FreeS Fund Year-End Special | Navigating the Consumer Cycle: 19 Stories That Broke Through the Fog

Over the past year, the consumer market has felt a bit gloomy. There were no obvious trends or major tailwinds; some companies that once shone brightly fell off the pedestal in 2018. Even the most oblivious caught a whiff of "winter." "Consumption downgrade," "fading dividends," "rising tariffs" — every day brought new challenges.

We prepared a few questions and spoke with founders from 19 FreeS Fund portfolio consumer companies:

• Looking back at 2018, what were the major events or keywords that shaped the consumer industry?
• What have frontline entrepreneurs learned about traffic, marketing, and customer acquisition?
• When innovating on product categories, how do you judge whether a category will work?
• How do you view consumption upgrade, downgrade, and segmentation?
• How does it feel to experience the end of the golden age of entrepreneurship and the arrival of the capital winter?

The results were somewhat surprising, but not entirely.

They said traffic is hard to find, but not completely absent; category innovation is hard to break through, but not without room for exploration; the winter is tough, but it's a good opportunity for internal adjustment. They believe the economy has its own cycles, and the market will always recover. They accept disappointment without losing hope. They persist in doing their best, striving to provide products that best meet consumer needs.

"One by one, strong days still wait ahead, tempting as freshly baked bread."

In 2019, we look forward to meeting more outstanding consumer entrepreneurs. In the new year, may you on the entrepreneurial path have wisdom and determination, with a dash of luck, to explore, to strive, to persist.

Q1

Introduce yourself and your company's product or business in one sentence.

A fill-in-the-blank: I am ___, we are ___. (There are thousands of ways to introduce yourself and your company — we're curious how founders describe themselves.)

I am Squirrel Dad. Three Squirrels makes tastier, fresher, more convenient, more fun, and affordable snacks. Snacks shouldn't be seen as a category, but as a form of behavioral expression. When you're in a bad mood, when you can't sleep, when work is hectic — have some snacks!

I am Wu Jun. "Saturnbird" is an innovative coffee brand. We're exploring more possibilities for coffee, making it younger and more interesting.

I am Chen Pengyun. Huasheng Haoche reaches lower-tier markets through directly operated stores, serving the car needs of a new generation of young consumers with new-car direct leasing for individual clients. Customers can drive away with just 10% down payment. Since 2015, we've opened over 500 directly operated stores nationwide, covering third- and fourth-tier markets.

I am Lin Sheng. Chicecream is "vibrant Chinese craftsmanship" — we want to make China's best, highest-quality ice cream.

I am Wang Shiyong. 2:10 Animation is an animation company that doesn't want to merely do entertainment. Drawing has always been a powerful medium of communication. Humans have been painting on walls and rocks since primitive times. Later, these paintings became writing, solving communication problems and allowing tribes to grow larger. During the Renaissance, the power of painting was strong enough to overturn the world's existing values. Now, we want to create animation products aligned with positive values, go global, and let people worldwide have heroic dreams — like Disney does.

I am Lou Yun. Club Factory is a data-driven new-era e-commerce platform, mainly serving developing markets like the Middle East and India.

I am Tao Weiguang. Hui Brand hopes to create Chinese cultural spiritual consumption products. Many people think culture is culture, art is art — things to be worshipped in museums, unrelated to our lives. But we want to bring art into life, into clothing, food, housing, and transportation, making art accessible. We hope our products can help you move beyond material consumption of "radishes and cabbage" and start enjoying spiritual consumption.

I am TT from Plant. A post-70s uncle leading a group of post-90s and post-95s to provide better personal care products for a new generation of Chinese consumers.

I am Li Jian. Xinliangji is an ingredient supply chain company positioned to create standardized Chinese cuisine blockbuster products.

I am Jiujin, who believes "winter" is more effective for cutting fat and building muscle. Particle Fever is a functional, fashionable sports brand that never tires of creating avant-garde topics and products.

I am Liu Changke. Qingqing Jiajiao is the only scaled domestic company providing users with a combined door-to-door/online home education service.

I am Kyle, who turns beliefs into reality. JUNO & Co. is currently one of the hottest beauty brands on American Instagram. In August-September 2018, our views on YouTube and Instagram ranked #1 across the entire US internet.

I am Liu Wenchao. Because I wanted to use internet technology and concepts to fundamentally solve the high-cost, low-efficiency problems in the parking industry, I entered the smart parking space and founded Tingjiandan. Tingjiandan is a young, vibrant startup that leverages the synergy of offline management and online operations, committed to building a nationwide smart parking network and driving comprehensive upgrades across the parking industry chain.

I am Guo Dayu. T-Custom is a high-quality T-shirt and sweatshirt customization platform. In three years since founding, we've completed three funding rounds, built a nearly 10,000-square-meter small-batch customization quick-response supply chain, achieved seven-day shipping with minimum one-piece orders, and cumulatively served tens of thousands of enterprises and organizations.

