As you casually crack open sunflower seeds that won't cause heatiness, every cent flows into the accounts of Chacha Food. By selling bags of roasted seeds and nuts, Anhui-based Chacha Food listed on the Shenzhen Stock Exchange and has earned nearly 1.8 billion yuan in total over the past six years. After listing, Chacha Food resisted temptation and continued to focus on its core business of roasted seeds. As of 2016, the sunflower seed business remained the company's absolute mainstay, contributing over 70% of revenue. Don't underestimate sunflower seeds; their gross margin exceeds 30%, which is more profitable than some seemingly impressive industries. Besides making seeds, Chacha Food holds a large amount of cash and is particularly keen on wealth management and external financial assistance, earning tens of millions in returns each year. As a result, outsiders feel the company's investment strategy is too conservative. More notably, Chacha's boss, Chen Xianbao, controls Hefei Huatai Group, which is involved in food, real estate, finance, and many other fields, and has once held the title of Anhui's richest person. Selling Seeds Nets 300 Million Yuan a Year Chen Xianbao, now 58, is a native Anhui native. After graduating from university, he worked in local government agencies and rose to the rank of section-level cadre. His restless nature led him to dive into business. Initially, he wasn't in the seed business but in children's food—popsicles—and quickly grew sales to the tens of millions. Still unsatisfied, Chen set his sights on another unassuming industry. Roasted seeds and nuts are a common small business on streets and alleys; with a small stove, a couple or a family of three can open a small shop and make a living. At that time, in Wuhu, Anhui, Nian Guangjiu's "Fool's Seeds" had already become famous and was the top brand in China's roasted seed industry. Who would have thought that selling roasted seeds could become a remarkable business? Chen Xianbao was also creative, innovating in this traditional trade. While everyone else was roasting seeds, he thought of boiling them, which made the seeds less messy to eat and, through traditional Chinese medicine blends, solved the problem of getting heatiness from eating too many. While all seeds were packaged in plastic bags, he chose kraft paper packaging, making his brand stand out among many in stores. In 2011, Chacha Food, which started by selling seeds, listed on the SME board of the Shenzhen Stock Exchange, becoming the first stock in the roasted seeds industry. Since listing, Chacha Food has not made great strides but has achieved steady growth, with revenue rising from 2.74 billion yuan to 3.51 billion yuan and net profit from 213 million yuan to 354 million yuan. Slow Investment, Keen on Wealth Management With a tiny seed, Chacha has achieved industry leadership through R&D and innovation. However, the company's emphasis on R&D seems to have waned in recent years. For example, in 2016, the number of R&D personnel dropped sharply from 36 the previous year to 25; despite a 6% increase in revenue, R&D spending even decreased slightly compared to the previous year. The 14 million yuan R&D investment in 2016 was nearly 3 million yuan less than in 2011. Having secured the top position in the sunflower seed sector, Chacha cannot afford to be too proud. After all, some leisure snack brands are rising at an astonishing pace through e-commerce. Another issue criticized by outsiders is Chacha Food's conservative investment and slow progress. When the company listed, it raised 2 billion yuan, and to this day, 380 million yuan remains unspent, sitting in accounts. Combined with returns from bank wealth management products, total returns from various funds have reached 220 million yuan. Two fundraising projects that were supposed to be completed and put into use in 2013 were still not fully invested by the end of 2016. Chacha Food seems particularly fond of wealth management. Its 2016 annual report shows that the company used a cumulative 3.4 billion yuan to purchase bank wealth management products, contributing 31 million yuan in interest income. In addition to buying bank wealth management products, Chacha Food also likes to provide external financial assistance, i.e., entrusting banks to lend money, with terms of less than one year and interest rates around 10%. Since 2012, the company has entrusted banks with loans totaling over 1.5 billion yuan. As of September this year, the cumulative balance of external financial assistance was approximately 536 million yuan. In September this year, after Chacha Food announced it would provide 200 million yuan in financial assistance to Anhui Xinhua Development Group Co., Ltd., it received an inquiry letter from the Shenzhen Stock Exchange. Although Chacha Food claims to have strong risk control mechanisms, in 2013, a 40 million yuan financial assistance to a Xiamen company became overdue, and both principal and interest were difficult to recover. The Chen Xianbao Family with 6 Billion Yuan in Wealth Chen Xianbao's business empire extends beyond roasted seeds. The Hefei Huatai Group, controlled by his family of three, is the controlling shareholder of Chacha Food and has diversified into real estate, finance, and other fields. Huabang Group, invested by Huatai Group, is a well-known real estate developer in Hefei, having expanded beyond Anhui to Shanghai, Jiangxi, and other places. In 2015, its comprehensive strength ranked second among local developers in Hefei, behind Anhui Wenyi Group. In 2016, Huatai Group ranked 23rd among Anhui's top 100 private enterprises with total revenue of 5.07 billion yuan. The Chen Xianbao family is a prominent wealthy family in Anhui Province, having held the title of Anhui's richest person in 2012. In recent years, although their wealth growth has not matched that of other local entrepreneurs, they remain regulars on the rich list. Last year, the Chen Xianbao family ranked 626th on the Hurun Rich List with a fortune of 6 billion yuan, ranking eighth in Anhui Province. Source: Zebra Consumption The 3rd (CFIC) China FMCG + Internet Conference will be held in Chongqing in November 2017. The conference will closely focus on the theme "New Forces, New Ecology," inviting 1,000+ distributors, 500+ brand owners, 200+ B2B platform founders, and 100+ investment and financing institutions to jointly explore a new chapter of cross-industry integration! Core Topics of This Conference:
How can the FMCG industry leverage B2B to achieve new growth opportunities?
How should the new supply chain behind new retail be built?
How can intra-city logistics help B2B achieve leapfrog development?
Highlights of This Conference:
The industry's first "2017 China FMCG B2B Industry Competitiveness White Paper"
Case sharing of excellent distributors undergoing transformation and upgrading
Upgraded conference and exhibition: Hall 6 Internet Technology Exhibition strengthens networking
Leaders from Alibaba Retail Link, ProLogis Finance, Eternal Asia Supply Chain, Best Store Plus, Yijiu Pi, and Hdware will deliver speeches and share pioneering views.
November 8-9, 2017 Xinyue Hall, Chongqing Yuelai International Convention Center Registration is now open. Long press the QR code below or click "Read Original" to register. Add friend with note "Conference Registration" Click the links below to review the highlights of the 1st and 2nd FMCG + Internet Conferences: 2016 "FMCG + Internet" Summit Forum -END-