Completely overturned! Once 7.8 billion, the old domestic products recommended by CCTV, why are they declining now
Thanks to the one that started in September last year"Domestic product boom"2023 has become a key turning point for many domestic brands.
In the era of mobile Internet, everyone is speeding up, and the prospects of brands are getting better and better.
However, the 37-year-old national brand has also had a rough year.
In January last year, Jiangsu Longrich Biotechnology Co., Ltd. was hereinafter referred to as"Longrich") was officially established.
This caused a huge sensation at the time, and readers who followed current financial affairs should still remember it vividly.
According to their report, the company's chairman, Xu Zhiwei, was released on bail pending trial by Suzhou ** on suspicion of illegal fundraising.
More than 1The equity of 500 million yuan was frozen for six months.
Over the next year, news about Longi appeared in public from time to time, but it was always negative.
For example, in February last year, in Guangzhou"Longway Asia Operations Center"The building is empty.
In addition to the closure of hundreds of branches and stores, the company's operations are clearly not optimistic.
And just a week before this year's Chinese New Year, LoneStar is back in shocking ways.
Its cosmetics subsidiary, which holds more than 65 percent of the shares, was forced to pay 97.4 million yuan, and the chairman of the company is none other than Xu Zhiwei's son, Xu Xiaoping.
If you belong"Post-80s"or"Post-90s", I think"Longrich"The name is not new to you.
Even if you haven't used the product yourself, you'll remember the Langway commercials that were everywhere on TV 20 years ago.
In the nearly 40-year history of the Longrich brand, snake oil skincare products have been a well-deserved part of the company"Cash cow"。
At its peak, it generated an annual revenue of up to 7.8 billion yuan for Longhao.
As"The originator of talent shows"The sole owner of the title, Longrich benefited from CCTV's direct ** for two months, spending huge sums of money to fight for popularity, and its financial resources can be seen.
As a giant in the daily chemical industry, the Langus brand has a long history and is loved by the public, and once had an unlimited reputation.
Why are you now at the point where you are suspected of breaking the law?
Before falling into the embarrassing situation of chicken feathers, Longrich also had high hopes.
In one fell swoop, it became the most promising national brand in the field of daily chemical products, breaking the siege of foreign companies.
This position did not come suddenly, at the beginning of Xu Zhiwei's business, a pair of fleshy hands seemed to be really magical.
Liu Zongyuan's play "The Snake Catcher Says" in the Tang Dynasty tells the bitterness and incompetence of the snake catcher group.
The poor had to take risks catching snakes for guts in order to earn more money to make ends meet.
It is truly sad that three generations of a family have lost their lives due to a slip of the tongue.
The young Xu Zhiwei is like Liu Zongyuan's snake catcher Sister Jiang.
In the early 80s of the last century, in order to improve his family's situation as soon as possible, Xu Zhiwei, who was born as a carpenter, decided to change his career to become a snake catcher.
Every morning at 4 a.m., they have to go out to catch snakes, and when they return home, they have to go door to door to get snake gall bladders, skin snakes, and then regularly sell them to Chinese medicine merchants who come to the village to receive and exchange money.
However, compared to the snake catcher ancestors who only knew how to fight alone, Xu Zhiwei is obviously much smarter and better at using resources.
After having some savings, Xu Zhiwei organized a team in the surrounding villages and towns"Snake catchers"。
After people were trained in snake catching techniques, the scale of snake breeding expanded rapidly, and the production of a series of products such as snake sacs, snake skins and snake meat increased significantly.
Once production is secured, Xu Zhiwei will no longer sit and wait for middlemen to receive the goods as he did in the past.
Instead, they began to take the initiative to go into the city to promote their products and establish partnerships with processing plants downstream of the industrial chain.
In 1986, Xu Zhiwei's snake company was established in Changshu, Jiangsu.
The small company of just 40 people was the predecessor of the future chemical giant Longrich.
Traditionally, there have been only two most lucrative businesses in the snake catching industry.
The first is the sale of snake gall bladder.
As an extremely precious medicinal material in traditional Chinese medicine, snake gallbladder is cold, has the effect of dispersing wind and dehumidifying, cooling and brightening the eyes, and natural snake gall has always been valuable.
The second is the sale of snakeskins.
In addition to being processed into traditional Chinese medicine, snakeskin can also be used to make rattles for musical instruments such as erhu and jinghu, as well as snakeskin drums.
But in addition to this, snake meat occupies the majority of the snake's body and does not bring much economic benefit.
In fact, most snake meat is edible, with the exception of a few venomous snakes.
For example, this year's"Salt and Pepper Snake King"It is famous for "Flowers" and is considered quite delicious.
In fact, although in the 80s of the 20th century, it was not illegal to eat snake meat, people could not help but feel disgusted with snakes.
Those who dare to take risks are still in the minority, and most of the snake meat produced in Changshu becomes the raw material for farmers' composting.
A small portion of the snake meat traveled across the ocean to Japan, where it was made into a species called"Snake powder"The skincare products are not expensive, but the sales are also very good.
