A Conversation with Xiangqian Song: Back to the Fields of Hope

By Jiaxiang Shi

Edited by Jing Liu

Song Xiangqian seems like the kind of person with sharply defined traits — someone who loves and hates with equal clarity.

Over the past few months, Song has given multiple media interviews, repeatedly emphasizing that consumption and technology are not binary opposites. Amid this year's tech investment frenzy, he was also the first investor to point out that tech investing has overheated while consumer investing has grown too cold.

On many public and venture capital topics, he comes across as an "idealist" — keenly observant, deeply engaged, and courageously outspoken. He frequently speaks up on macro issues like the economy, demographics, and urban governance, constantly calling for a fairer and more just capital market environment, as well as an entrepreneurial spirit that creates more consumer welfare. This conversation originated from a desire to discuss the relationship between tech and consumer investing at a time when the former is booming and the latter is under pressure. As founding partner and chairman of Harvest Capital, he argues that finance must serve industry, that technological development is merely a means to an end, and that people are the end itself. Everyone must recognize the importance of consumption to the national economy and not focus all attention on the tech sector.

To be sure, Song's remarks are undeniably self-interested: as a consumer investor, he has every reason to beat this drum. But what he identifies is also a spectacle visible to all — a primary market, and indeed a business world, ruled by systems and ideologies that all too often permit only one voice.

This means that even Song, as a critic, must to some extent "play along" with this narrative. He admits, for instance, that his future investments will weigh the "tech content" of consumer industries. When discussing Lao Xiang Ji, he notes that the restaurant chain has implemented smart stores, AI-powered automatic checkout, and achieved full-supply-chain digital management. He also considers Eastroc Super Drink to be the most innovative company in the beverage industry over the past decade, because it was the first Chinese beverage company with data assets, consumer insights, data-driven operations, and digital precision marketing capabilities.

But consumption is still consumption at its core. Coca-Cola's greatness lies in the fact that Coke is just Coke — that all Coca-Cola tastes equally good, that you and the president drink the same Coke — not in being guided toward so-called digital transformation.

Consumer investors today are reshaping themselves to fit what the times demand. Song too is trying to grasp what young people want. Two years ago, his view of Pop Mart was that such things have short lifecycles and struggle to sustain long-term attention. In this conversation, however, he not only recognizes Pop Mart's role in satisfying young people's emotional needs but has also started buying Pop Mart products himself.

Still, some things about Song haven't changed. Among investment schools, he remains firmly in the "classical" camp. In his own words, he prefers to "be an institution focused on investing in consumer and service industries."

If a fund is compared to a factory, unlike giants with multiple product lines that increase their win rate through synergies, Harvest only has one product line — consumption — and strives not to make mistakes. Their investment style is extremely conservative: they look at over 200 companies a year but invest only 3 or 4 times. Harvest's principle for pulling the trigger is to believe that 20 years from now, this brand will be embedded in ordinary people's daily lives — finding the one fish that survives out of 100.

But companies that meet Harvest's requirements have typically already passed their inflection point, with strong cash flow and well-developed brand, market, channel, and management operations. At this stage, simply injecting money doesn't help.

This is where their renowned post-investment services come in. A colleague of Song's once said their level of operational detail even exceeds that of buyout funds — they get involved in membership operations, service SOPs, brand second curves, and HR recruitment processes.

Take their sole investment in Xiaocaiyuan, for example. On December 19, 2023, following its first funding round in March, leading Chinese restaurant chain Xiaocaiyuan announced a new round of financing. Harvest's cumulative investment reached 500 million RMB, the largest financing in the mass-market dining sector in recent years.

After Harvest came on board, it participated in the company's day-to-day operations, from new brand strategy to execution. Song frequently travels to Xiaocaiyuan's offices in Tongling and Shanghai. To bring in high-caliber financial management talent, he personally interviews every CFO candidate. The Harvest team built internal control systems from scratch and improved the company's BI and membership systems. When peers visit Harvest to study and exchange ideas, their assessment is often: "Harvest isn't an investment institution — it's an industrial, service-oriented investment company."

Because they rarely pull the trigger, they naturally miss out on many giants and unicorns — HeyTea and Wei Long Latiao, for instance. Song doesn't see this as regretful, though. "If you missed it, you missed it. Just don't miss the future." On this dimension, he's an optimist, his gaze fixed more on the future than the past.

On another front, his conservatism shows in his attitude toward money. In conversation, he believes value must be created before it can be shared, repeatedly stressing that he has no desire to pursue excessive wealth and hopes every penny he earns is deserved. In a market where investment and speculation coexist, he calls for capital not to expand disorderly, for investment behavior to be effective, and believes his profession carries the responsibility of adjusting industrial structure.

