Not long ago, as Kunming durian fell to 10 yuan a catty, many netizens shouted: "Durian freedom has finally been realized."
However, the joys and sorrows of human beings are not the same, and on the other hand, Hongjiu Fruit, which has the reputation of "China's durian king", is facing a severe test.
Since its listing in September 2022, Hongjiu Fruit's market capitalization has exceeded HK$67 billion.
In less than two years after its listing, the market value of Hongjiu Fruit has evaporated by more than 60 billion Hong Kong dollars, and now the market value is only 2.795 billion Hong Kong dollars.
Why did the former fruit king fall into such a predicament?
Deng Hongjiu, the founder of Hongjiu Fruit, is a native of Changshou County, Chongqing, who lost his father at the age of 5, and his family relies on his mother to grow sweet potatoes for a living.
One rainy day when he was 10 years old, his overwhelmed mother wanted to drag Deng Hongjiu to jump into the river, in order to survive, he could only kneel in front of his mother and swear:
"Mom, don't worry, I will definitely try to change our fate!"
In 1987, 17-year-old Deng Hongjiu roamed Chaotianmen alone and started to be a "stick" for people to load and unload goods at the wharf.
Relying on his intelligence and hard work, Deng Hongjiu quickly saved a sum of money, which he later used to start a fruit business.
When Deng Hongjiu was selling red oranges, he found that the red oranges in his hometown of Changshou County were much cheaper than those in Chaotianmen.
So he bought 2 tons of red oranges from Changshou, bought 3 jiao, sold 6 jiao, and earned more than 100 yuan in less than two days.
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After that, Deng Hongjiu slowly ran his own stall, and then purchased fruits from various origins across the country, making the business bigger and bigger.
In 2002, Deng Hongjiu founded "Chongqing Hongjiu Fruit Co., Ltd.", and several partners have opened up six fruit sales routes in the southwest, northwest and north China, and the company's turnover is booming.
In June 2003, under the leadership of Deng Hongjiu, Hongjiu Fruit made a net profit of 300,000 yuan in less than half a month by doing seedless watermelon business.
However, this is not the peak moment of Hong Jiu Fruit.
2011 was a watershed year in the development of Hongjiu Fruit Company, when the sales of imported fruits in the fruit market increased at a rate of 20% per year, and the primary purchase market was in the two major cities of Guangzhou and Shanghai.
Hong Jiu Fruit was also purchased from Guangzhou at that time, but he soon found that the purchase from the primary market was not only expensive, but the quality of the goods was uneven after several changes, and it was difficult to ensure the supply of goods.
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In order to ensure the quality of the fruit and save the purchase cost, Deng Hongjiu decided to import the fruit directly from Thailand, the origin of the fruit.
It is not easy to break through in a foreign country, after experiencing language barriers, doubts from fruit farmers, difficulties in the government, and even the loss of millions of baht, Hongjiu Fruit still has not given up the belief in opening up the market.
In 2012, Deng Hongjiu borrowed 100 million yuan to build a factory in Thailand, employing thousands of workers in the local area, and also hired Chinese and Thai bilingual talents as professional managers.
Subsequently, Hongjiu Fruit signed a long-term purchase contract of 40,000 mu of fruit in the form of futures, which aroused the great attention and support of the Thai government to Hongjiu Fruit.
In order to reassure the fruit farmers, Deng Hongjiu also promised them: "Hongjiu Fruit will pay you a year in advance for the purchase of fruits!"
Since then, Hongjiu Fruit has quickly won the trust of the Thai government and fruit growers, and gradually opened up the Thai market.
From 2012 to 2022, it is the "golden decade" of Hongjiu Fruit.
Hongjiu Fruit's main imported fruit is durian, which is the largest durian distributor in China.
According to statistics, China is the world's most important importer and consumer of fresh durian, and more than two-thirds of the world's durian is eaten by Chinese.
Hongjiu Fruit is undoubtedly the "only middleman" connecting China and Thailand.
By 2022, Hongjiu Fruit has sold an astonishing sales of nearly 4 billion yuan with a gross profit margin of nearly 25% just one fruit, durian.
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Thailand, as the origin of the fruit, directly said: "More than half of the durian growers in Thailand have to rely on Chinese to feed!" ”
In 2022, mainland durians were imported twice as much as cherries, and it is said that Chinese eat 10 durians, one of which is a durian from Hongjiu fruit.
In addition, fruits such as longan, mangosteen, and dragon fruit are also the main purchases of Hongjiu Fruits, which purchase about 35,000 tons of fruits in Thailand every year.
However, with so many fruits, the entire Chongqing market obviously cannot be fully digested, and it is easy to produce unsalable problems.
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But Deng Hongjiu had thought of this a long time ago, and he found Lu Mingxin, vice chairman of the "Sichuan International Agricultural Products Trading Center".
In 2013, the two sides finally reached a cooperation: Hongjiu Fruit cooperated with wholesalers in more than a dozen provinces across the country, and the products were supplied directly from Southeast Asia.
Direct delivery from the origin avoids the middleman to make the difference, reduces the cost of purchasing fruits, and allows ordinary people to afford "sky-high fruits" like durian.
