Among the brands named on CCTV's 3·15 Gala, Qinghai Spring's Tinghua liquor undoubtedly suffered the most. A dream of immortality, three Nobel laureates, and a bottle of sky-high priced Tinghua liquor. On this night, it cemented its reputation for false advertising and being a 'stupidity tax.' Years ago, under Zhang Xuefeng's leadership, Qinghai Spring earned billions annually through the exorbitantly priced Jicao. After regulatory tightening, Jicao exited the market. From cordyceps to ultra-premium baijiu, Zhang Xuefeng's product and branding approach is identical, and he has been tripped by the same stone again. After this battle, Tinghua may not completely exit the market, but once the story is exposed, how can this sky-high priced liquor sustain its value? More importantly, Qinghai Spring has been loss-making for four consecutive years—what else can the company rely on?
Luck As the boss of Tinghua liquor, Zhang Xuefeng's good luck may truly be running out. Initially, he created an industry myth by managing the Jicao powder tablet product. Later, when the Jicao myth collapsed, he used a dream to create Tinghua liquor and enter the ultra-premium baijiu market. Before the Jicao powder tablet product, Zhang Xuefeng's life trajectory was centered in Chengdu, Sichuan. According to public reports, starting in 1991, he held executive positions at Sichuan Huaxing Company, Sichuan Zhongda Industrial, Sichuan Zhongzi Investment, Sichuan Jiufeng Industrial, and other enterprises. In 2003, his life took a major turn when he became the legal representative and chairman of Qinghai Tanggula Pharmaceutical, suddenly entering the pharmaceutical industry. At this time, Zhang Xuefeng began to frequently appear in Qinghai's pharmaceutical circles, holding titles such as executive director of the Qinghai Pharmaceutical Society and director of the Qinghai Cordyceps and Human Health Research and Development Foundation. In hindsight, Qinghai Tanggula Pharmaceutical was just a pawn for Zhang Xuefeng to establish a foothold in Qinghai's pharmaceutical industry; more important things were to come five years later.
On March 8, 2013, Zhang Xuefeng, Jin Luping (Zhang's mother), and Xiao Qingyuan jointly established Tibet Rongen, with Zhang Xuefeng contributing 52 patents valued at 300 million yuan for a 60% stake. The other two shareholders each invested 100 million yuan for 20% stakes. Twelve days later, these three individuals transferred their 20% stakes to Xiao Qingyuan's daughter, Xiao Rong, making the company owned 40% by Zhang Xuefeng and 60% by Xiao Rong. Tibet Rongen was a key step for Zhang Xuefeng to enter the capital market. The following year, Tibet Rongen participated in the asset restructuring of ST Xiancheng (the predecessor of listed company Qinghai Spring) and became the controlling shareholder. Xiao Rong, born in 1970, one year younger than Zhang Xuefeng, is the actual controller of the listed company but rarely appears publicly; Zhang Xuefeng holds both the chairman and general manager positions, taking full responsibility.
Zhang Xuefeng is indeed a top-tier corporate operator. Qinghai Spring Pharmaceutical Technology, controlled by Tibet Rongen, launched the Jicao powder tablet product in 2009, and within two years, sales exceeded the 1 billion yuan mark. This was the capital for restructuring ST Xiancheng.
Controversy However, the rapid growth of Jicao powder tablets was accompanied by controversy. Its birth originated from a story Zhang Xuefeng told about a 'living Buddha and a horse.' Qinghai is the main production area for cordyceps in China, accounting for over 60% of national output, traditionally sold as raw cordyceps and used as a traditional tonic. Jicao powder tablets overturned traditional methods of decoction, wine soaking, and soup cooking, boldly advocating daily sublingual use of these pressed tablets made from pulverized cordyceps, challenging the entire industry. With Jicao, Zhang Xuefeng established his marketing methodology: massive advertising on major media platforms, attempting to establish unique standards beyond the industry standards for raw cordyceps, which infuriated competitors. In 2014, Zha Xi Cai Ji, chairman of the long-established Qinghai cordyceps company Sanjiangyuan Pharmaceutical, spent heavily to take out newspaper ads to confront Zhang Xuefeng directly, accusing him of 'neither respecting the dialectical treatment principles of traditional Chinese medicine nor considering efficacy, harming the Qinghai cordyceps industry.' During the 'de-raw-cordyceps' process of Jicao powder tablets, its 'identity' was uncertain, transitioning from 'food' to 'Chinese medicine decoction pieces,' then to special tonic products and pilot products for comprehensive development and utilization of advantageous resources in Qinghai Province. However, with national regulatory adjustments to the cordyceps industry, production had to cease in 2016.