"I'm pursuing a kind of beauty in hardship," Song summarizes. Achievements born of hardship are admirable — the challenges are greater, the flow state more intense. After 28 years in the industry, he finds the psychological rewards of extracting profits through asset management to be limited. In his narrative, employment, tax revenue, and the national economy are high-frequency words, and the ultimate destination of all investment.

One practical manifestation of this pursuit of hardship: he even wants to rename Harvest Capital to Harvest Industry and go build businesses himself. "Industry generates greater marginal social benefit and more efficient marginal improvement. Products and services profoundly change a generation — that's more advanced than finance." This is tantamount to giving up a high salary to return home and start a business.

This perhaps explains why he speaks out on so many public issues. When policy order and financial order encroach upon more important physical domains, the real economy swings like a pendulum left and right. He hopes to express his ideal world with clearer values.

Below is the full interview:

People Are the End; Technology Is the Means

"An Yong": Over the past while, you've repeatedly mentioned that consumption and technology are not binary opposites. Why have you taken such a clear stance against this opposition? And who is manufacturing it?

Song Xiangqian: This is a typical phenomenon in today's primary market: everyone rushes to invest in technology while not taking consumption seriously enough. Meanwhile, various policy and regulatory signals are being sent, with everything tilting toward companies high in "tech content." Consumption is a function of income; income is a function of employment; employment is a function of people's livelihood. Local governments are pouring massive resources into local platforms, state-owned enterprises, "little giants," and "chokepoint" initiatives, while resources flowing to the private sector and toward people's livelihoods are truly scarce. Some departments even one-sidedly understand the relationship between national economy and people's livelihood — they only want the so-called high-tech grass, not the consumption seedlings for people's livelihoods, issuing administrative "red-green light policies" that discriminate against consumption and constrain people's livelihoods. They're keen on "technology Great Leaps Forward," force-feeding technology growth.

Of course, technology now faces "chokepoint" pressures; we've missed too many classes for too long, and catching up requires spending more money. Concentrating forces can indeed accomplish great things. I don't oppose effective and balanced market management, and I support tilting resources toward technology, demanding productivity from technology. But we can't choose between technology and consumption. Even if three opportunities go to technology and one to consumption — that would be reasonable. But right now, not a single opportunity is going to consumption. We can't cancel consumption enterprises' right to use capital markets just because they don't face economic pressure or liquidity pressure.

Supporting technological progress, solving chokepoint problems, and promoting China's industrial and value chains toward higher-value upstream positions cannot be achieved overnight. Historical experience has repeatedly proven: whenever we engage in movement-style fattening, so-called "curve overtaking," it inevitably ends in wreckage and death, a mess on the ground, and tremendous waste of social wealth.

"An Yong": The venture capital industry seems easily trapped in this curse: movement-style investing, followed by movement-style reflection.

Song Xiangqian: Why does this movement-style investing keep happening in VC? I think many firms are engaging in arbitrage — wherever there's profit, they go there. Current policy clearly favors technology, so they swarm into chips, clean energy, and large language models. The short-term effects are obvious; they're arbitraging policy: the state supports something, so they do it. Regardless of whether the market needs it, regardless of whether it can withstand long-term market testing.

Personally, I don't oppose this kind of "arbitrage," because if water is too clear, there are no fish. We must also view speculation and investment, arbitrage and anti-arbitrage, scientifically. Investment and speculation are twin brothers in financial markets; speculation also has its role — providing market liquidity and activating trading.

A mature, healthy, orderly market indeed needs both speculation and investment. As long as markets exist, arbitrage will exist. Our job is to skim the foam off the coffee and drink the coffee itself.

"An Yong": Many people believe there's considerable泡沫 in tech investing today.

Song Xiangqian: Because our policies are relatively宽松 — no three-year profitability requirement, no large scale needed, no profit level required to go public. In supporting tech enterprise development, we do need some unconventional measures.

But let me give a simple example. Back then, everyone invested in the AI Four Dragons. They went public one after another in recent years. How many people actually made money? Their sales were mainly to government; they hadn't yet reached the market.

Of course, the special nature of tech enterprises is that if one great tech company emerges, all previous investment mistakes can be written off in one stroke, because tech enterprises have winner-take-all dynamics and can grow exponentially.

"An Yong": What factors do you think could reignite the consumer sector in the primary market?

Song Xiangqian: First, the state introduces fundamental measures to stimulate consumption; second, economic stabilization; third, solving problems through rule of law.