This business model soon penetrated into the country, including Xi'an, Beijing, Dalian and other cities, the market has Hongjiu Fruit's products.
In the past ten years, Hongjiu Fruit's position in the industry is unshakable.
In recent years, the community fresh food group buying business has allowed Hongjiu Fruit to expand its customer base, and its business is getting better and better.
In 2016, Hongjiu Fruit has received multiple rounds of financing, with a total financing amount of more than one billion yuan.
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In 2020, with Alibaba's stake, Hongjiu Fruit accelerated the pace of expansion, establishing fruit processing plants in many countries.
By the end of 2021, Hongjiu Fruit has a total of 16 fruit processing factories and 60 sorting centers, making it a well-deserved "fruit giant".
In 2022, Hongjiu Fruit was officially announced, and its market value reached HK $67 billion that year.
Since then, the annual sales of Hongjiu Fruits have also quickly exceeded the 10 billion mark from the previous billions, and Deng Hongjiu himself will also be listed on the Hurun Report in 2022, fulfilling his promise to his mother when he was a teenager.
However, who would have thought that the Hong Jiu Fruit, which was infinitely beautiful at that time, was already at the end of the strong crossbow?
In March 2024, Hongjiu Fruit suddenly issued a suspension announcement and announced the postponement of the publication of its 2023 annual report, and Hongjiu Fruit's shares also stopped trading soon after.
On April 16, because it was unable to complete the annual performance review, Hongjiu Fruit's accounting firm actually announced its resignation!
At the same time, fruit suppliers from all over the country also asked Hongjiu Fruit for payment, but the boss Deng Hongjiu always refused to show up.
After this toss, the market value of Hongjiu Fruit evaporated by more than 60 billion, and Deng Hongjiu left the Hurun Report even more gloomily.
Why did a listed company with an annual income of 10 billion yuan fall into such a desperate situation in just two years?
There are two main reasons for this.
The first is Hongjiu Fruit's unique "end-to-end" sales model.
The so-called "end-to-end", that is, Hongjiu Fruit purchases fruits from the place of origin, and then directly cooperates with large supermarkets and fresh e-commerce to sell fruits, which saves costs and ensures the quality of fruits, but has a fatal flaw.
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Deng Hongjiu has assured Thai fruit farmers that Hongjiu Fruit will pay the fruit farmers in advance to buy fruit before it is ripe.
Hongjiu Fruit has always fulfilled this promise, but when it sells the purchased fruits to customers such as B-end supermarkets, it often fails to collect payments in a timely manner due to the daily sales difficulties of B-end.
As of the end of the first half of 2023, Hongjiu Fruit still has more than 10 billion payments that have not been recovered.
It is necessary to pay the upstream fruit farmers and not get the payment from the downstream customers, which will inevitably make Hongjiu Fruit in a state of no money for a long time.
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In order to reverse the predicament, Hongjiu Fruit also spent more than 100 million yuan on live streaming on platforms such as Douyin, as well as launching offline experience picking activities to attract traffic, but with little effect.
Another reason for the decline of Hongjiu fruit is the rise of domestic fruits.
The reason why Hongjiu Fruit wanted to import durian from Thailand back then was precisely because the domestic durian production was small and there were no competitors.
However, with the development of China's science and technology, durian varieties were introduced in Hainan in 2019, and after a long period of cultivation, the current planting scale of durian in Hainan has reached about 1,867 hectares, and the taste is not inferior to that of imported durian.
This year, as the price of durian in China has dropped again and again, the people have realized the freedom of durian, but for Hongjiu Fruit, which makes money from durian, this is tantamount to adding insult to injury.
The former durian king walked to the edge of the cliff step by step.
As a well-known fruit distribution company in the industry, Hongjiu Fruit has recently faced an unprecedented severe test.
Due to the difficulty in collecting payments from B-end customers such as supermarkets, Hongjiu Fruit's trade and other receivables are as high as about 10.151 billion yuan, and the turnover days of trade receivables have increased significantly, which directly affects the company's cash flow.
In the face of changes in the market and the company's predicament, Hongjiu Fruit tried to expand to the C-end business, such as attracting consumers through online marketing, but this transformation did not achieve the expected results.
As the largest durian distributor in China, the decline in durian prices has had an impact on its business, and it has undoubtedly given Hongjiu Fruit a blow to the head.
In addition, a series of problems such as the evaporation of market value, the closure of stores and layoffs are also a sharp knife hanging over Hong Jiu Fruit.
From this point of view, Deng Hongjiu, who dared to carry a flat burden and go to Chaotianmen alone when he was a teenager, seems to have no power to return to heaven in the face of today's predicament.
What is the future of Hongjiu Fruit, and whether it can make a comeback, everything is still unknown.
-END-
Resources:
21st Century Business Review: "Chongqing Fruit King, Lost Tens of Billions of Net Worth"
Economic Observer: "Revenue has increased more than seven times in four years, why is "China's first fruit stock"
China Business News: "The Three Giants "On the Sword" Fruit First Share Compete for the Trillion-Dollar Fruit Market
Business Classic: "Also Selling Fruits, Why Did He Sell Billions of Fortunes"
Author: TWYMG
Editor: Ichiyigi