I am Wang Can. Patpat is a cross-border export e-commerce company focused on the vertical direction of maternal and infant children's clothing. Our products and services are integrated — not just the app and website, but the entire supply chain, from design to fabric selection, factory printing and dyeing, to warehousing and delivery.

I am Dami. We are Vphoto, making photos and videos fly!

I am Zhang Rui. Gaoding is a company exploring the use of artificial intelligence and crowdsourcing platforms to transform the marketing services industry.

I am Si Wei. Yuki is a comprehensive pan-entertainment industry service provider based on derivative design and sales. We choose consumer products that appear with high frequency in people's daily lives and turn them into derivatives.

I am Xiao Guoxun. Haosepai is a healthy brand creating a sexy lifestyle, centered around young users' needs and providing one-stop solutions from products to content to services.

Q2

What were the major events or keywords affecting consumer market changes over the past year?

"The mobile internet traffic dividend is gone." When discussing this topic, we no longer mince words. The fading of dividends is consensus; everyone is looking for a way out. Perhaps it's offline, perhaps in lower-tier markets, perhaps overseas. We're still actively exploring.

Liu Changke, CEO of Qingqing Jiajiao: Online traffic is getting more expensive, and people are slowly returning to offline scenarios. People discovered that the consumer internet they once enthusiastically discussed hadn't greatly improved commercial efficiency, and began thinking about how to enter "industrial internet." But people who grew up in consumer internet find it hard to take root in industry, while industry people often lack internet thinking. Everyone feels a sense of powerlessness and has become conflicted. Additionally, the state is strengthening "regulation" across various fields. New life is always chaotic at the beginning, and so is entrepreneurship. This chaotic, disorderly state actually gives entrepreneurs more opportunities. If control is too strict from the start, some innovations might be stifled.

Lou Yun, CEO of Club Factory: The dividends are gone, and the industry as a whole is somewhat lost. Where's the way out? First, "industrial internet" — using technical means to optimize traditional industries; second, "going global" — to places where mobile internet dividends still exist. India only has a little over 200 million Facebook users, at least 4 times fewer than WeChat users in China. That's all opportunity in between!

Squirrel Dad: In 2018, two phenomena caused relatively large changes in the consumer market overall. First, "mass entertainment, represented by Douyin." We started thinking from the product R&D stage about how to make products fun, how to encourage consumers to express and release their individuality on Douyin, forming video-based product dissemination. Later, we launched many fun snacks, like giant packaging, Haoduola spicy strips, and so on. Second, "retail channel下沉, represented by Pinduoduo, WeStore, and community e-commerce." Products can reach consumers more easily, consumers have greater choice space, and they tend more toward products that express individuality. These two things combined have allowed China's consumption power to be fully unleashed.

Guo Dayu, CEO of T-Custom: "Channel下沉." The IPOs of Pinduoduo and Qutoutiao made more people realize that consumer goods can下沉 to user groups previously hard to reach. Although some of these channels were previously reached by Wahaha, OPPO, and vivo, mobile internet brought more opportunities to build new channels and scale quickly, allowing many brands to innovate and achieve explosive growth.

Tang Liang, founder of Plant: "ALL IN social" and "ALL IN Tmall" are inevitable choices for a new generation of consumer brands. The rise of new new media (like Xiaohongshu and Douyin) has allowed brands that capture new media traffic dividends to rise extremely quickly; Tmall remains the largest e-commerce platform (60% market share) and maintains the fastest growth rate (60% growth). For beauty products, online sales have already surpassed offline — dozens of billion-dollar brands can surely emerge here.

Kyle Jiang, CEO of JUNO & Co.: "New channels" and "new brands." In the US, online channels are developing very rapidly. Behind this is the emergence of new media and changes in people's consumption habits. Consumers are increasingly accepting of new brands, giving rise to many niche, personalized brands. Amazon and online brands are scaling quickly; we do promotion through social media, and the results are good too.

Zhang Rui, Chairman of Gaoding: "Traffic dividends have disappeared." Both online and offline traffic costs are rising. In the consumer market, competition used to be about who could find untapped cheap traffic; now it's about who understands customer needs better and who can better satisfy them. At the same time, "consumers are also becoming smarter and more opinionated." In the era when traffic was king, no one needed to be very meticulous. But now marketing costs are higher, so a company's internal capabilities become more important — more effort must be invested in products and marketing.

"China-US trade friction" has made us worry about the impact of increased import tariffs on future business.

Chen Pengyun, co-founder of Huasheng Haoche: Tariffs were affected, and import car prices fluctuated somewhat. This fluctuation then transmitted to domestic cars. People aren't very optimistic about the economic situation and are cautious about large consumer goods, causing the car market as a whole to be somewhat affected. However, the leasing segment has just started and is still growing.

