Thanks to a "domestic product boom" set off by the whole network in September last year, 2023 has become a key turning point for many domestic brands.
Everyone has accelerated the pace in the mobile Internet era, and the brand prospect is getting better and better.
However, there is also such an old domestic brand with a history of 37 years, which has had a difficult time in this year.
In January last year, Jiangsu Longrich Biotechnology Co., Ltd. suffered a drastic change.
It caused a huge sensation at the time, and readers and friends who paid attention to financial current affairs must still remember it vividly.
According to reports at the time, due to suspicion of illegal fundraising, the company's chairman Xu Zhiwei was released on bail pending trial by Suzhou **, more than 1The equity of 500 million yuan was frozen for half a year.
In the year since, news about Longrich has appeared in the public eye from time to time, but all of them have been negative.
For example, the Longrich Asia Operation Center in Guangzhou was empty in February last year, and hundreds of branches and stores have been suspended, so the company's operation is obviously not optimistic.
And just a week before this year's Spring Festival, Longrich thundered again.
Its cosmetics subsidiary, which accounts for more than 65% of the shares, was forced to pay 97.4 million yuan, and the chairman of the company is Xu Zhiwei's son Xu Xiaoping.
If you belong to the post-80s or post-90s group, then I believe that you will be familiar with the name "Longrich".
Even if you have not personally used the relevant products, you must still remember the overwhelming Longrich advertisements on CCTV 20 years ago.
In the nearly 40 years of Longrich's brand history, "snake oil skincare" has always been a well-deserved cash cow for the company.
At its peak, it created an annual revenue of 7.8 billion yuan for Longrich.
As the exclusive title sponsor of the "Originator of the Draft" Youth Song Competition, Longrich has enjoyed a two-month direct ** on CCTV, burning huge sums of money to gain popularity, which shows that it is rich and rich.
Why did Longrich, a giant in the daily chemical industry with a long history of brand history and high popularity among the masses, now come to the point of being suspected of violating the law and committing crimes?
Before stepping into the embarrassing situation of chicken feathers, Longrich also had high hopes.
It once became the most promising domestic brand to break through the encirclement and suppression of foreign companies in the field of daily chemicals.
Such a status does not come out of thin air, Xu Zhiwei at the beginning of his business, a pair of meat hands seem to really have magic.
Liu Zongyuan's "Snake Catcher Said" in the Tang Dynasty exhausted the bitterness and helplessness of the snake catcher group.
In order to make more money to make a living, the poor family had to take risks to catch snakes and get guts.
Three generations of the family have lost their lives due to a mistake, which is embarrassing.
And Xu Zhiwei in his youth was the same as Liu Zongyuan's snake catcher Jiang.
In the early 80s, in order to improve his family conditions as soon as possible, Xu Zhiwei, who was born as a carpenter, decided to change his career to become a snake catcher.
Every day at four o'clock in the morning, I have to go out to catch snakes, and when I get home, I take snake gall bladders one by one, peel the snakes, and sell them to the Chinese medicine merchants who come to the village to receive the goods for money.
However, compared to the snake catcher whose ancestors only knew how to fight alone, Xu Zhiwei is obviously much smarter, and he is better at using resources.
After having some savings in his hands, Xu Zhiwei organized a "snake catching team" in nearby villages and towns.
The training of villagers in snake catching skills has rapidly expanded the scale, and the output of a series of products such as snake gall bladder, snake skin and snake meat has also increased significantly.
After the output was guaranteed, Xu Zhiwei no longer waited for the middleman to receive the goods as before.
Instead, they began to take the initiative to go into the city to promote and establish cooperative relations with the refined processors in the downstream of the industrial chain.
In 1986, Xu Zhiwei's "Snake Industry Company" was established in Changshu, Jiangsu.
This small company, which had only 40 employees at that time, was the predecessor of Longrich, a daily chemical giant in the future.
In the traditional snake catching industry, there are no more than two most profitable businesses.
The first is to sell snake gall bladders.
As an extremely precious medicinal material in traditional Chinese medicine, the cool snake gall bladder has the effect of dispelling wind and dehumidifying, cooling and brightening the purpose, and the natural snake gallbladder has always been valuable.
The second is the sale of snake skins.
In addition to being processed into Chinese medicinal herbs, snakeskin can also be used to make the ringing membranes of musical instruments, such as erhu, jinghu and snakeskin drums.
But in addition, snake meat, which occupies the largest part of the snake body, does not produce too many economic benefits.
In fact, except for a few species of venomous snakes, most snake meat is edible.
For example, this year's "Salt and Pepper King Snake", which is well-known for "Flowers", is said to have a good taste.
But in fact, in the 80s, even if it was not illegal to eat snake meat, the people couldn't bear to be "disgusted" by snakes.
There are still a few people who dare to bite the tongue, and most of the snake meat produced in Changshu eventually becomes the raw material for farmers' composting.
Another small part of the snake meat went across the ocean to Japan and was processed into a skin care product called "snake powder", which sold very expensive, but also sold very well.