The three drivers of economic growth are investment, consumption, and trade. Right now, real estate investment, private enterprises, and fixed assets are all declining — investment-driven growth is difficult. Meanwhile, trade maturity and global market share are already very high at 14.7%; challenges outweigh opportunities.

So we can only rely on consumption. Technology can drive consumption — Apple, Tesla, and Microsoft are examples. Without consumer markets, where would these companies apply their products? Kant said: people are the end. Technology is the means. All technological invention and progress must ultimately be applied to consumers, to make people's lives better.

On the other hand, consumption also supports technology development. It solves massive employment and creates huge tax revenue. We can't expect tech enterprises to provide large numbers of jobs.

So we must develop both technology and consumption, with dual-wheel drive. Don't throw the baby out with the bathwater. From this perspective, technology and consumption are not actually in opposition. Don't think technology is cool and consumption is lame. Technology and consumption are two sides of the same coin of economic and social development, and the two most important elements in the national economy — one is technological progress, the other is consumption support. Consumption creates application scenarios for technology.

Kant said: people are the end; technology is not the end. Technology is a means and tool; human welfare is the end. We cannot oppose consumption and technology, forcing the market to make "either-or" choices. Discriminating against consumption is actually constraining technology in reverse, because technology would lose its market.

The Only Regrets Are the Ones Ahead

"An Yong": How has the slump in consumer investing over the past two years actually affected companies?

Song Xiangqian: Consumer enterprises are generally quite stable with decent cash flow. Whether or not they use capital markets isn't an urgent matter. In the long run, this actually allows consumer enterprises to focus on operations, steadily providing good products and services to ordinary people — a rare period of calm.

Everyone discusses the resilience and elasticity of China's economy. When discussing resilience and elasticity, everyone looks to policy出台, hoping for faster economic growth, larger aggregate volume, more forceful policy — this is wrong. China's true economic resilience and elasticity lies in deepening reform, in institutionalization and rule of law, in configuring production factors through market methods, in adhering to market economy principles, and releasing institutional dividends. Time is the weigher of enterprise value; profit is the byproduct of doing things right. In this process, faced with changes in the macro environment and structural changes in production factors and slow variables, Chinese entrepreneurs have no choice but to hone internal skills, improve management, optimize operations, refine technology, and strengthen value.

Chinese enterprises face an era of cleansing. Turning crisis into opportunity, transforming danger into safety — the competitiveness, competitive level, and structural competitive advantages of Chinese enterprises are gradually being nurtured and growing. Chinese enterprises' competitiveness is beginning to emerge, and a large cohort of entrepreneurs truly capable of participating in global competition is beginning to appear. I believe this competition, this cleansing, this downturn, this crisis — is actually a good thing. This is a true trial by fire for entrepreneurs, industries, products, services, and brands; this is rebirth from the ashes, this is the phoenix's nirvana. The era of "good quality at low prices" is giving way to a quality revolution. The way out is good quality; we cannot simply compete on low prices. The times are calling for entrepreneurs to emerge. "Not disturbed by floating clouds that obscure the view, let the winds blow from east, west, south, or north."

"An Yong": Do enterprises themselves need to address shortcomings at a higher level?

Song Xiangqian: Objectively speaking, while industrial policy orientation has created some obstacles for consumer industry development, the main obstacles still lie in our own underlying logic problems — take the chain service industry, for example.

First, China's chain operations have numerous "quick recruitment" companies that lack a spirit of altruistic empowerment, simply profiting from franchise fees, brand fees, management fees, and even equipment sales. Second, in the development process, many participants simply emphasize price competition — low prices, but not good quality. Just harvesting once through price competition, impossible to harvest a second round. Third, our business strategy is deficient. In the relationship between people, goods, and场景, we play with goods and场景, rarely centering on people.

The greatest competition in business is trust. Behind brands is competition over quality; behind quality is the character of entrepreneurs.

Why are companies like Costco and Sam's Club higher-dimensional commercial civilizations? Because their success essentially lies in being consumer-centered. Centering on people, managing people's relationships. Costco operates with a疯狂 altruistic mindset — being honest people, doing solid work. In the triangular relationship of people, goods, and场景, they always center on people. People are the end; goods and场景 are means. Essentially, they treat retail as a service industry. Traditional retail relies on being channel merchants who earn price differences. This is an asymmetric war of high dimensions striking low dimensions — or rather, the battle is over before it begins.

This is what we advocate: this is the era of good people doing business. Earning hard money deserves respect. Time is certainly the weigher of enterprise value; profit is the byproduct of doing things right. The great way is simple; the way of commerce is true. There are also companies that completely rely on traffic economics, like internet live-streaming sales, but internet fame doesn't equal lasting fame, and classics don't equal eternity. Behind consumption still lies the character of entrepreneurs.