Wang Can, founder of Patpat: Cross-border e-commerce is a business of internationalized supply chains. "China-US trade friction" and "Brexit" have had quite a large impact on us. It may not be obvious now, but in a year or two, the effects will gradually show: RMB exchange rates may fluctuate; the UK is no longer a Schengen country, and our goods movement may face additional friction, with costs potentially increasing. Our strategy is to proactively diversify our eggs into more baskets, like looking at opportunities in Arab countries.

Xiao Guoxun, CEO of Haosepai Salad: Economic challenges have affected consumer confidence. China-US trade friction has also affected our procurement costs to some extent, particularly for dollar-denominated imported raw materials.

"Change" keeps happening, such as:

Lin Sheng, Founder of Chicecream: "Influencer status has normalized." For the entire consumer goods market, this is absolutely an inflection point. People have grown accustomed to a constant stream of internet celebrities emerging; they won't keep paying just because something's trending anymore. Building a brand can't rely on gimmicks for distribution — you have to genuinely, solidly make good products.

Si Wei, Founder of Yuki Animation: The content industry is gradually moving away from state subsidies, operating with high marketization driven by capital markets. Domestic original IPs have incredibly vibrant vitality — take Tencent Animation's Under One Person and Tencent Video's The Founder of Diabolism, for example. Content producers are focusing more energy on thinking through and planning content commercialization. During the production committee preparation stage, they're already thinking about post-launch questions: who'll handle the animation? Who'll do the game? Who'll distribute? Is anyone willing to take on film and TV adaptation? The industry's development is gradually becoming healthier. New brands keep emerging, and many established brands are revitalizing with renewed energy. Existing production capacity is being repurposed with higher premiums, and consumers are willing to pay for it. Both content consumption and products are undergoing a process of "industry resource reallocation."

Also, word-of-mouth传播 is becoming increasingly important — every share is an endorsement of trust. So the unspoken sentiment for many is: my Moments feed isn't some place where I'll casually post ads for just anyone.

The future belongs to young people. Their consumption potential and commercial value keep growing.

Q3

What have you learned about traffic, marketing, and customer acquisition over the past year?

Over the past decade, the Chinese market has witnessed the Taobao miracle. But the rapid growth of e-commerce — and the entire consumer market — resulted from the叠加 of early capital support, technological transformation, and demographic dividend. That's difficult to replicate. Going forward, beyond cleverly leveraging traffic, we want to refine our products and serve our users well.

Our genuine feeling is: good traffic is hard to find, but opportunities aren't entirely absent. Social media remains an effective channel. Douyin, Kuaishou, and Xiaohongshu have begun commercializing, and good platforms in lower-tier channels are gradually emerging. These are all excellent channels for reaching consumers.

Lin Sheng, Founder of Chicecream: You have to keep iterating on yourself. At different stages, the most effective traffic acquisition tools differ. The year before last it was livestreaming, last year it was Douyin and Xiaohongshu — what will emerge this year? You should try these new tools at the lowest possible cost. Once you see data回流, immediately double down.

Chen Pengyun, Co-founder of Huasheng Haoche: Decentralization —挖掘长尾 traffic dividends. Third- and fourth-tier cities have many local websites and forums where traffic dividends still exist, suitable for local social marketing and word-of-mouth marketing. Doing localized customer acquisition on these easily overlooked platforms offers far better ROI than placing ads on national platforms.

Kyle Jiang, CEO of JUNO & Co.: In 2018, one thing we did right was reaching target consumer groups through new social media — user and order growth were both ideal. Of course, what ultimately determines user reviews and repurchase rates is the product itself. Good products bring their own traffic.

Tang Liang, Founder of Zhi Guan: Brand competition is product competition, but also competition in team, technology, and data. Emerging brands' growth goes through three stages: dividend-driven, content and creativity-driven, and data-optimized media placement-driven. During the cold start phase, Zhi Guan seized a wave of traffic dividends. Later, we converted those dividends into team capability. Today, with new media and self-media becoming the main distribution channels, without good products it's hard to create good content; without good content, media promotion often yields half the results for double the effort. How did Zhi Guan beat out numerous major brands to secure Tmall's Joy Day resources in February 2019? By grasping young people's "#The More Defeated, The More Upward" psychology and doing an IP collaboration with Chibi Maruko-chan, a childhood memory for those born in the '90s and '95. Additionally, we've begun experimenting with programmatic placement, allowing appropriate content to reach appropriate people through precise user tagging and social media content targeting.

Product, product, product! Good products are always the most important thing.

