Deconstruct Huaying New Investment In Chinese Goods: New Consumer Brands Welcome The Golden Age, And Digitalization And Supply Chain Are Two Major Dividends

The PE/VC market in 2020 seems to be depressed, but it is surging under the surface.

After the epidemic situation entered a stable period, investors quickly returned to busyness. Moreover, at the annual meetings of major institutions and industry forums, cross-border and frontier, greed and enterprising, and seeking certainty in uncertainty have become hot topics for investors.

"The external world is constantly changing, passively accepting change is called 'adaptation'; actively embracing change is' evolution 'or' iteration '." In the opinion of Ji Wei, the founding managing partner of Huaying Capital, the consideration of boundary expansion is mainly based on, first, whether there is an opportunity for the track, and second, whether the team genes are suitable.

Huaying Capital was founded in 2008, when the domestic entrepreneurial trend began to emerge, and it was also the originator of RMB equity investment funds in the same period. Today, the team manages more than 6 billion yuan in total and invests in nearly 180 enterprises.

In the past 12 years, the layout of Huaying Capital has focused from the initial digital content related industry, to the scene flow entrance and realization, and then to consumption, technology and enterprise services. At present, it has formed two major bases of large consumption and technology.

"Our capability circle has always been in the field of the digital economy, focusing on the two main lines of people and technology for investment." At the 2020 annual conference of Huaying Capital in September this year, Ji Wei said that Huaying Capital has gone from the comfort zone of digital content to the vast world of consumption upgrading.

The era of new domestic products

When Huaying Capital was founded, it was in the infancy of the domestic Taobao brand. The team kept an eye on the Taobao brand and even the broader consumer brand investment field, but it rarely made any moves.

In 2015, Huayin Capital officially entered the field of local consumer brand investment, laying out a number of subdivisions such as food and beverage, beauty care, lifestyle, and representative projects including Panda Brewing, Wenian (Li Ziqi), Zihi Pot, ITO suitcase Maia Active、 Xiao Qiao sports, etc.

The launch of Taobao brand spring tide started with Taobao Mall, which launched B2C business on Taobao. com, and a group of private brand entrepreneurial teams grew rapidly with the support of platform funds and traffic. After the launch of the "Double 11" network in Taobao Mall, many operators of Taobao brand entered the capital vision, which contributed to the financing tide of Taobao brand at that time.

Several years later, some of the early Taobao brands got rid of single dependence and achieved multi platform development. Three of them, Squirrels and Xiaoxiong Appliances, have completed IPO listing, and Rongmei is in the process of listing on the GEM; More brand entrepreneurial teams gradually declined and finally bid farewell to the market due to the traffic dependence of a single platform.

"Their ceiling will be much higher than that of the Taobao brand in those years." Ji Wei believes that compared with the entrepreneurs in the era of Taobao brand, the founders of emerging consumer brands in the new era of Chinese goods have very strong ability to integrate resources, learn and iterate. At the same time, the maturity of the supply chain has become the help of their organizational resources.

Ji Wei divides the development of Chinese local consumer brands into three stages: the era of traditional brands, the era of Taobao brands and the era of new domestic products.

In the era of traditional brands, the channel mode is highly dependent on the traditional offline channel, and the marketing delivery mainly depends on the high cost TV ads and star endorsements; The era of Taobao brand relies on the online traffic dividend of Taobao, which is correspondingly limited by the traffic squeeze brought by a single channel; The characteristics of the new era of domestic products are that content helps brands and channels cover online and offline in a diversified way.

Brand investment strategy

In recent years, Huaying Capital's investment in the to C end consumption field covers different themes such as emerging consumer brands, national trends, new retail and consumer services.

In the opinion of Wang Weiwei, the managing partner of Huayin Capital, the next 5-10 years will be a golden bonus period for new consumer brands, and the driving forces include new consumer groups, new channels, new supply chains, new teams, etc.

"Brand is a long-term construction process, which is based on the ability to provide good products and meet the needs of consumers," Ji Wei suggested.

In terms of the selection criteria of new domestic brands, combing some of the invested projects of Huayin Capital, we can find that they not only have outstanding performance in consumer insight and content marketing, but also have competitive advantages in product research and development capabilities, supply chain integration capabilities, and innovative organization building.

For example, Li Ziqi is a food brand that focuses on content, and Weinian has completed the establishment of IP and the establishment of its own brand product line by a MCN agency; Zihi Pot is the second venture of Cai Hongliang, the founder of Baicao Flavor. It not only defines the scene of "eating for one", but also cuts into several product categories of self heating food with the label of "Hermes in the self heating food industry"; Xiao Qiao Sports has explored the mode of "content+hardware" in the field of family fitness, and the founding team is also planning multiple product categories in the family health scene; PolyVoly has created popular online brands such as Sangu Amino Acid Shampoo and Rever Small Rainbow Bath Ball, and is also exploring the possibility of creating multi brand incubation through innovative organizational structure design.

The growth of a new generation of local consumer brands has a similar path: cold start through online marketing, make up for supply chain deficiencies in the growth process, improve product capabilities, gradually complete the expansion from single front-line to multi-channel, and quickly occupy the minds of users before the influx of competitors from the same segment track.

"Today, it is not the strong marketing ability and short-term rush to super popular products that can retain users and create value throughout the life cycle. Only when large companies can do all the new brands they need to do can they have the opportunity to form a real strong penetration." Li Zijia, founder of PolyVoly, told 21st Century Business Herald.

Talking about the future: efficiency+innovation

For PE/VC investors, the market is in the transition period of structural opportunities. In the current environment, the monthly growth of mobile Internet has peaked, and the disruptive opportunities brought by a new round of technology need to be explored.

"Everyone is still exploring the next direction of subversion." Ji Wei said that before the arrival of new structural opportunities, the investment keywords of Huayin Capital were efficiency and innovation, and the focus included three directions: media reform and product innovation, industrial digital upgrading, scientific and technological innovation, and domestic substitution.

Specifically, in the field of media reform and product innovation, the investment of Huayin Capital is divided into new brands, new services, new platforms, supply chain capabilities, brand going abroad, and part of the business restructuring of leading enterprises.

Ji Wei believes that the Chinese market has formed two major dividends in the past 20 years, namely, digitalization and supply chain, which "are the driving forces for new brands and new domestic products, and have given wings to new consumption".

From the perspective of the investment theme of New Guohuo, Huaying's earlier investment in content, channel and digital empowerment is the key to find and support local consumer brands. Judging from the invested cases, its projects in the new generation of consumer insights and new media channels include Kuaimei, Goumei, and Xiaoxuehai. In the field of digital empowerment, it has invested in sparrow e-commerce, Jiahe technology, zero eye intelligence, etc.

"We cannot follow the trend all the time, nor can we be bound by unchanging boundaries." If we do not keep pace with the times, we will lose our living space. Ji Wei said that Huaying's choice in facing the industry change is to find the ability circle of dislocation competition from transaction to in-depth service.

Now, the industry ecology of Huayin Capital in the emerging consumption field is taking shape. The strategy of "dislocation competition" can be seen from its investment in the field of consumer brands, or more recently, namely the aforementioned investment layout in the theme of new domestic products.