This healthy food brand was founded 8 years ago, but in 2023 it already had an annual income of more than RMB 1 billion. This story, from entrepreneurship clubs for students to food companies with an annual turnover of more than RMB 1 billion, started with the wrong choice of study by the founder.

Zheng Guo, founder of Unicorn

Wrong study

At the time, Zheng Guoyu chose to study computer science. ICT was then a popular field and Zheng Guoyu made his choice without in-depth knowledge of the technology. Soon after enrolling, he discovered that he wasn’t interested in it, so he joined a club that played entrepreneurship games. Unicorn (Dujiaoshou 独角兽) was one of his entrepreneurial projects in that club.

Candy

In 2015, Zheng Guoyu’s first venture was based on the touristic popularity of his hometown, Xiamen, the major port city of Fujian. He created a special e-commerce platform to sell handmade sweets and souvenirs. According to Zheng Guoyu, a turnover of almost RMB 10 million was already achieved at that time. But he didn’t have a positive cash flow and wasn’t making a profit. However, he did gain a lot of experience at that time.

Light food

From the beginning, the Unicorn brand has been positioned in the market for what is known in China as Light Food (qingshi), which is a low-calorie, low-salt, sugar-and-fat food. The first product has achieved a turnover of more than RMB 60 million in 3 years. In 2022, the revenue was more than RMB 700 million, and the revenue for 2023 is estimated at RMB 1 billion. This growth will continue. According to Zheng, what is the driving force behind this rapid success?

Beauty parlour

Zheng sees the university as a ‘beauty salon’. Young people on the university campus are starting to pay attention to their bodies and clothes, and when Zheng Guoyu himself started at the university, he and his classmates also had a need for fitness and weight control. When they got their university gym card and tried to follow the coach’s instructions to start eating healthier, they discovered that there were few products to choose from on campus.

Internet

Preparing low-fat meals yourself was not realistic, as the use of electrical appliances such as refrigerators and hotplates was prohibited in university dormitories. Zheng Guoyu and his classmates therefore chose to buy light meals over the internet. They found that the unit price of chicken breast there was between RMB 150 – 200; A very student-unfriendly price. This unmet need presented a commercial opportunity.

Small portions

Starting from their own needs, Zheng Guoyu and his classmates began to think about what light meals they would like to buy: small portions that are individually wrapped, not too expensive in price, lean but still tasty. Zheng Guoyu, who was already in the entrepreneurs’ club, started this entrepreneurial project with his team.

Outsourcing

The team has gained entrepreneurial experience by negotiating production outsourcing with factories. When they discovered that there were very few ready-to-eat chicken breast products in small packages on the market, Unicorn decided to find a factory to produce chicken breasts in small packages based on their specifications.

Unicorn’s lean chicken breast with crayfish flavour (you can compare it with the chicken breast of Dacheng on the Trends page of this blog)

Resounding success

The first product was an instant hit. In 2017, the ready-to-eat chicken breast was launched, and already in 2018 achieved a turnover of more than RMB 20 million in 2018 and RMB 60 million in 2019. It became the best-selling brand in its category on the Taobao internet store.

In-house production

When, three years after its founding, the scale of RMB 100 million was reached, Zheng and his partners thought it better to build their own factory than to continue to rely on outsourcing to multiple third-party factories. They thought it would be better not to look for external financing right away, but to finance the factory from their own income. Nor did they immediately aspire to become the market leader. Staying profitable was more important. This also applied to the promotion costs. Unicorn is active on several internet platforms, but does not invest in excessive promotional campaigns and steadily tries to build brand awareness through consistent quality.

Traditional brand

Unicorn, which was born on the internet, has been around for 8 years now, but hopes to transform itself into a ‘traditional brand’ that makes good use of the internet. According to Zheng Guoyu, China’s e-commerce platforms are about 20 years old. However, there are popular consumer brands that are 30 or 40 years old and still viable. If Unicorn would like to live to be 50 or 100 years old, the brand must also learn from the traditional brands. That means you should also be found in physical stores.

New channels

Zheng sees great opportunities for offline sales. That does require changes in the supply chain. Online sales are made in small quantities. Large batches are needed to supply stores. Also, the pricing of products has to change in order for retailers and the like to earn money from sales. According to Zheng, it may be necessary to develop new products for offline sales. “We found that in order to solve this problem, we may need to develop other products, and the net content, specifications, and taste of the products need to be adjusted,” Zheng said.

Export

The next step could be export. At the end of 2020, Unicorn set up an export company. However, it is more difficult to export food because the regulations are different in each market. The strategy chosen by Zheng is to first gain experience with the export of textile products (bedding), for which the rules are less strict, and then to move on to foodstuffs.

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This entrepreneurial story also offers insight into the typical way of thinking of Chinese entrepreneurs. Whereas Western biographies of entrepreneurs usually portray the protagonist as the ‘born entrepreneur’ who knows how to realize an idea with unique strategic insight, Zheng is someone who is proud of the fact that his idea is due to a wrong choice of study and has come to fruition in a social context (the entrepreneurs’ club on campus). Where the typical Western start-up entrepreneur is willing to sacrifice everything to make a company grow quickly (quick success or failure), Zheng thinks in terms of continuous learning by keeping the company up and running for as long as possible and converting what he has learned into long-term strategy. Reverence for one’s ancestors is an old Confucian value.

Peter Peverelli is active in and with China since 1975 and regularly travels to the remotest corners of that vast nation. He is a co-author of a major book introducing the cultural drivers behind China’s economic success