Father Squirrel: Looking across the entire Chinese consumer market, traffic simply isn't the problem — the problem is we can no longer treat traffic as the primary factor. If we're talking leverage, as a brand that grew out of Taobao, our biggest fulcrum in recent years was indeed traffic. But traffic is a dead account; it has costs. Going forward, we're placing product at the fulcrum of our leverage, and expanding channels through continuous product optimization.

Tao Weiguang, CEO of Hui Brand: In 2018, long-established IPs like the Palace Museum went viral again; several Monet and Van Gogh exhibitions were also very popular. Our immersive starry sky art exhibition White Night Stars at Shanghai Changning Raffles City also generated considerable revenue. Young consumers aren't satisfied with passive content formats like film and theater — they want active interactive participation and social media distribution. They're especially willing to spend over 100 RMB to experience beauty, to experience a dreamscape. We desperately need good products at the cultural consumption level! The key is being able to create products that seamlessly connect with consumers, integrating online and offline, with scenarios and experiences. Currently, our average ticket price is between 800-1,500 RMB. That's still a bit expensive — it should come down further so more people can afford it.

Wu Jun, Founder of Saturnbird: The era of winning with套路 is over. Young people's vision and mindset are more advanced and independent than we imagined. We can only carefully refine products, deliver good service, and continuously improve user experience.

Lin Sheng, Founder of Chicecream: Our team comes from a marketing background — we could sell socks and ice cream well. But the longer we've been at it, the more we've engaged with upstream and downstream supply chain links, the more we've realized we want to genuinely, solidly make good products. When products are good, the brand naturally follows.

Lou Yun, CEO of Club Factory: Do you think Tesla needs marketing? Traffic is a tactical matter; the most crucial thing is delivering good user experience, using an efficient approach to make industry efficiency higher, making repurchase and organic traffic the engine of growth.

Dami, CEO of Vphoto: The best, most fundamental customer acquisition method is making good products. Products have their own stickiness; when you make good products, traffic naturally follows. Additionally, the way consumers trust brands has changed — people place more emphasis on trust endorsements.

Behind good products, there must be excellent teams providing support. Before making consumers' hearts flutter, we put considerable effort into完善ing the company's foundational architecture. Whether it's online-offline integration or supply chain refinement and optimization, these are comprehensive capabilities we must compete on.

Liu Changke, CEO of Qingqing Tutoring: Education is undergoing a migration from offline to online, from store-based to home-based — this is a slow process. In 2018, we newly entered 15 cities, bringing our total to 50. We've basically built out market and brand systems that can support frontline business development. Regarding the industry-wide customer acquisition challenge, we've also established acquisition channels differentiated from competitors. Whether community, offline markets, online placement, user referrals, or TMK — these channels all grew organically through Qingqing's continuous exploration and improvement. Additionally, considering that education is based on trust, and trust is based on intimacy, we've also promoted home visits by teaching assistants in key offline cities, building closer relationships with parents through these visits. We've built a team of over 200 class teachers in Nanjing, able to provide parents with better, more timely service remotely.

Si Wei, Founder of Yuki Animation: Our core is "crossover." Product formats must "cross over," marketing methods must also "cross over." We leverage brands'完善 product systems, selecting compatible IPs for integration, mutually guiding each other's audience groups for efficient traffic acquisition; simultaneously, we integrate respective advantageous resources to drive market sales. From recent years' crossovers between NIKE, Supreme, and various luxury brands, it's not hard to see brands' synergistic effects in traffic acquisition and marketing methods. We've also done crossover collaborations with streetwear brand BBF and hard sci-fi The Wandering Earth, bringing more and more eye-catching products.

Wang Can, Founder of Patpat: Our customer acquisition and marketing costs have dropped to roughly 50% of what they were. Two reasons: first, optimizing internal efficiency. Early on with a dozen-plus people, attacking markets was like a street brawl; as the company grew to hundreds of people, attacking markets requires tactics. Second, in the second half of 2018, traffic costs that spiked in the first half came back down across the industry. Google, Facebook, and other platforms also established strict standards to control traffic. Traffic began concentrating toward companies that could provide good service.

Ren Jiujin, Founder of Particle Fever: 2018 was extremely busy for us — from April through late September we were constantly preparing and executing Tmall China Day, then did Singles' Day and Double Twelve. During this period, we also opened a flagship store at Grand Gateway Shanghai. Regarding traffic and marketing, we never spend big money or use discounting to acquire customers. We do more at the product level and brand style building, and will continue to do so.

Guo Dayu, CEO of T-She: We're in enterprise services. In traffic acquisition, we need even more precise planning and development than B2C companies. In 2018, for online traffic, we expanded search engine placement, explored information feeds and Taobao system traffic. We took detours, but ultimately found methods suitable for us. For offline traffic, we established a Beijing branch to build brand and develop markets through offline events. I increasingly feel that future traffic and marketing must combine online and offline, conducted in a more comprehensive, three-dimensional manner.