At that time, because the Japanese were willing to spend ** to buy snake meat, most of the Chinese snake companies were willing to export, but Xu Zhiwei's brain turned fast:
Can we try to produce this snake powder as well? ”
It is this idea that has helped Xu Zhiwei achieve industrial upgrading, and a daily chemical giant born and raised in Jiangsu is about to emerge.
In 1995, Xu Zhiwei's snake company finally broke through the bottleneck of research and development.
Launched its own series of snake oil health products, snake oil hand cream, snake powder, snake oil ointment are readily available.
At that time, there had never been a health product derived from snakes 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 close to 1,200 yuan, and Boss Xu deserved the title of "Chinese Snake King".
It was also in this year that the snake company completed the equity reform, and "Longrich" biotechnology was officially established.
The English name Longrich also clearly shows Xu Zhiwei's ambitions:
Be rich, and stay rich. ”
From the late 90s to the beginning of the 21st century, the decade was the most efficient period of TV advertising.
As the people's access to information is still relatively limited, the ratings of the channel are extremely high.
And this also means that as long as the brand is willing to spend a lot of money on TV advertising and marketing, it is bound to be able to gain popularity, and Xu Zhiwei is well versed in this.
Since 2004, Longrich has won the title of CCTV Advertising Department for three consecutive years.
Firmly "occupy" the advertising space of daily chemical products in CCTV's ** period, and do ** for the brand.
It's not enough to grab the advertising space, in order to increase the efficiency of the advertising film, you have to choose the right brand image spokesperson.
Who is the most popular after the millennium?
The male star is none other than Chen Kun who plays "The Family of Gold Powder", and the most potential actress is Tang Can, who became popular because of the song "Happiness Forever".
was packaged and pulled by Longrich to be an endorsement, and borrowed the influence of artists to brush up their presence.
Relying on an efficient marketing mix, as of 2008, Longrich's product sales have reached an astonishing 7.8 billion yuan.
It has the strength to wrestle with overseas giants such as Procter & Gamble and Unilever.
Whether it's for a show, or really value employees.
Longrich will also award awards to sales champions every year, and Mercedes-Benz and BMW will choose at will, showing their pride.
First out of the circle, then sell goods, this is the common business logic of cutting-edge brands at the beginning of the new century, and Longrich is no exception.
Unfortunately, with the gradual increase in popularity, Longrich's marketing path has become more and more deviant.
After the influence of TV advertising gradually declined and the return on investment in advertising and marketing was no longer considerable, Xu Zhiwei thought of a new marketing path: transformation to direct sales.
However, it was because of this fatal transformation that Longrich, which had been in high spirits, began to go downhill.
Direct selling, as the name suggests, is "point-to-point direct sales", relying on a small-scale direct distribution model such as person-to-person transmission to achieve product transactions.
Obviously, such a distribution model will not be too efficient, and the effect will definitely not be as good as advertising.
But in the eyes of merchants, the biggest advantage of direct selling is that it is much cheaper than advertising.
According to Longrich's internal calculations, even if sales are reduced to less than 50% of the past, net profit will still increase after the transition to direct sales.
But did you ever feel that something was wrong? There doesn't seem to be a clear barrier to direct selling and MLM.
Xu Zhiwei has publicly publicized Longrich's direct selling model, and after introducing his acquaintances into the direct selling system, you can get a reward of 2,000 yuan as an "upline".
The focus of the direct selling model should be to get a commission for selling goods, rather than giving bonuses to people, which is obviously a typical feature of MLM.
Moreover, according to the reporter's report, the new members of Longrich's direct sales team have to undergo a lot of conference training.
There are many hateful "**-style" courses that are full of them, and they are even publicly reported by CCTV after the overturn.
In addition to the offline direct sales team training, Longrich has also developed an online direct selling system called "Juhao**".
The same way to play, after spending money to join the club, you can get rewards by pulling new ones.
It can be said that since 2009, when Longrich obtained direct sales licenses with brands such as Amway and Mary Carin, Longrich has embarked on a road of no return.
In the past year, the huge thunder that Longrich has planted for more than ten years has begun to explode one by one.
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-meter operation center in Guangzhou was exposed to be emptied;
In the past year, the company's stock price has exceeded 95%, almost ankle cut, and the branch of the young owner has been executed, and the execution target is close to 100 million ......
All of the above shows that this "time-honored domestic brand" has fallen into a quagmire, which is really embarrassing.
The creation of a national brand often takes decades or even longer in history, but the decline of the golden sign is much faster.
After all, any negligence in decision-making, any step in the wrong direction, may lead to a catastrophe.
Longrich's fall at the speed of light has also given many domestic brands a wake-up call
Despite the huge pressure of competition with overseas giants, the road can always be taken slowly, and do not fall into the trap of capital.
Once the game of capital is on the table, it means that there is a probability of becoming a loser.
To do industry, to do a good job in products is the king.
-end-
Author: Lu Yao.
Editor: Ichiyigi.