"An Yong": You invested in Lao Xiang Ji. Does it count as good quality at a reasonable price?

Song Xiangqian: Its average ticket size isn't particularly low. We're constantly working to provide more suitable consumers with more satisfactory products and services, with better price points. The market is also evolving. Chinese consumer segments are very diverse — some find 20 RMB cheap, some find 30 RMB not expensive, some can afford 40 RMB. Pricing is a science.

"An Yong": How do you define Wenheyou? It's not a restaurant company?

Song Xiangqian: Wenheyou originally only provided snacks; the main monetization within its space relied on餐饮. But in the future, it won't be. It needs餐饮, entertainment, performances, and other service retail — becoming an集合体 of urban life.

This is an innovative revolution. I prefer to position it as a creative industry. Wanting to succeed in entrepreneurship, productizing and standardizing it also has difficulties and challenges, because each city's culture is different, consumption habits differ, consumer psychology differs. It requires continuous创新能力.

"An Yong": Wang Shugao of Xiaocaiyuan is quite mysterious. From the founder's perspective, why did you invest in Xiaocaiyuan?

Song Xiangqian: Today's business competition is essentially competition over entrepreneurs'认知, and even more competition over entrepreneurs'心性 and altruistic spirit. To become a long-term sustained winner in business, one needs to drive the work of addressing shortcomings and honing internal skills with altruistic spirit. This reflexivity will明显 drag down enterprise development in the short term, but in the long term is high-dimensional wisdom of planning before acting. From the Xiaocaiyuan team led by Chairman Wang Shugao, we have seen such wisdom.

"An Yong": Beyond digitalization, changes in consumers are also something consumer enterprises need to focus on. Will you invest in more youth-oriented consumer enterprises in the future?

Song Xiangqian: Yes. Youth is the future. Today's young people are the mainstream consumers of the future. Paying attention to young people's consumption needs is always the top priority for a consumer enterprise and consumer fund.

The younger generation is a better-educated generation, a generation of rising consumption, and the first generation of consumption equality — they have their own consumption主张. We need to respect them, trust them.

"An Yong": As an established consumer fund, how do you ensure you understand young people's needs?

Song Xiangqian: Through digital engineering. We listen to and collect user opinions, collect user profiles, understand the needs of every different age stage, and through digitalization establish data engineering that lets young people's ideas participate in product production, manufacturing, and sales.

The future is a process of flexible supply chains, flexible production, F to B to C, and also a digitally driven process where demand反向 reshapes supply.

"An Yong": But whether coffee or tea beverages, you've never invested in them — yet these are indeed products young people love.

Song Xiangqian: I believe this is a crowded赛道, with supply exceeding demand. The existence of a细分 industry is reasonable; milk tea is indeed loved by many, with a target demographic of 15 to 35. Children too young don't drink it, people too old don't drink it either, because high sugar and high dairy have certain health impacts.

Natural laws will constrain industry development and create ceilings. This is invisible; you can't break through it. China doesn't actually need so many milk tea shops. Go to various cities now, especially first- and second-tier cities — the oversupply is肉眼可见. This is caused by capital quickly chasing trends. Future competition will be quite fierce.

"An Yong": How do you view the blind box economy? If there were another chance to invest in Pop Mart, what would you do?

Song Xiangqian: I would invest.

Every age stage has its own market demands under its own system. Understand their hearts, understand their needs,洞察 their needs, and you can provide suitable products.

It still has certain universality, and its lifecycle and user age range are relatively broad. But objectively speaking, with milk tea, once you're over 35 you know you need to preserve your health — you don't dare drink so much. Indulging a craving is fine; one cup a day isn't realistic.

"An Yong": You don't invest very often. Among such limited opportunities, which missed projects do you regret most?

Song Xiangqian: None. The only regrets are the ones ahead. If you missed it, you were wrong; go review and summarize the mistake. If I'm right, they're wrong; if I'm wrong, they're right — things that are neither right nor wrong rarely exist. If you missed it, you missed it; just don't miss the future. I'm not particularly inclined to recall past events; I prefer to face the future, because I believe the future will certainly be better than today. On this point, I'm an optimist.

"An Yong": In investing, what risk can you least afford to take?

Song Xiangqian: Knowing it's wrong and still doing it.

"An Yong": That sounds like a simple principle.

Song Xiangqian: People are influenced by other factors — there are all kinds of market noises, emotional influences, interference from external technical factors. This is the most terrifying: knowing it's impossible and still doing it. This is the most unacceptable problem. Our company often says one thing: nothing is something that absolutely must be done — precisely to prevent this kind of situation.