Zhang Rui, Chairman of Gaoding: All consumer brand marketing has high requirements for creative campaign concepts. But the supply distribution of marketing creativity is very uneven, mostly concentrated in first-tier cities like Beijing, Shanghai, Guangzhou, and Shenzhen; major advertising agencies also mostly prefer serving big brands. We use intelligent matching to allow more supply resources with excellent marketing creativity to effectively serve small and medium brands, letting SMBs enjoy creative content that only big brands could access. For us, every signed client is an investment. If client renewal rates are poor and can't generate口碑 premium, then we're losing money on the deal. So in 2018, we emphasized finding clients where we could create value and serving them, rather than indiscriminately, impatiently pulling in clients we shouldn't be serving. Short-term behavior will eventually be punished by the market.

Xiao Guoxun, CEO of Haosepai Salad: Relative to customer acquisition, over the past year we've focused more on maximizing total user lifetime value and doing more refined supply chain management to improve gross margins from the source.

Wang Shiyong, CEO of 2:10 Animation: In 2018, our output more than doubled compared to 2017, driven by changes in production methods. We figured it out: the animation and films we make aren't art pieces, they're mass consumer goods. Art is lonely — perhaps only one lonely individual in the vast crowd can appreciate it. But mass consumption must resonate with people; it must be industrializable. Based on this consideration, I transformed the company's management process from entertainment industry management to container-style management, covering nine segments from IP evaluation, process segmentation to production systems, brand operations, etc., with mid-to-late stage personnel procuring early-stage projects. The further back in the process, the more like甲方 you become. This optimized internal resource operation, solving problems like bureaucracy and cost waste.

Liu Wenchao, CEO of Tingjiandan: We're relatively fortunate in having natural advantages from offline scenarios, able to naturally convert offline traffic into platform traffic. For customer acquisition, our cooperation with parking lots also uses a leveraged approach.

Q4

When innovating in a category, how do you judge whether it will work?

Innovation is hard, but it's always viable. Industry giants standing tall can't block our entry; the fact that few have done it before draws us to explore.

Lin Sheng, founder of Chicecream: Consumption upgrades don't happen uniformly across all sectors. In terms of scale, technology, and marketing, the ice cream industry has lagged behind beverages and snacks. Other categories have already upgraded, while ice cream has stayed put — there's definitely opportunity here.

People used to think winter was too cold for ice cream, but now new homes have air conditioning and heating cranked up high. The home has become a great consumption scenario for ice cream. How do we transform traditional impulse retail into household stockpiling as a necessity? That's the direction we're working toward.

Chen Pengyun, co-founder of Huasheng Haoche: We verify through overseas trends. Car leasing accounts for 30-40% of auto consumption in Europe and America; there's huge room for growth in China.

The product needs to successfully convert customers in a short time. Compared to traditional car buying, our advantage is low down payment and flexible usage; the disadvantage is customers don't own the car, they only have usage rights. We surveyed many young people to see if the advantages could offset the disadvantages, and found that they could.

Ren Jiujin, founder of Particle Fever: Team and people matter most. Before Dyson made hair dryers, no one dared imagine a 3,000-yuan hair dryer could become a consumer product. What we're good at is brand and product creativity — so we just take that to the extreme.

Tao Weiguang, CEO of Hui Brand: Many people ask me, why at nearly 50 am I still doing these "trivial" things? But I believe art carries spiritual energy; it can empower spaces and brands. Hui Brand isn't just a store in a shopping mall — it's a model that breaks cultural boundaries, and the boundaries between art museums and institutions. One insight this year: the whole market is quite hopeful about beautiful things. People are now focusing on themselves; they feel that buying something represents their taste, their personality. In the purchase process, we need to co-create this spiritual consumption act with the user. So we emphasize scenarization. We constantly adjust displays, changing them up after a while. We're also communicating with users on a spiritual level, because sometimes people shop not because they lack something, but because it can express what they feel.

Kyle Jiang, CEO of JUNO & Co.: Whether in America or China, consumers are pursuing high cost-performance. Some beauty brands in America have already started making affordable products; China doesn't have mature brands in this space yet, so we have huge opportunity.

Beauty is a category very suitable for social media传播, and traditional brands are too slow on new media, giving new brands like ours many opportunities.

Beauty is relatively easy to globalize, especially internet beauty brands. After selling well in America, we also sold well in Asia and Europe.

Wu Jun, founder of Saturnbird: Coffee has obvious consumption and cultural attributes, and expresses well, giving brands room for value elevation. Over the past decade, innovation in the coffee industry has indeed been relatively scarce. We're at an inflection point where users and the market are eager for innovation — some innovations get amplified, some shortcomings can be tolerated. Our users understand and包容 us very much.

