham sausages.

At that time, both sides continuously reduced the pork content in ham sausages while drastically cutting production costs. When the price of a ham sausage dropped from 1 yuan to 0.5 yuan, consumers began to question: "Are we buying pork ham sausages or starch ham sausages?"

While Chundu and Shuanghui were still focused on the price war, in 1996, Jinluo broke through with a positioning of high quality and low price, maintaining rapid growth that doubled year after year. Subsequently, in 1998, Shuanghui launched "Shuanghui Wangzhongwang Ham Sausage," which also rose rapidly. Yurun, founded only in 1994, followed suit by launching ham sausages but was clearly no match for its competitors.

After stumbling, Yurun began to focus on low-temperature meat products. In 2011, Shuanghui was embroiled in the "clenbuterol" incident, and within just half a month, sales plummeted by 1.5 billion yuan. At that time, rumors circulated that Yurun took the opportunity to poach a large number of Shuanghui's distributors. In 2012, Yurun was exposed for allegedly mixing in "expired meat." After several rounds of turmoil, both companies suffered.

Data shows that after Shuanghui's revenue and net profit grew over 20% year-on-year in 2010, in 2011, revenue declined 1.32% year-on-year, and non-GAAP net profit fell sharply by 55%. Yurun, after seeing revenue and net profit grow over 50% year-on-year in 2010, saw its shareholders' attributable profit decline over 30% year-on-year in 2011. In 2012, both revenue and net profit declined significantly.

After the "clenbuterol" storm, Shuanghui successively acquired Smithfield Foods and participated in bidding for a stake in Spanish meat giant Campofrio, further widening the gap with Yurun and Jinluo in scale. In contrast, Yurun and Jinluo have been on the decline. In May 2017, Shuanghui filed a lawsuit against Jinluo over products like "Wangzhongwang," demanding that Jinluo stop infringement and compensate for economic losses. In 2020, Jinluo was ordered to pay Shuanghui 1.2 million yuan in compensation.

"Competition among peers is normal in the domestic market, and Shuanghui has a clear leading advantage over the other two in all aspects. Shuanghui is stronger in terms of market coverage and the entire industry chain, while Yurun and Jinluo are more regional and smaller in scale," Shen Meng said. He added that Shuanghui's market position is difficult to shake, and even if Yurun and Jinluo resort to unconventional competitive tactics, it will not change the market landscape.

Therefore, in the long run, vicious competition will not last, and the "mercenary" culture formed by Yurun's poaching may provide a temporary solution but cannot serve as a foundation for long-term development.

-03- Seeking Their Own Paths

After vicious competition, the three giants have each undergone transformation and upgrading.

Shuanghui leads in performance but faces product aging and urgently needs to transform toward a younger image. It is understood that Shuanghui has formulated a product strategy of "stabilizing high-temperature products, increasing low-temperature products, and industrializing Chinese-style products." In the high-temperature meat products segment, Shuanghui is strengthening the development of high-temperature food ingredients and products combining "meat, eggs, milk, vegetables, and grains," transitioning to a product structure that "enters households and reaches dining tables." In the development of Chinese-style cooked food, it is leveraging its deep processing and raw material resource advantages to cultivate signature products.

Under this strategy, in 2020, Shuanghui launched Babao Sausage Instant Porridge, announcing its entry into the catering industry and the booming plant protein sector. In April, Shuanghui launched the plant-based meat product "Chi Dou Ren" online and acquired several companies with plant protein production capabilities. On the brand front, at the beginning of 2020, Shuanghui accelerated its presence on younger social media platforms, cooperating with Douyin to launch Shuanghui internet-famous products targeting students and young white-collar workers.

Shuanghui needs to upgrade to appeal to younger consumers, while Yurun's most important task is to recover its vitality. On the market front, on August 15, Yurun opened its first street store in Shanghai, and on the same day, its wholesale and retail center also opened in Wuxi.

Yurun has begun to systematically integrate online and offline channel resources, gradually achieving deep integration of online services, offline experiences, and modern logistics, building a mutually beneficial platform to promote the innovation and upgrade of Yurun's retail formats. However, Yurun still needs to continue its efforts. In the first half of 2020, Yurun's revenue was HK$7.536 billion, up 1.95% year-on-year, but it still recorded a loss of HK$405 million, narrowing by 9.3% year-on-year.

Jinluo, once the third brand, has now surpassed Yurun and is targeting the health sector. In 2018, Jinluo launched a low-fat sausage with 60% fat reduction and introduced a new plant-based meat product series called "Su Rou Pai" in the plant protein field. In response, Jinluo stated that the development of its meat products segment has opened up new growth points, helping Jinluo to attack the high ground of the plant-based meat market. Regarding future developments, a Beijing Business Today reporter contacted Jinluo, but as of press time, the company had not replied.

In Xu Xiongjun's view, due to different stages of development, the strategies of the three companies also differ. Even if they choose different paths, ultimately, companies pursue high profits. Who can secure a place in the ham sausage market still needs to be tested by performance.

Regarding future development, Shen Meng suggested that all three parties need to seriously produce good products, strictly control quality, and improve responsiveness to consumer demand. Ultimately, the competition is about product, quality, and consumer satisfaction.

Source: Beijing Business Today (ID: BBT_JLHD) Reporters: Li Zhenxing, Bai Yang