"An Yong": How should enterprises and individuals comport themselves in this era?

Song Xiangqian: In today's process of social system重装, understanding the underlying logic that顺应 social development trends and having超强 dynamic system adjustment capabilities are more important. Understanding system重装 means understanding future China. Life is a Kondratiev wave; going with the flow, guiding according to circumstances — it's easier to reconcile with change. Truly standing on the side of 1.4 billion ordinary people's lives, resonating with society's greatest common denominator, at the historical turning point of system重装 — of course it's easier to be compatible with time, to be compatible with the system.

Each of us is a variable in the social system game. Being in sync with the times, advancing with the times — only then will we not be cleansed by the system.顺应 historical trends, moving in the same direction as progress, giving years to civilization, giving civilization a future — only then can we more deeply inject ourselves into this era and correctly walk toward the depths of history.

Finance Is Inferior to Industry

"An Yong": You once said you wanted to rename Harvest Capital to Harvest Industry. Why?

Song Xiangqian: Harvest is 16 years old; I've been in the industry 28 years. In long-cycle development, through continuous cognitive upgrading, we finally understood one truth: doing finance is inferior to doing industry.

Because finance integrates resources and obtains benefits through resource allocation, but industry is a higher-dimensional endeavor — from nothing to something, from small to large, passing through several cycles. The challenges are actually quite great, but I personally prefer the beauty of hardship.

Beauty with hardship is more admirable — from nothing to something, from weak to strong, experiencing several cycles, great challenges, producing powerful flow states. If you purely extract profits through capital arbitrage, through asset management, the marginal effect is diminishing; there's no particularly strong sense of achievement or satisfaction.

"An Yong": Why did this idea arise?

Song Xiangqian: It may be related to my upbringing. My mother was a teacher, my father an accountant. I grew up in a large state-owned enterprise built with Soviet assistance during the First Five-Year Plan. From the wilderness of the early People's Republic to today, I've seen industry change the fate of a generation, a country.

After reform and opening up, it's the same. China becoming the world's factory today was built on industry establishing our international competitiveness, not finance.

Financial tools are neutral; we can use them well. But finance has profit-driven, earnings-driven tendencies that often easily go off track. Finance is a means, like technology; it's not the end. Developing industry is the end.

For me personally, I don't want to become an asset management company. I want to truly make good products, applying the capabilities developed through knowledge accumulation to enterprise operations management, to the creation of good products and good services. Gaining society's recognition, value's recognition — such meaning and attraction may be greater.

"An Yong": What advantages does Harvest have in personally doing industry?

Song Xiangqian: We're professional赛道 players, and we've been rooted in one赛道 for 16 years, with powerful knowledge accumulation and insights, and several champion enterprises continuously feeding back to us.

We're not financial investors, nor are we outsiders and bystanders to enterprise value growth. We're contributors to and co-creators of enterprise value growth. When we decided to do this line of work, at least we ourselves believe we've made preparations.

"An Yong": Whether during the pandemic or hot events, you really like public expression. What has this brought you?

Song Xiangqian: Daily progress, nothing wasted.

For us, creating social and economic value means bearing social responsibility and standing on the side of common sense and conscience. There must always be someone in this world who speaks the truth, someone who voices opinions on public issues. If everyone remains silent on public issues, no snowflake is innocent when the avalanche comes. Every grain of dust of the times that falls on an individual becomes a mountain. The price we each pay for our silence is enormous.

I have no intention of playing the role of a public intellectual, but in areas related to our lives, involving public interests, and in fields I'm familiar with, I still need to observe keenly, participate deeply, and have certain expressions. In today's era, watching is also a form of support, let alone expressing. Being the correct version of oneself is very important. The value of our lives is all about striving to meet a better version of ourselves on life's journey.

"An Yong": Does it bring trouble?

Song Xiangqian: Of course it does. But if everyone acts for self-preservation, minding their own business and holding themselves aloof, then no one cares about public issues. All these issues will eventually extend and harm oneself.

Speaking out in areas I understand relatively well counts as a kind of well-intentioned perspective. This is also just one opinion, one judgment. But I personally believe that in today's environment where space is limited, being able to express and discuss is already a beneficial thing. Being brave in voicing opinions on public issues — don't be afraid of trouble. The more people in China who walk the right path, the more people who dare to speak out, the more hopeful this society becomes.

I particularly miss the 1980s — that was "on the fields of hope," because you believed that studying and working hard could change your life, change your fate. The core is returning to a fair competition environment, returning to an environment where all people are full of confidence and hope.

Image source ｜ IC photo

Layout ｜ Xuemei Guo