What ever happened to the titans of Chinese commerce? That’s a question we’ve been pondering here at CNBC.
After all, historical merchant groups like the Jin merchants, Min merchants, and the Zhejiang and Jiangsu merchants were titans, fortunes that made empires.
Take the Jin merchants, for instance. Most people’s minds likely jump to Qiao Zhiyong.
A decade ago, the drama “Qiao Family Compound” introduced many to the legendary life of this Jin merchant.
Qiao Zhiyong not only successfully managed the business of the Baotou Fuzihao, but he also established a banknote exchange, achieving a network across the country.
Moreover, the Jin merchants valued reputation and integrity above all else.
When Qiao Zhiyong discovered that a workshop employee had sold adulterated sesame oil, he immediately recalled all the oil and refunded the entire purchase price.
Such events are much more than just the personal experiences of Qiao Zhiyong, these anecdotes exemplify a whole generation of Jin merchants.
Then, you have the Min and Wenzhou merchants from the coastal regions, who operated with a distinctly different style.
While the Jin merchants were building their banknote networks, merchants from Fujian, defying the ban on private maritime trade, were selling silk and porcelain overseas—risking everything for riches.
Wenzhou merchants didn’t start with banknotes or large ships, but the first individual industrial and commercial household after the reform and opening up was born in Wenzhou.
These groups, with their distinctive characteristics, have left indelible marks on China’s commercial history.
But times have changed. We rarely hear about these merchant groups today. CNBC has been wondering, in the age of the internet, how these once-powerful merchant groups have evolved?
We recently spoke with three merchants from Shanxi, Fujian, and Zhejiang. Through their experiences, we’ve learned that these historic merchant groups haven’t disappeared, but have instead found exciting new directions.
The rise of the Jin merchants was closely tied to the opportunities of their time.
The “Kaizhong System” of the Ming Dynasty stipulated that those who provided grain for the border troops could obtain official licenses to sell salt.
For Shanxi, this was a golden opportunity.
First, Shanxi bordered the military bases to the north and the grain-rich Henan to the south, which meant short and fast grain transportation. Second, Yuncheng itself had the Hedong Salt Field, giving it a major resource advantage.
So, the Jin merchants made their first fortune with the highly profitable salt trade.
As their businesses expanded, the Jin merchants also entered the banknote business, which emphasized credibility the most. In addition, Shanxi has a custom of worshiping Guan Yu, emphasizing righteousness and integrity, and the old Jin merchants known for this.
Besides Qiao Zhiyong, Lei Lüt, founder of China’s first banknote exchange, “Rishengchang,” also built a fortune by the virtue of trust, converting one banknote after another into vast sums of silver.
The present day Jin merchants no longer trade salt or run banknote exchanges, but the spirit of the older generation of Jin merchants has been carried on and adapted.
Take Shanxi agricultural enterprise Jinxiu Daxiang, for example. In 1998, founder Lǚ Ruifeng started with just 300 laying hens, and two generations turned it into a large company with revenue of 30 billion yuan. Today, it is a stable supplier to well-known brands like KFC and Shuanghui.
Li Shixuan, a young man born in the 90s in Lüliang, is another good example.
After a failed start-up after college, Li Shixuan returned to Wenshui County, where he realized that his hometown had excellent beef that wasn’t selling for a good price.
Photographer: Wu Liuhong
So, Li Shixuan decided to use e-commerce for a “second start-up,” selling Wenshui beef nationwide.
Building on his experience on Pinduoduo, Li Shixuan’s beef, which was available for only one year, already had sales of over 20 million yuan and later increased sales to 150 million.
With the idea of building a brand, Li Shixuan would provide employee training and hire talent, and also tightly controlled the product. For example, after they buy chicken legs from outside, they have to reprocess them. Those with feathers or bruises would be thrown away.
Most importantly, Li Shixuan carries on the Jin merchant spirit of “righteousness.”
Photographer: Wu Liuhong
For example, if the market price of live cattle is 10 yuan per jin, he will let the breeders raise them for another ten days, and if the market price drops to 9.5 yuan after ten days, he still buys them at the original 10 yuan. Moreover, he gives a part of the profits from selling beef to the breeders.
In Li Shixuan’s view, this seemingly “disadvantageous” model allows him to go further. Regardless of the market conditions, he will always have supporters behind him.
Whether it’s Qiao Zhiyong in the past or Li Shixuan today, the Jin merchants’ story, at its core, is still about “trust and righteousness.”
Fujian, nestled by the sea, epitomizes: “eight mountains, one water, and one-tenth farmland.” With agriculture offering limited prospects, Fujian people were compelled to look to the vast ocean for their livelihoods.
Constantly dealing with the sea requires one to be ready to gamble with fate. That’s why the willingness to take risks and fight hard may be ingrained in Fujian people’s DNA.
The 80s Jinjiang shoe merchant Chen Qingfu, whom CNBC has interviewed, is a typical example of the Min merchants’ unyielding spirit.
Photographer: Zhan Zhao
Like many of his peers, Chen Qingfu began working right after graduating from junior high school. At age 19, with no money or experience, he dared to start his own stall by borrowing 50,000 yuan. Despite three failed brand agencies, Chen Qingfu’s sharp edge was not dulled.
He even made a decision that made everyone hold their breath: acquiring Bullfighter.
In 2021, Bullfighter has become a shoe company plagued by debt and could only maintain basic operations by selling tags. But Chen Qingfu spent over 100 million yuan for this acquisition.
His peers, even his family and friends, thought he was crazy.