At that time, most Chinese snake companies were happy to export, because the Japanese were willing to buy snake meat, but Xu Zhiwei was the only one with a flexible mind:
This kind of snake powder, can we also try to produce it? "
It was this idea that helped Xu Zhiwei realize industrial modernization, and the Jiangsu native resigned from the chemical giant Daily Chemical.
In 1995, Xu Zhiwei's snake company finally broke through the R&D bottleneck.
It has launched its own line of snake oil health products, including a full line of snake oil hand creams, snake oil powders, and snake oil balms.
At that time, there had never been a snake-based health supplement on the Chinese market.
As soon as Xu Zhiwei's snake oil series was launched, it immediately aroused great interest among consumers.
In 1995 alone, Xu Zhiwei's company's annual profit was around 1,200 yuan, and he also obtained it"The Chinese Snake King"The title.
It was also in this year that the Snake Industry Company completed its shareholder reform"Longrich"Biotech *** was also established in this year.
The English name Longrich also clearly indicates Xu Zhiwei's ambitions:
Rich but not decaying"。
The decade from the late 90s of the 20th century to the beginning of the 21st century was the most effective period for television advertising.
As access to information is still relatively limited, the telecommunications have received widespread attention.
This also means that as long as brands are willing to invest heavily in TV advertising and marketing, it is possible to achieve Xu Zhiwei's popularity in this way.
Since 2004, Longrich has won awards in the advertising department of **TV station for three consecutive years.
Firmly occupy the advertising space of daily chemical products during the CCTV period, and carry out brand **.
It's not enough to just occupy the advertising space, to improve the effectiveness of the advertising space circle, you also need to choose the right brand image spokesperson.
Who is the hottest post-millennium?
The male star is none other than Chen Kun, who has starred in "The Family of Gold Powder", and the most potential actress is Tang Can, who became popular with the song "10,000 Years of Happiness".
All of this was prepared by Longrich to raise support, borrowing the influence of the artist to strengthen his presence.
Through a series of efficient marketing mixes, Longrich achieved total product sales of RMB 7.8 billion in 2008.
It has the strength to compete with foreign giants such as Procter & Gamble and Unilever.
Whether it's for show or genuinely for the sake of employees.
Longrich also awards the sales champion during the annual dividend period, and Mercedes-Benz and BMW are randomly selected to show luxury.
Jumping out of the circle before selling goods is the common business logic of brands emerging at the beginning of the new century, and Longrich is no exception.
But unfortunately, with the gradual increase in popularity, Longruiqi's marketing route is becoming more and more biased.
Given that the influence of TV advertising was waning and the return on investment of advertising marketing was no longer impressive, Xu Zhiwei thought of a new marketing avenue: the transformation to direct sales.
However, it was precisely because of this fatal shift that the initial highs momentum of Longevity began to decline.
Direct selling, as the name suggests, is"Peer-to-peer direct marketing"It is a small-scale direct sales model such as person-to-person sales to conduct product transactions.
Obviously, this distribution model won't be too efficient, but it's certainly more effective than advertising.
But in the eyes of entrepreneurs, one of the biggest advantages of dropshipping is that it is much cheaper than advertising.
According to LoRho's internal calculations, net profit will continue to improve even after transitioning to direct sales, even if sales drop below 50% of what it used to be.
But have you ever felt that something was wrong? There doesn't seem to be a clear line between dropshipping and MLM.
Xu Zhiwei publicly announced Longrich's direct selling model, introducing his acquaintances to the direct selling system"Go live"You can get a reward of 2,000 yuan.
The direct selling model should be centered on selling products to earn commissions, rather than pulling people to red envelopes, which is obviously a typical feature of MLM.
And, as far as the reporter understands, new members of the LoneStar direct sales team have to attend a number of training sessions.
There are many abominations"** "courses, which were even publicly condemned by television cameras after they were overthrown.
In addition to training offline direct sales teams, Longrich has also created a program called"Get together**"online direct sales system.
The gameplay is the same, after spending money to join the club, you can attract new people to receive rewards.
It can be said that since 2009, like Amway, Mecarin and other brands that have obtained direct sales licenses, Longrich's development has embarked on a road of no return.
The future is limitless, and now only the superficial fortress is supported, and last year, the huge mine shafts that Longrich had been buried for more than a decade began to burst one after the other.
At the beginning of last year, Xu Zhiwei, chairman of Longrich, was released on bail pending trial by Suzhou ** on suspicion of illegal fundraising;
A month later, the 1,700-square-foot operations center in Guangzhou was found empty;
In the past year, the company's share price has risen by more than 95%, almost cutting off its ankles, and the branch of the small owner has also been canceled for redemption, with a redemption price of nearly 100 million yuan...
All this shows that this"Old domestic products"has fallen into a quagmire, which is embarrassing.
It often takes decades or more to build a national brand, but the fall of a golden sign can be even faster.
After all, any negligence in decision-making, any wrong step, can lead to destruction.
The fall of Longrich is also a wake-up call for many national brands:
Despite the pressure to compete with foreign giants, the road can always be walked slowly and cannot fall into the trap of capital.
Once a capital game is on the table, it means that you have the potential to be a loser.
Doing the industry with heart and doing a good job in products is the king.