---
title: "What Does the Future Hold for Three Squirrels?"
description: "In 2003, at age 27, Zhang Liaoyuan became an FMCG salesperson, driven by a dream to become rich after a life-changing experience in 1994. After years of self-study and failed ventures, he founded Three Squirrels in 2012, which grew rapidly but faced stagnation, food safety issues, and IPO setbacks by 2017, leading to anxiety and a strategic overhaul."
author: "陈彦华"
publisher: "New Distribution"
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published: "2019-05-03"
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# What Does the Future Hold for Three Squirrels?

> In 2003, at age 27, Zhang Liaoyuan became an FMCG salesperson, driven by a dream to become rich after a life-changing experience in 1994. After years of self-study and failed ventures, he founded Three Squirrels in 2012, which grew rapidly but faced stagnation, food safety issues, and IPO setbacks by 2017, leading to anxiety and a strategic overhaul.

**In 2003, at age 27, Zhang Liaoyuan became an FMCG salesperson.**
**Initially, he just wanted to be rich.**
In 1994, when Zhang Liaoyuan was 18, his cousin took him on a spending spree of 3,000 yuan in one day—an amount that was almost a year's salary for an average worker at that time. "We bought 3-yuan bottled water to wash our hands." This was unbelievable to him, a "street punk," and standing beside them was a middle-aged man in his 40s waiting for the empty bottles. This deeply affected Zhang Liaoyuan: "I wanted to be a rich man like my cousin, not a bottle collector." Afterward, he harbored a dream to "change his environment"—to start a business.
"The shortcut to entrepreneurship requires understanding marketing." At that time, Zhang Liaoyuan believed that "marketing knowledge comes from reading relevant books." With little formal education, he began buying books, and this reading habit lasted 7-8 years. "Except for English, because I couldn't understand it." While reading marketing books, he also read biographies to understand human nature. "I share a common trait with Shi Yuzhu: understanding human nature."
**During those seven or eight years, Zhang Liaoyuan persisted in self-study while trying to start businesses.** "I set up street stalls, ran a cold drink shop, and sold VCDs." He never succeeded but kept trying. At 26, he was still drifting in society. He began to reflect: "In that environment, without money and without the right opportunity, starting a business wasn't feasible." Choosing a company to practice his years of accumulated marketing knowledge was the most practical step.
A year later, Zhang Liaoyuan "managed to get into" Anhui Zhan's Food Co., Ltd., which made nut products, responsible for frontline sales in Wuhu. That year, Wuhu became the largest market outside Zhan's home base. At 29, he was promoted beyond the usual process to deputy general manager of marketing, gradually building up Zhan's.
In 2009, at Alibaba's 10th anniversary celebration, Zhang Liaoyuan, founder of Three Squirrels, first learned about Alibaba and first took e-commerce seriously. The event, themed "New Business Civilization," had about 20,000 participants. He unexpectedly got a ticket, and in his own words, "It showed me a beam of light and ignited another passion." He saw many Taobao brands on the platform and took e-commerce seriously for the first time. After returning, e-commerce and the internet buzzed in his mind for a long time.
At the end of 2010, Zhang Liaoyuan felt the changes of the times: B2C e-commerce had arrived. Zhan's pecans stood out in Anhui's regional market, but it wasn't enough for Zhang Liaoyuan; he wanted to build a national brand. He launched Keke Guo, an online store selling pecans, which reached 20 million yuan in sales in 2011. **He realized that e-commerce could build a national nut brand, and by the second half of 2011, he insisted within the company that this was the only opportunity,** and that they could achieve 200 million yuan in three years. But others thought he was bragging; e-commerce was virtual and not as reliable as physical stores. Zhang Liaoyuan was obsessed.
The conflict between online and offline was clear. Zhan's boss was conservative. Zhang Liaoyuan believed that the time window for FMCG brands to establish themselves via e-commerce was within three years. In 2012, due to disagreements with management, he decided to resign and start his own business. At that time, everyone didn't understand: "You have a house and a car, an annual income of hundreds of thousands. What are you doing?" He invested almost all his savings—1 million yuan—to start a business. What if he failed? Zhang Liaoyuan had a tenacity to fight fate; he believed that life's ups and downs make a great leader.
Time flew, and by 2017, the poor boy Zhang Liaoyuan had become a successful figure in the public eye and a representative of internet food brands. Although he was a well-known success, Zhang Liaoyuan fell into deep anxiety in 2017, suffering from insomnia and turning to alcohol to sleep.