Guo Dayu, CEO of T-Custom: Traditional apparel has severe inventory backlog. Our small-scale rapid-response supply chain effectively shortens production cycles, improves inventory turnover and capital utilization, producing products closest to consumer demand at the fastest speed. The existing customization industry is too fragmented; price wars lead to泛滥 of low-price, low-quality goods, yet no one has built a brand. We focus on building a high-quality customization brand and supply chain; our factories all use self-developed production management systems, achieving informatized management that makes high-quality, high-efficiency small-batch customized production possible from a process standpoint. More and more enterprises are coming to us for categories beyond apparel — Douyin gift boxes, Kuaishou mugs. For them, T-Custom represents high-quality customization. We'll also do more expansion in customizable product categories.

Li Jian, CEO of Xinliangji: We help B-end restaurants improve efficiency, which fundamentally satisfies C-end product demands.

Dami, CEO of Vphoto: Everyone enters the consumer market with different postures. What we do isn't pure consumer product; we create a new category based on technological innovation, while capturing both supply and demand sides to empower the industry. At the same time, we rapidly iterate our products.

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Q5

How do you view consumption upgrading, downgrading, and segmentation?

"Consumption downgrading" doesn't exist!

Consumption remains the primary driver of economic growth. Over the past year, we've seen consumption structure accelerating its adjustment. "Pursuing cost-performance" doesn't mean selling cheap junk. Rational consumption is dominant — we make appropriate products, not the most expensive ones.

Zhang Rui, chairman of Gaoding: China's urban structure is complex; within the same city, different consumption preference groups are also complex. People who use WeChat but not Taobao do have different consumption habits from Taobao users. Overall, everyone is upgrading in ways they can choose. Even instant noodle consumption follows this pattern. The cheapest instant noodles used to sell for one yuan per cup; now they've upgraded to 2.5 yuan.

Lin Sheng, founder of Chicecream: We're all not ascetics; pursuing beautiful things in life is instinct. We often reference Japan's consumption trends, thinking China also experienced downgrading after rapid economic development. But that's not downgrading — it's returning to simplicity. Before economic boom, people bought 200-yuan bags; during the boom, they wanted 20,000-yuan LV; now, people are more rational, preferring 2,000-yuan bags. In absolute terms, bag prices have gotten cheaper. But this is still rational upgrading. In the end we found that what's between street stalls and luxury is the most mass-market.

Kyle Jiang, CEO of JUNO & Co.: If divided by product quality, I see two trends: one is consumer segmentation caused by social class and income分层; the other is all classes pursuing higher quality products. To summarize: consumption upgrading on a foundation of segmentation. Low-spending consumers pursue high-quality goods, raising average ticket size; consumers who previously pursued luxury return to product usage value itself, lowering average ticket size. Everyone is pursuing cost-performance. Good products, high cost-performance, good design can apply to all segmented groups.

Liu Changke, CEO of Qingqing Tutoring: Information is more transparent now; consumers at every level are pursuing higher cost-performance goods. From the education industry perspective, whether in China or America, education is an important lever for crossing social classes, and remains one of every family's primary consumption expenditures.

Lou Yun, CEO of Club Factory: The consumer market is so large; for下沉 populations, Pinduoduo is also consumption upgrading.

China's consumption structure is very diverse; "consumption segmentation" has always existed. We see more opportunities in细分 markets.

Tang Liang, founder of Plantur: I studied in the Netherlands for nearly three years. The Netherlands has 16 million people (about Guangzhou's population) and birthed many of its own national brands. China has 1.4 billion people, equivalent to two Europes. In such a large, rapidly changing country, it's completely normal for consumers to have many different needs! Many segmented market brands will certainly emerge here, and these brands will go to more countries and regions in the future.

Chen Pengyun, co-founder of Huasheng Haoche: New products and new channels are making the market more "diversified." For startups, the more segmented the market, the more opportunities. Our car leasing product counts as upgrading, because customers who would have bought cars years later can now consume in advance; but it also counts as downgrading, because customers' current barrier to car usage is lower — they can drive for less money. Neither upgrading nor downgrading alone is accurate.

Wu Jun, founder of Saturnbird: Segmentation is more accurate for the coffee industry. On one hand, specialty coffee shops are growing, and more instant coffee users are switching to freshly ground; on the other hand, freshly ground coffee prices at Luckin Coffee, Manner, and others have dropped below 20 yuan.

Tao Weiguang, CEO of Hui Brand: Human society has always had分层; some people are wealthier, others relatively less so. But醋溜白菜 isn't only loved by common people — even wealthy people sometimes want醋溜白菜. Happiness, joy, all beautiful things — there's no upgrading or downgrading.