According to Chen Qingfu’s recollection, the acquisition negotiations alone took more than six months. During that time, he was often too stressed to sleep the whole night, sometimes still negotiating with the other party at two or three o’clock in the morning.
During the conversation, CNBC also noticed that Chen Qingfu used such terms as “fighting with one’s back to the water” and “to die is to live” to describe this acquisition.
Fortunately, this gamble paid off.
After acquiring Bullfighter, Chen Qingfu changed its previous mode of selling tags, invested heavily in material research and development, and product design. He then spent several months identifying Bullfighter’s product gene of “brown” and “casual Martin boots,” attempting to expand in the sub-segments.
After three years of hard work, Bullfighter revived under Chen Qingfu’s leadership.
But his ambition doesn’t stop there. In the future, he also wants to make China’s Bullfighter a global brand.
In CNBC’s opinion, to understand this slightly crazy persistence of Chen Qingfu, it may not be enough to find the answer from the inheritance of the Min merchants’ spirit; you may also need to understand the Jinjiang that is behind him.
Known as the “Shoe Capital of China,” Jinjiang started with OEM and had a strong supply chain. One out of every five sports shoes worldwide come from Jinjiang.
Later, by using the model of “celebrity endorsement + CCTV advertisement + offline store opening,” Jinjiang achieved an industrial upgrade. At that time, many national brands like Anta and 361° also appeared.
But soon, this set of methods didn’t work. Many brands, such as Bullfighter, declined.
So, CNBC believes that the reason why Chen Qingfu unhesitatingly acquired Bullfighter is because he wants to personally create a model to promote the second wave of product and design-focused industrial upgrades in the Jinjiang shoe industry.
This involves the inheritance of “working hard to win” and transforming into a long-term view beyond traditional thinking.
When mentioning Wenzhou people, most people’s first reaction is probably that they are good at business, often referred to as the “Eastern Jews.”
Similar to the geographical environment of Fujian, Wenzhou, Zhejiang, also has a situation where nature does not give people a good deal, and thus, they can only find opportunities through their own efforts.
After the reform and opening up, when other places were still figuring out how to develop the private economy, Wenzhou took the lead.
Take the “Wenzhou Model,” which came from a front-page headline of the Liberation Daily in 1985. Wenzhou promoted the model of production based on households to the people across the country.
Living in factories, the whole family are hard workers. No high-tech is involved, but they produce small things like buttons and zippers, and then send someone who can speak well out to run the market. It doesn’t seem to have much technical content, but it is this model that allows Wenzhou’s products to be sold all over the country.
Moreover, the sense of unity among Wenzhou people is extremely strong, and it is not a good idea to work alone outside, so they establish private chambers of commerce to help each other.
Even today, there are still many “front shop, back factory” family workshops in Wenzhou.
However, the times are developing, and Wenzhou businessmen are also constantly evolving.
Take Wang Kai as an example. After retiring from the army, he started businesses in Beijing and his hometown of Hebei. Then, he went to Wenzhou to join his brother-in-law’s women’s shoe factory. Although he is not a native of Wenzhou, he also embodies the agility of Wenzhou businessmen.
As soon as he arrived at the factory, Wang Kai found that the old method of waiting for sporadic orders to come to the factory was not only costly but also inefficient.
So, he emulated the large factories by holding ordering fairs, generating 50 million in sales in two days, with everything paid in cash. The orders equaled the output of the previous three months.
Later, when transforming to e-commerce, Wang Kai was also among the first to do live streaming in Wenzhou. He started live streaming on the production line without any preparation, with a mobile phone.
In the live streaming room, Wang Kai not only attracted countless fans through his persona but also thought of using live streaming to save trouble for designers.
Through live streaming, Wang Kai allowed consumers to make their own decisions, “click 1 for the left style, click 2 for the right.” In the most direct way, Wang Kai increased the rate of mid-range models of women’s shoes in the factory from 20% original to 60%.
Even now, Wang Kai still streams live two or three times a week. Occasionally, people from physical stores come to learn live streaming, and Wang Kai also shares his knowledge, mentoring several apprentices.
In Wang Kai, the characteristics of Wenzhou merchants are no longer limited by region, but are synonymous with actively seeking changes and daring to make mistakes.
From Shanxi and Fujian to Wenzhou, the merchant groups influenced by different regional cultures have their entrepreneurial styles.
But one thing is certain, with the development of new technologies, these merchant groups have also begun to talk about live streaming data, link optimization, and brand value…
CNBC believes that through e-commerce platforms, more and more merchant groups will emerge in the future.
Taking Pinduoduo as an example, this year’s 100 billion yuan support further expands the subsidy and traffic support for merchants, allowing more small and medium-sized merchants with good ideas and products to be seen by consumers.
Pinduoduo also stated that over the next three years, it will allocate 100 billion yuan of resources to help small and medium-sized merchants in industrial zones build new quality products and open new markets, thus achieving high-quality transformation. Wang Kai from Wenzhou, Li Shixuan from Shanxi, and Chen Qingfu from Jinjiang, all emerged in this process.
Today, Wenzhou people still say, “Rather sleep on the floor than be a boss.” People from Fujian believe in “working hard to win,” and people from Shanxi view honesty and integrity as the threshold for doing business.
At that time, there will not only be stories about Jin, Min, and Wenzhou merchants, but also about Dian, Gui, and Chuan merchants.
Original article, Author: Tobias. If you wish to reprint this article, please indicate the source:https://aicnbc.com/3027.html