**Now rich but anxious, unable to sleep at night.**
Squirrel Daddy Zhang Liaoyuan revealed in an interview: "I often suffer from insomnia, and it's been worse in the past year or two. I can only use alcohol to help me sleep. I usually go home at 7 p.m., have dinner with red wine, and relax. If I can't sleep by 1 a.m., I drink another half bottle. **I'm not used to chatting with others; I usually figure things out myself and set my phone to do-not-disturb mode.**" Why is Squirrel Daddy Zhang Liaoyuan so anxious?
First, performance stagnation.
Since February 16, 2012, when Zhang Liaoyuan led a team of five initial members to found Three Squirrels in Wuhu, Anhui, the company maintained rapid growth until 2017. In 2013, annual online sales exceeded 300 million yuan; in 2014, total sales reached 900 million; in 2015, sales were 2 billion; in 2016, annual sales exceeded 4.4 billion. Starting in September 2017, growth stopped, continuing through Double 11 and the New Year shopping season.
**For internet brands, without strong offline channel support, a halt in online growth is terrifying.**
Second, food safety issues.
From mid-2016 to August 2017, 14 consumers sued Three Squirrels, involving food products like lotus root, snow chrysanthemum, freeze-dried lemon slices, melon seeds, and Hetian jujubes, with claims totaling over 2 million yuan. On August 15, 2017, the Food and Drug Administration's notice on three batches of unqualified food (No. 135 of 2017) stated that pistachios produced by Three Squirrels Co., Ltd., sold on Tmall Supermarket, had a mold count of 70 CFU/g, 1.8 times higher than the national standard (not exceeding 25 CFU/g); the inspection agency was the Shanghai Institute for Food and Drug Control.
For Three Squirrels, which has over 1,000 SKUs, **the internet plus OEM model poses a strong challenge to its supply chain. Food safety issues will continue to plague its development and pose a significant threat to brand reputation.**
Third, IPO obstruction.
On April 22, 2017, the snack food e-commerce company "Three Squirrels" officially submitted its IPO prospectus, planning to list on the ChiNext board. On December 12, 2017, the CSRC announced that, given that Three Squirrels Co., Ltd. still had matters requiring further verification, it decided to cancel the review of the company's issuance application at the 72nd meeting of the 17th Issuance Examination Committee. According to the CSRC's previous arrangement, Three Squirrels' IPO application was scheduled for review on December 13.
During its development, Three Squirrels continuously received capital investment, and investors were seeking exit mechanisms. **An IPO is the best exit option for capital; obstruction means Three Squirrels will face greater pressure from investors.** It also means that in future competition, compared to listed rivals like Qiaqia Food, Lai Yifen, Yanjin Puzi, and Baicaowei (acquired by listed company Haoxiangni), it will face greater competitive pressure.
**The road ahead is long: What is the prospect for Three Squirrels?**
As a brand that grew by riding the internet wave, Three Squirrels maintained high growth from its founding in 2012. Five years later, everything changed—from consumers to the Tmall platform it relied on, to competitors, to the company itself. Everything is testing this internet food brand.
**First, on the consumer front, the "wow point" has risen.** In September 2017, Three Squirrels fell into a sales stagnation that lasted through Double 11 and the New Year shopping season. **The stagnation is ultimately due to the disappearance of traffic dividends, shifting from a growth market to a stock market. There is still business in the stock market, but it demands higher product quality and user experience.**
Brand interaction is the first step that e-commerce snack brands think of, and you can already see their moves:
Baicaowei spent 20 million yuan to bring in Yang Yang as a spokesperson. Leveraging fan power, Baicaowei created the topic "Yang Yang and Baicaowei have a date" on Weibo, generating over 50 million reads and 390,000 discussions. Baicaowei, which also frequently sponsors music festivals and does product placements in TV shows, plans to use marketing to raise brand awareness among young people and directly engage with these consumers;
Liangpin Puzi found Huang Xiaoming. Besides creating marketing campaigns like "Feed Love on Qixi" on social media, the brand also used WeChat to distribute red envelopes, directing traffic from marketing directly to its WeChat mall and online flagship stores;
Three Squirrels spent 5 million yuan on a 15-second ad that aired four times during Tmall's Double 11 gala, once again marketing its cute squirrel image to consumers. In the future, e-commerce snack brands will take more actions to attract, interact with, and cultivate loyalty among consumers, and these actions will further raise the consumer experience "wow point."