With the Jicao myth shattered and the listed company's performance unsustainable, Zhang Xuefeng turned his attention to baijiu. In March 2018, he launched Lianglu liquor, designed for spicy food pairings. Despite gaining some recognition through the popularity of 'A Bite of China 3,' the brand's heat did not last. After three years of unsuccessful attempts in the small-bottle liquor market, Lianglu was shelved. However, Zhang Xuefeng did not give up on the baijiu market and directly pivoted to ultra-premium. With a story of being 'enlightened by Taishang Laojun,' Tinghua liquor quickly moved from the celestial realm to reality.
From its inception, Tinghua liquor has been a topic of discussion. At the end of 2020, Tinghua liquor's physiological indicator testing research with the Baijiu College of Sichuan University of Science & Engineering went viral online; last year, its 'search promotion' angered 77 liquor companies including Moutai and Luzhou Laojiao; and it also attracted three Nobel laureates, including the 'father of Viagra.' The bigger controversy surrounding Tinghua liquor is its sky-high price. Its standard version is priced at 5,860 yuan per bottle (750ml), and the premium version sells for 58,600 yuan per bottle (750ml), 40 times the price of Feitian Moutai.
Marketing Zhang Xuefeng is undoubtedly the listed company chairman who is best at telling stories. Because his products are all positioned as high-end, he has earned the reputation of 'not cheating the poor.' From Jicao to Tinghua, Zhang Xuefeng's branding methods are identical. Since 2012, Jicao advertisements accelerated across major media, and Jicao powder tablets became extremely popular. Print ads + column promotions + long-duration cordyceps technology ads, a comprehensive approach to reinforce awareness, remains a classic case in the brand communication industry. In marketing, Zhang Xuefeng is willing to spend heavily. From 2013 to 2014, Qinghai Spring Pharmaceutical Technology spent 355 million yuan and 328 million yuan on advertising alone, each accounting for over 16% of main business revenue in the respective periods.
With the noise of Jicao fading, Tinghua liquor emerged, and Zhang Xuefeng transformed into the chief designer of Tinghua liquor, frequently appearing in interviews with certain mainstream media, not only detailing the process of divine enlightenment but also tirelessly explaining the technological content of this baijiu. In fact, Qinghai Spring does not produce baijiu; the Tinghua and Duhua series baijiu products are all purchased from Yibin Tinghua Liquor Industry, which was formerly known as Lianglu Liquor Industry before the name change. For this sky-high priced baijiu, Qinghai Spring has spent lavishly. In 2020 and 2021, the company's selling expenses were 48 million yuan and 56 million yuan, accounting for 38.89% and 43.58% of revenue in the respective periods, and in 2022 and the first three quarters of 2023, they soared to 76.94% and 79.26%. However, expenses and output are not proportional. From 2020 to the first half of 2023, the company's liquor revenue was 16.87 million yuan, 25.39 million yuan, 93.6432 million yuan, and 42.73 million yuan, respectively.
Pain Tinghua, guided by immortals, did not improve Qinghai Spring's performance; instead, it widened the company's loss hole. In 2020, the company adjusted its liquor FMCG segment, slowing down channel development for Lianglu liquor and Huolu herbal tea products, and at the end of that year, Tinghua liquor began target market testing. Due to business adjustments, the company suffered a huge loss of 320 million yuan that year. Subsequently, Tinghua liquor did a lot of work in brand, channel, and consumer cultivation and communication, but the results were not obvious. From 2021 to 2022, the company recorded net losses of 249 million yuan and 288 million yuan, respectively, and in 2023, it is expected to record a net loss between 222 million yuan and 287 million yuan.
Zhang Xuefeng once had high hopes for Tinghua liquor. In April 2021, he stated publicly, 'It is expected that Tinghua liquor will reach 30 billion yuan in sales within 5 years.' Now, that dream has become wishful thinking. After being named on the 3·15 Gala, Tinghua liquor advertisements were dismantled, products were removed from shelves, and regulatory authorities conducted inspections. In response to media reports, the stock exchange and the CSRC issued regulatory letters and supervision and inspection notices. Today and in the coming days, it will be endless pain for investors in Qinghai Spring.
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