Ren Jiujin, founder of Particle Fever: Thinking about these concepts gives me a headache; consumption levels have always been differentiated. It's all discussion about whether spending 100 yuan feels worth it or not.

Whatever the consumption trend, following users' real needs is never wrong.

Squirrel Dad (Zhang Liaoyuan): We shouldn't think about this by final consumption amount, but from category characteristics. Three Squirrels has nearly 100 million members; we make a national-level snack brand accessible to both white-collar workers in tier-one cities and consumers in tier-four or five cities. People used to pay 20 yuan for a bag of nuts; now with developed retail, they can get it for 18 yuan with better quality than the 20-yuan version. Is this upgrading or downgrading? Neither. We still talk cost-performance. When people mention cost-performance, it seems to imply poor quality. But actually, cost-performance is maximizing consumption value.

Li Jian, CEO of Xinliangji: Consumers' most fundamental needs have always been eight characters: good quality, low price, simple, easy to obtain. These eight characters can combine into many different consumption demands. Good-quality products at higher prices can be called upgrading; same-quality things at lower prices due to higher production efficiency can be called downgrading. We don't focus much on surface changes; we still grasp these eight characters, with internal industrial chain efficiency improvement being more important.

Wang Shiyong, CEO of 2:10 Animation: Consumption trends are proportional to GDP — you can't run too fast or too slow, must attach precisely to GDP. Upgrading, downgrading, segmentation are all "components of the economic spiral ascent process." Whatever the level, people are pursuing better cost-performance. Finding ways to satisfy their needs — that's the direction consumer industries should advance. Additionally, I've observed a trend: city upgrading. Previously logistics relied on ports, so port cities developed faster than inland cities. But now, one网线 is logistics; every city stands at the same starting line. For cities to upgrade, retain talent, build industrial ecosystems, they still need to传递 their core culture and values, playing the user experience card.

Si Wei, founder of Yuki Animation: First satisfy users'刚性 needs, then talk about upgrading. When we planned洗护 sets for The Last Summoner and Non-Human, we first needed people to feel this洗护 set works well, then considered different seasons, different demographics matching different formulas, etc. If you can't grasp刚性 needs, other needs are impossible to do well. Consumption upgrading is users wanting to become better, not brands abandoning刚性 needs and casually concocting new demands.

Dami, CEO of Vphoto: Upgrading, downgrading — they're both just surface-level labels. Whether someone buys a 30,000-yuan TV or a 3,000-yuan TV, they're both seeking psychological satisfaction. Consumers don't confine themselves to fixed consumption tiers. What matters is who can better meet their needs.

Xiao Guoxun, CEO of Sexy Salad: When we first started out, many people saw eating grain salads as consumption upgrading. But none of that really matters. We've never emphasized macro-level narratives about upgrading, downgrading, or market segmentation. We only focus on three things: who is the user? What's the consumption scenario? What does the user need in that scenario?

Q6

Views on claims like "the golden age of entrepreneurship is ending" and "capital winter"?

Over the past year, anxiety has spread. But this isn't the first time. Economies always have cycles, and "darkest hours" can still produce good companies. "Winter" is precisely when we build our internal strength. We reorganize our internal structure, accumulate energy, and set out for new battlefields.

The veterans really aren't scared.

Dami, CEO of Vphoto: This is my third venture. During my first two, the concept of VC didn't even exist! A northern child born in winter always knew that survival meant wrapping yourself up tight. We didn't feel much of the 2018 "winter" — instead, we hired many new people and kept advancing steadily. Also, if you genuinely feel "cold," finding something beyond commercial value to sustain you through it matters quite a bit.

Lin Sheng, founder of Chicecream: For most of the year, I was indifferent. Only in the final two or three months did many startups and investment institutions around me start talking about it. "Winter theory" spread like the flu. But looking back, when we first started doing business, there were almost no investment firms in China — you had to earn money through hard work, bit by bit. That perspective brings balance. The most critical thing for a company has never changed: you must have strong self-sustaining profitability.

Li Jian, CEO of Xinliangji: Everything in the world follows patterns — from macro economic cycles to the ups and downs of personal health. Starting a business in different periods has different pros and cons; you need to view it dialectically. What matters most is taking actions suited to the current cycle. We do B2B business, and a tighter macro environment is actually beneficial — when B-side companies tighten their belts and squeeze out every cost and profit margin, that's precisely where we become valuable. We've also focused on internal efficiency and costs, using this time to refine our products. When spring arrives and the yellow light turns green, we'll shoot right out.

Liu Changke, CEO of Qingqing Tutoring: Winter is a rare season for building physical strength. We lived through the 2015 O2O wars and the subsequent collective cooling of the sector, and we deeply understand that so-called "windfalls," "shortcuts," and "disruptions" are all fleeting. Education is a long-term endeavor requiring time to polish and the resolve to endure solitude. When things hit bottom, they turn around; winter gives birth to spring. This is a season of gestating vitality — let's seek strength from within.