**Second, on the platform front, dividends are fading.** In the nut market that no one paid attention to, Three Squirrels quickly made itself a well-known online nut brand. When asked about the reason for the brand's popularity, Zhang Liaoyuan replied, "Three Squirrels' success lies in stepping on the rhythm of internet development at every step. Today, don't talk about giving me 1.5 million yuan (the angel round amount Three Squirrels received); even if you gave me 100 million, I couldn't create another Three Squirrels on Tmall. There's no chance because the Taobao dividend is gone."
The so-called "Taobao dividend" refers to the "benefits" Tmall gave merchants in its early days. Three or four years ago, when Three Squirrels was just founded, the number of merchants and categories on Tmall was not as large as now. For example, if you wanted to buy nuts, there were few merchants to search on Tmall, and Three Squirrels could easily appear at the top of search results. Now consumers have more choices besides Three Squirrels. More choices mean traffic diversion and intensified competition.
**Third, on the competitor front, they are more numerous and stronger.** Snack e-commerce has transitioned from the stage of cultivating consumers to the stage of competing for them. This raises a new question: Just as in the past, when a consumer stood in front of a supermarket shelf, would they hesitate between Pepsi and Coca-Cola?
Now, these nut e-commerce brands have become the objects of choice. In other words, when Three Squirrels, Baicaowei, and Liangpin Puzi transform from ordinary Taobao stores into brands, they face a broader and more discerning market.
In this environment, how should they maintain brand competitiveness and make consumers choose them over competitors?
Moreover, when Three Squirrels is no longer synonymous with nuts but with snacks, and expands from online to offline, it will face an unprecedented number of competitors! In addition to e-commerce brands with offline advantages like Liangpin Puzi, Baicaowei, and Lai Yifen, brands like Panpan, Qiaqia, Daliyuan, Mondelez, Mars, and Danone will all become competitors, each with their own significant advantages.
**Fourth, on the self front, reflection and improvement.** Corporate culture is the boss's culture; the quality of a company's development depends on the speed of the boss's own progress. **Zhang Liaoyuan realized he had made a mistake in the past few years—overestimating the organization's capabilities while neglecting the CEO's core value.**
Zhang Liaoyuan once reflected: "I used to think my core competency was marketing, and I didn't understand the supply chain, so I left it to others. Now I no longer believe that. I've taken charge of product quality, R&D, and packaging. I don't manage finance, logistics, PAC, sales channels, pricing, or procurement."
If the product is good, even a fool can sell it. In the first one or two decades of a company, the CEO is the core value. The most core things should be done by oneself; don't think about hiring someone to solve problems. Regarding talent, Three Squirrels used to not use much external talent; it preferred to cultivate its own people. Not introducing external forces early was correct because e-commerce was a new tool, and there were no mature talents in the industry; "children of the family" were better. However, when switching to a different track, the competitors are different, and if the speed of talent development cannot keep up with the company's growth, external help is needed.
In 2018, Three Squirrels established an office in Nanjing because the headquarters in Wuhu had underdeveloped transportation, while Nanjing offers direct access to Hangzhou and Shanghai, making it convenient for external talent to commute. In this way, **Three Squirrels transformed from a closed or regional organization into a national one.** Now, the entire organizational model of Three Squirrels is based on values, oriented by business results, with competition as a principle and promotion as a driving force. **It has introduced the "361" principle in management: within a year, 30% of people are promoted, 60% can get a salary increase but not promotion, and 10% are eliminated.**
Squirrel Daddy Zhang Liaoyuan, through self-reflection, is leading Three Squirrels on a journey of optimization in innovation, organization, and model.
After a year and a half, Three Squirrels' direction, positioning, model, and organization have truly been established. The 2018 Double 11 was a test to see if the model could work, and it was the most critical time point. The final scorecard for Double 11 was 680 million yuan, slightly below the target, but Zhang Liaoyuan was still satisfied because sales from the 1st to the 11th increased by 41% year-on-year, and achieving that number was not easy. Perhaps the anxious Zhang Liaoyuan can breathe a little easier!
In February 2014, Three Squirrels, with only 300 million yuan in sales, set a target of 10 billion yuan in sales by 2020. Today, it is foreseeable that the 10 billion yuan target by 2020 is within reach! But facing consumers with higher expectations, fading platform dividends, and more numerous and stronger competitors, Three Squirrels' future growth path is destined to be less smooth than before. But regardless, the achievements of Three Squirrels under Zhang Liaoyuan's leadership not only bring good news to foodies but also serve as an inspiration and role model for many young people!
Source: China Marketing Communication Network
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**China FMCG + Internet Professional New Media**
**Committed to FMCG manufacturers' transformation and upgrading and channel digital solutions**


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