意大利贵宾

The following article is from Forbes, authored by Forbes China:

Top 100 Venture Capitalists ? Song Xiangqian

"Investment in consumption should be based on insights into human nature. If you observe the various aspects of human life, if you can immerse yourself in the hustle and bustle of everyday life, and help ordinary people make better buns, fried dough sticks, melon seeds, and soy sauce, providing them with better clothing, food, shelter, transportation, education, entertainment, medical care, and elderly care, such a career is significant." These are the words of Song Xiangqian, Founding Partner and Chairman of Harvest Capital.

What makes 2021 special for Song Xiangqian? Just in the latter half of this year, "the first stock of functional beverages," Dongpeng Beverage, went public with a market value surpassing 100 billion yuan, Wenheyu completed its Series B financing, and "the first stock of Chinese fast food," Laoxiangji, initiated the A-share IPO process... The "sniper" Song Xiangqian targeted not only companies with a market value of trillions of yuan but also the backbone and hope of China's consumer industry.

As a veteran who has been deeply involved in the investment industry for more than twenty years, Song Xiangqian has served in positions at Everbright Securities and Guosen Securities, and was the Director and CFO of Huatai Securities. In 2007, Song Xiangqian founded Harvest Capital and has since focused on investing in China's consumer and modern service industries, with a cumulative asset management scale exceeding 80 billion yuan.

For fifteen years, Harvest Capital has been cultivating the consumer sector, successively investing in leading companies such as Qiaqia, Jiada Soy Sauce, Aurigen, Babimantho, Laoxiangji, Amoeba Underwear, Jiabaoli, Xiaoguan Tea, Meituan, Dongpeng Beverage, Wenheyu, and many others. With the assistance and support of Harvest Capital, these familiar names have gradually become the backbone of China's consumer market, and Harvest Capital has developed into a leading investment institution in China's consumer industry.

In the field of equity investment, Harvest firmly believes in the power of long-term value, always keeping a low profile and working hard in the consumer sector. When it comes to why he chose to focus on consumption, Song Xiangqian openly admits that it is related to his own experience. Song Xiangqian's mother once started a business, engaging in small businesses such as clothing and catering, which allowed him to experience firsthand the challenges faced by entrepreneurs.

Graduating from university with a degree in literature has also given Song Xiangqian a patriotic sentiment of "helping the world." For him, consumption cannot be separated from insights into human nature; consumption embodies the various aspects of human life.

Harvest Capital focuses on three types of enterprises: first, companies in essential high-frequency sectors, focusing on investing in companies with the characteristics of long-term and compound growth in basic necessities of life; second, growth brands in optional consumption sectors characterized by consumption upgrading and sinking markets; and third, innovative and iterative companies that combine traditional consumption industries with technological progress. Only in major sectors can major companies emerge, and only in major companies can good products be produced.

From a methodological perspective, Harvest has formed a stable investment logic, focusing on three "buying certainty": first, buying industry development (major industries), second, buying enterprise growth (major enterprises), and third, buying the growth of entrepreneurs' learning ability and character.

Song Xiangqian believes that the human factor is crucial. Harvest also attaches great importance to the combination of "people and things" - companies are made by people, reflecting the match between people and things, or what is known as "timing, place, and people."

Song Xiangqian pointed out that although the consumer industry seems to have a low barrier to entry, in fact, the competitive barriers are very high. A consumer goods company that wants to become the way of life of the Chinese people and become a national-level brand has a long way to go. First and foremost, it must have a good original intention and be willing to create good products and services for consumers. "To become a national brand, you must become a brand of mind. If the people endorse you, you will have the ability and potential to create a brand and achieve better unit prices and repurchase rates."

Song Xiangqian used the term "national trend" as an example. In recent years, "national trend" has become a hot consumer trend, and domestic products have become fashionable. However, at the same time, many former time-honored Chinese brands have declined.

Song Xiangqian believes that today's Chinese consumer market has rapidly entered the era of consumer sovereignty. The reason why some old Chinese brands cannot complete the refreshment, iteration, and progress of their brands, and cannot synchronize with the lifestyle of the people, is not because they are "old-fashioned," but because they ignore the current consumption environment, scenes, product, and service needs of young consumers. They have "confiscated" the rights of consumers. "To reverse the decline and attract young people, traditional brands should see what is happening around them. Brands should provide what users need, and where users are, the brand should appear. Respecting consumers is the primary principle."

Furthermore, if a brand does not have good products, no matter what method it uses to sell them, it will inevitably fail. Only ultimate products have the power to penetrate through the mist of time. Essentially, this is also the competitive advantage of products created based on deep insights into human nature by brands, thereby establishing commercial competitiveness primarily based on humanistic values. Good product strength may lead to good sales and higher gross profit and enterprise efficiency than peers.

Consumption is also an industry of "youthful vitality," continuously testing the innovative and iterative capabilities of brands. Song Xiangqian admitted that in the current era of technological upgrades and information overload, there is a need for systematic methodologies on how brands can better express sales touchpoints and detonate aggregated value. This places higher demands on entrepreneurs and brand owners. This also explains why Harvest attaches so much importance to entrepreneurs' character, mental strength, and continuous learning ability.

In the current context of consumption upgrading, Generation Z is gradually becoming the main force of consumption, and the next 20 years will be a super era for China's consumer service industry. In this process, super companies will inevitably emerge. What Harvest  Capital needs to do is to find these "seed players," accompany them from small to large, and make them strong from big.

China is becoming the world's largest single social consumer market. National brands are emerging like bamboo shoots after a spring rain, and "national" will eventually become "worldly." However, behind national pride, we should also be aware that China is transitioning from the third consumption era to the fourth, with glaring social stratification highlighting the widening gap between the rich and the poor.

According to data from the National Bureau of Statistics, about 80% of China's population

 still has a living standard below the middle class, with around 900 million people having a monthly income below 2,000 yuan. Ninety percent of the population has a monthly income below 5,000 yuan, and the bottom 25% of the population collectively owns only 1% of the total wealth in society, while the top 1% of the population holds 30% of the total wealth.

Song Xiangqian believes that Chinese entrepreneurs and investors must understand that the era of pursuing capital expansion regardless of consequences has ended, and a new era prioritizing fairness over efficiency has arrived. "The country advocates common prosperity and emphasizes the third distribution, aiming to raise the income level of the middle-income group and strengthen the size of the middle class. When the per capita national income level is raised, and per capita disposable income is improved, China's domestic demand market can find sustainable momentum, and China's consumption will truly be ignited." Song Xiangqian pointed out that under the visionary policies of the government, Harvest will continue to support Chinese consumption, support national brands, cultivate champion enterprises, and create greater consumer benefits.

Looking back on the 15 years of hard work at Harvest, Song Xiangqian has always insisted on doing difficult but correct things. "Every institution has its own characteristics, with arbitrage companies and value investment companies; companies obsessed with speculative forces and companies that believe in the time compound value movement. As a highly vertical investment company, HarvestCapital focuses on value creation. Focusing on one thing brings professional value, truly empowering the market, enterprises, and platforms, being needed, and therefore being respected." Song Xiangqian said.

"In the next 20 years, it will be a historic window for Chinese consumer brands to become global brands." Faced with the consumer market, Song Xiangqian has more ideas and ambitions. "In this super era, plan and act, follow the trend, stand with the people, deeply understand the people's lives. With the heart of benefiting others, explore more possibilities in a longer time cycle."