Panic spreads like the flu. Stay physically fit, don't get infected. Remember that challenges always coexist with opportunities. Please don't be afraid — darkness lets you see with perfect clarity.

Tao Weiguang, CEO of Hui Brand: There's an old saying: if you listened to every cricket chirping, would you stop planting crops? There will always be someone calling it winter. Don't let such talk brainwash you into stopping what you should be doing.

Zhang Rui, chairman of Gaoding: Era is indeed an important factor, but success or failure shouldn't all be attributed to it. We can't change the weather, so we check the forecast before going out — whether to wear an extra layer or bring an umbrella. The most critical thing is to exercise and keep fit, so that no matter how the weather changes, you don't easily catch cold, get sick, or worse.

Chen Pengyun, co-founder of Huasheng Haoche: When macroeconomic conditions are good, the probability of entrepreneurial success is 5%; when they're bad, it's 2%. Both 5% and 2% are extremely low probabilities. What truly affects whether we succeed are micro-level factors. You can pay attention to the macro, but stay focused on your own company's development.

Tang Liang, founder of Plant: Do your own job well. Running a good business is the hard truth.

Ren Jiujin, founder of Particle Fever: Many people don't know that winter is the best season for "cutting fat and building muscle." Companies that can manage finances well, maintain net profits, and achieve reasonable growth will feel more at ease during the "winter" — because this is when real capability shows. Besides, fundraising isn't a necessary condition for business development.

Wang Can, founder of Patpat: In the cross-border industry's previous supply chain operations, upstream companies had relatively long payment cycles, which invisibly created capital pools. But by 2018, this approach no longer worked. Whether taxes or rent, costs were rising rapidly. Many suppliers quit, and everyone in the supply chain felt pressure. Companies that had grown through volume alone began experiencing problems one after another. Only those with refined operations could keep improving.

Si Wei, founder of Yuki Animation: On the capital level, 2019 might be even tougher than 2018. But a colder capital environment, which pushes everyone to take a serious look at their own business, is a good thing! In the process of growing a company, internal adjustments are also necessary — you should adapt to various business environments.

Lou Yun, CEO of Club Factory: Rather than calling the current period a "winter," I think it's more accurate to say the previous period was "overheated." Startups must respect cost structures. Cost structure is originally the most effective tool for mobilizing social resources, but "overheating" caused many people to ignore it and run blindly.

Kyle Jiang, CEO of JUNO & Co.: With crisis comes opportunity. Focus on consumer needs, go from nothing to something and from something to excellence, making products they love — excellent companies can be built in any era.

Wu Jun, founder of Saturnbird: Adjustment is simply the natural order. Going forward, some will keep acting up, some will firmly choose to fight monsters, and some will keep admiring flowers. Many will start feeling they should plant vegetables. In short, innovation by the few brings more choices for the many, eventually becoming the direction of the era.

Guo Dayu, CEO of T-Club: Over the past decade, under multiple dividends — demographic dividend, PC internet, mobile internet, capital — internet entrepreneurship developed obvious bubbles. Winter isn't necessarily bad. Everyone moves closer to business fundamentals, no longer blindly chasing windfalls and speculation, but instead creating value and pursuing enduring success. This includes capital usage: startups no longer inefficiently expand through reckless spending, but instead build internal strength through precision marketing and improved operational efficiency. For consumer goods entrepreneurs, changes in channels, in how consumers access information, and in consumption concepts and lifestyles all create new opportunities.

Xiao Guoxun, CEO of Sexy Salad: Striving to create profit is the mission of all enterprises. Good companies can transcend economic cycles and find appropriate ways to make money under different challenges. We strive to become such a company.

Liu Wenchao, CEO of Tingjiandan: Era, environment, background — these aren't things you get to choose. We've always focused solely on our industry, deeply cultivating smart parking. From the start, we weren't chasing a windfall or betting on a future, but doing one thing with down-to-earth dedication, persisting, and making the smart parking industry deeper, finer, and larger.

Squirrel Dad (Zhang Liaoyuan): These narratives don't matter, and I don't pay attention to them. Over the past year, I met with Uncle Feng (Li Feng) 12 times, almost once a month. Looking back, perhaps 60% of the judgments we made during those meetings weren't necessarily correct. The business world changes too fast, full of uncertainty. But it's precisely because of so much uncertainty that we're forced to think more deeply step by step. As expressed in that film Darkest Hour: when feeling lost, you should ask consumers and listen to their voices, understand what has changed and what remains constant, then build your strategy in that direction. Whether it's winter or not, no need to over-worry. In any era, relying on yourself is best.

Finally, wishing you a happy Spring Festival.

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