The founder of Zhong Xue Gao sells sweet potatoes and "pays back every penny"

Lin Sheng, the founder of Zhong Xue Gao, started live streaming to sell goods, sell goods to pay off debts, and embarked on the road of self-help. Standing on the line between life and death, can he turn the tide and return to the top? Today, by telling his story, I will give you some inspiration and recommend it to Internet friends to read.

"There has always been pressure. Live streaming is a particularly difficult thing for me because this option has never been available before." At 7 p.m. on May 28, Zhong Xue Gao founder Lin Sheng officially started live streaming and selling products in the "Zhong Xue Gao Lao Lin" live streaming room on Taobao, with obvious nervousness on his face.

Lin Sheng chose live streaming to sell goods in order to ease the company's cash flow and pay off overdue wages to employees.

"Zhong Xue Gao didn't operate very well in the past year, mainly due to my fault. As a result, the cash flow was very tight and even a large number of employee salaries, compensation, and reimbursements were not paid in time. So no matter what method I use, I hope to restore the company to normal operation as much as possible, and pay back the money I owe everyone bit by bit." Before officially starting to sell goods, Lin Sheng explained the current operating situation of Zhong Xue Gao.

As of 7:30 p.m., Lin Sheng's live broadcast room had launched a total of 75 products. In addition to the five Zhong Xue Gao products, the remaining products were divided into four categories: live broadcast selection, digital electronics, food, and home furnishings. Among them, the discount on Zhong Xue Gao's signature product Velvet Cocoa was obvious. The regular price of this product is 180 yuan/10 sticks, while the price in the live broadcast room is 112 yuan/12 sticks, and the unit price of the product has dropped from 18 yuan to 9.3 yuan. In addition, the products selected in the food area are mainly sweet potatoes, fried dough sticks, apple juice, tea, etc., while the home furnishings products are hand sanitizer, mosquito repellent, toilet paper, etc.

Overall, the live broadcast room's product selection is user-friendly. Ten minutes into the broadcast, the number of viewers in the live broadcast room exceeded 80,000; 17 minutes into the broadcast, the number of viewers in the live broadcast room exceeded 100,000; as of press time, the number of viewers has exceeded 500,000.

From staying behind the scenes to stepping on the stage to promote products, Lin Sheng is racking his brains to raise funds to keep the company running. However, with the changes in the consumption situation and the retreat of the high-end trend of domestic ice cream, Zhong Xue Gao is also facing many uncertainties in the road ahead.

1. 729 employees are owed money, and "will pay it back bit by bit"

Lin Sheng’s live streaming sales was not sudden. He had been releasing information to the public for more than a month before the start of the show.

On April 21, Sina Finance CEO Deng Qingxu posted a Weibo post saying that after Lin Sheng was "restricted from climbing", he took a green train to Beijing overnight. According to the Weibo post, Lin Sheng said, "I will pay off my debts even if I have to sell sweet potatoes!" That same evening, Lin Sheng posted a Weibo post in response to the above post, saying that although the company is currently facing many difficulties, the company's determination to change and take responsibility has not changed.

On May 11, Lin Sheng appeared in the live broadcast room of Wu Xiaobo Channel again to talk about the development history and current situation of Zhong Xuegao. When the comment "pay back the money" appeared in the comment area of ​​the live broadcast room, Lin Sheng responded that no matter whether he was selling ice cream or sweet potatoes, he would pay back the money bit by bit, and expressed his consideration of developing new products and even live streaming to sell goods.

Behind the low-key attitude, Zhong Xuegao is hovering on the "line between life and death".

In October 2023, several netizens claiming to be former employees of Zhong Xuegao broke the news on social media, saying that Zhong Xuegao had withheld wages and compensation for resigned employees. At that time, the relevant person in charge of Zhong Xuegao told the Times Weekly reporter that the company was actively resolving the relevant disputes and that operations were currently normal.

In a live broadcast on the evening of May 28, Lin Sheng also revealed that Zhong Xue Gao had a large amount of employee salaries, compensation, and reimbursements that had not been paid in time. "729 is the number of employees we counted who were owed wages. We hope to reduce this number little by little."

Tianyancha shows that since November 2023, Zhong Xuegao has added a number of court opening notices, with the cases being service contract disputes, sales contract disputes, processing contract disputes, etc., in which Zhong Xuegao is the defendant. Since December 2023, Zhong Xuegao has added 7 equity freeze news, freezing nearly 40 million yuan of equity, and the companies whose equity is executed are all wholly-owned subsidiaries of Zhong Xuegao.

According to the China Enforcement Information Disclosure Network, on March 11, the Jiading District People's Court of Shanghai issued a consumption restriction order, restricting Zhong Xuegao and its legal representative Lin Sheng from high consumption due to "failure to perform the payment obligations determined by the effective legal documents within the period specified in the execution notice." According to statistics from the Times Weekly reporter, as of now, the total amount of execution against Zhong Xuegao and its wholly-owned subsidiary Zhongmao (Shanghai) Food Technology Co., Ltd. exceeds 30 million yuan.

