The sale of konjac can also be listed, with no money, and annual income of 500 million!

By orchioo Apr8,2023

If a number of “specialized and new+invisible champions” in counties and towns can get more sufficient funds, and more “consistent konjac” can land in the capital market, it will be of landmark significance for local tax and employment.
Recently, a company selling konjac was listed. “Konjac” landed on the Beijing Stock Exchange, with annual revenue of 500 million and market value of more than 1 billion. Pencil suggested that all entrepreneurs should study the company. There is a huge blue ocean opportunity behind it.
Why? This company is full of “small town characteristics”. The founder is a small town entrepreneur, and its business focuses on the small town characteristic industries. But today, such a “small town enterprise” can smoothly connect with the capital market. What does this mean?
Today’s venture capital circle pursues “high and sophisticated+technological innovation” everywhere. In other words, there are few opportunities for “ordinary entrepreneurs” with grassroots background. The hot identity tag has become scientists’ entrepreneurship, well-known executives’ entrepreneurship and so on.
The key track has also been replaced by semiconductors, new energy, biological medicine, industrial internet, etc. According to Pencil Track DATA data, more than 80% of the capital has poured into these tracks in 2022.
However, the company “Konjac” foreshadows a truth: the pursuit of “high and sophisticated+technological innovation” is not all, and the entrepreneurship of scientists and enterprise executives is not all. As long as we can find a track of “specialized and innovative+invisible champion”, small town entrepreneurs also have the opportunity, and small town enterprises can also be listed.
It also reveals a new entrepreneurial idea, a “dimension reduction and strike” idea: instead of being involved in first-tier and second-tier cities, elite entrepreneurs can focus on some county-level and town-level characteristic industries. With the commercial awareness of first-tier cities, they can go to the county-level and town-level characteristic industrial chain to find a position, and can also bend to overtake and achieve the goal of landing in the capital market.
Let’s see how “consistent konjac” is made.
In Changyang Tujia Autonomous County, Yichang City, Hubei Province, there is Wu Ping, a small town entrepreneur. She graduated from the Department of Traditional Chinese Medicine of Hubei University of Traditional Chinese Medicine, and later started a business in advertising, catering and other fields. Since then, instead of going to the big city, she went to Changyang County with her husband in 2007 – and founded “consistent konjac”.
This direction is the characteristic industry heavily relying on Changyang.
For the konjac industry, what is the position of Changyang? According to the Konjac Research Report of Junyi Capital, China ranks first in the world’s konjac production ranking, accounting for 63% of the world’s total production. In China, konjac production areas are concentrated in remote areas such as Yunnan-Guizhou, Sichuan and Chongqing, southern Shaanxi, Hunan and western Hubei.
Among them, there are many high-quality konjac production areas in Changyang: Langping, Hejiaping, Ziqiu and other towns.
In this context, “Uni-President Konjac” positioned its business as the intensive processing of konjac. For example, konjac flour, which accounts for more than 85% of the total revenue (2019-2021).
From the perspective of “high precision+scientific and technological innovation”, the technical content of “consistent konjac” business is not high. It takes the OEM route first, and then introduces the consumer brand – which is also the mainstream business route of processing/consumer enterprises in the past two years.
In terms of financing, “unanimous konjac” also exudes a strong “town” flavor: mainly bank loans and shareholder investment.
For example, from 2019 to 2021, the company’s annual loan amount from banks was about 40 million to 100 million, including Changyang Rural Commercial Bank and Bank of China Changyang Sub-branch.
This is the typical “high dimension hits low dimension”.
Founder Wu Ping is now known as “Konjac Sister”. Even in low-tier cities, the products are exported to more than 20 countries and regions such as the United States, France, Germany, such as Cargill, Germany Teer Group, Belgium Lvsai Group, etc.
From 2019 to 2021, the revenue of “consistent konjac” was about 366 million yuan, 379 million yuan and 501 million yuan, and the net profit was between 35 million and 60 million yuan.
In a track neglected by the capital, it is quite good to be able to achieve such revenue+profit on the premise of only borrowing 40 million to 100 million yuan per year. From the perspective of entrepreneurs, it took about 16 years to build a company with a market value of 1 billion yuan under the premise of very little equity financing. This book return has exceeded 99% of the companies in the mainstream venture capital circle.
According to Pencil Road’s previous statistics, the probability of entrepreneurs becoming listed companies is less than six in ten thousand.
So why should entrepreneurs roll around in first-tier cities?
Taking Changyang County as a benchmark, there are 3580 famous, special and excellent new agricultural products in China (recognized by the state in 2020). By 2021, China has created 1099 strong agricultural industrial towns and 308 “agricultural product advantage zones with Chinese characteristics”.
Theoretically, every town and advantageous area may produce “great small town enterprises” like “Konjac”, which has both profitability and the possibility of docking with the capital market.
In these virgin lands, if entrepreneurs go to the countryside with the commercial awareness of first-tier cities, combine their love and expertise, and find differentiated positions in the local industrial zone, it is also possible to create listed companies.
This is also in line with the country’s super cycle of building “county economy”. On February 13, 2023, the “No. 1 central document” was released. According to incomplete statistics, there were 13 “counties” in the document, and about 35 expressions related to counties.
By the end of 2020, China’s counties account for about 90% of the land area, 41% of the national economic aggregate and 63% of the national population. In terms of growth, the total GDP of the county in 2020 was 39.2 trillion, an increase of 60% compared with 2011.
The rise of county economy first depends on the rise of county and town enterprises. If in the future, more money from the capital market can flow into the county, so that a number of “specialized and new+invisible champions” in the county and town can get more sufficient funds, and more “consistent konjac” can land in the capital market, which is of symbolic significance for local tax, employment, etc.
It is expected that in the future, more “consistent konjac” will emerge in more than 1300 counties and cities across the country, and more “homecoming entrepreneurs” will feed back their advanced knowledge to counties and towns.

By orchioo

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