According to the information from Wu Xiaobo's live broadcast room, there are only 70 employees left in Zhong Xue Gao. At its peak, the number of employees was 2,000. In addition, the last update time of Zhong Xue Gao's WeChat public account and official Weibo was in August 2023, and the last update time of Zhong Xue Gao's Xiaohongshu account was on September 14.

On March 1 this year, Zhong Xue Gao's Douyin official flagship store account released new product news, announcing that the classic flavor formula was upgraded across the board. However, judging from the terminal situation, the market scope of Zhong Xue Gao's products is relatively small.

Currently, there are only three new products with upgraded formulas on sale at Zhong Xue Gao's Tmall flagship store, and the distribution range is limited. On May 28, a reporter from Times Weekly visited several convenience stores and supermarkets in the Zhujiang New Town area of ​​Tianhe District, Guangzhou, and found no Zhong Xue Gao products in the store freezers. In addition, a considerable number of Zhong Xue Gao discounted products are still circulating on various e-commerce channels.

During tonight’s live broadcast, many netizens also left comments saying that they hope to be able to buy Zhong Xue Gao’s ice cream in the live broadcast room.

2. High-end ice cream is not selling well, and distributors feel sorry for Zhong Xue Gao

No matter how Lin Sheng’s live streaming business develops, Zhong Xuegao may find it difficult to regain its glory in a short period of time.
Lin Sheng, who started out in advertising consulting, used his strong marketing skills to push small street shops like Madiel and Zhongjie 1946 in Northeast China to the core business districts of first-tier cities. Zhong Xue Gao, founded in 2018, can be seen as the "culmination" of Lin Sheng's ice cream business.

Zhong Xue Gao's selling point is that it uses high-quality raw materials and has zero additives. Its products are priced between 10 and 20 yuan when they first hit the market. During the 2018 Singles' Day shopping festival, Zhong Xue Gao's Ecuadorian Pink Diamond ice cream was priced at 66 yuan per stick.

Riding on the trend of high-end ice cream market in China, Zhong Xue Gao once achieved outstanding sales performance. On Singles' Day in 2018, Zhong Xue Gao sold 50,000 sticks in 40 minutes, ranking first in the ice cream category on Tmall. In 2019, the brand's sales exceeded 100 million yuan. In 2020, the brand's online sales once surpassed Haagen-Dazs. In 2022, Zhong Xue Gao's revenue exceeded 1 billion yuan.

From 2018 to 2021, Zhong Xuegao won four rounds of financing in succession, with investors including ZhenFund, Matrix Partners, Tiantu Investment and other well-known institutions. Among them, the A round of financing obtained in May 2021 was as high as 200 million yuan.

However, after a period of rapid growth, Zhong Xuegao's management shortcomings gradually became apparent.

In order to ensure the unique product appearance of tile-shaped and chevron-shaped patterns on the top, the production equipment of the entire production line of Zhong Xuegao is independently designed and purchased. The founding team previously revealed that Zhong Xuegao has invested hundreds of millions of yuan in equipment, technology, and innovation; and in order to expand the market, Zhong Xuegao has put more than 50,000 freezers into the offline market, especially the low-end market. For reference, when Unilever's ice cream brand Wall's entered China nearly 10 years ago, the total number of imported freezers installed was only about 60,000. In the early 2000s, Wall's investment in 60,000 freezers exceeded 360 million yuan.

However, Zhong Xuegao, which has been advancing all the way, has also suffered from the backlash of traffic. In June 2022, due to the soaring prices of ice cream in the market, Zhong Xuegao was regarded as a typical "ice cream assassin". At the same time, Zhong Xuegao was controversial because its products "could not be burned". With the cooling of consumer investment, Zhong Xuegao, which was previously a darling of capital, has no longer been able to receive capital transfusions.

In Wu Xiaobo's live broadcast room, Lin Sheng summarized his mistakes in running Zhong Xue Gao as a lack of risk awareness, rapid expansion that led to inability to keep up with management, and failure to learn how to face public opinion in the era of self-media.

However, when business mistakes occur during the market transformation period, it is not easy for Zhong Xuegao to start over.

After a brief period of consumption upgrading, the domestic ice cream market is once again moving towards a period of affordable consumption.

Data from the Mashangying Intelligence Station shows that both the suggested retail price and the average transaction price of products show a significant "downward trend" in the ice cream market in 2023 compared to 2022. From the perspective of suggested retail prices, the number of products priced above 6 yuan has dropped from nearly 50% in 2022 to just over 20% of the total SKUs in 2023, and the decline of high-priced products on the best-selling list is very obvious.

On May 28, a senior ice cream distributor told the Times Weekly reporter that since the beginning of this year, the sales of ice cream products priced above 5 yuan have generally been poor. "This year, there are very few Internet celebrity products on the market. Consumers are generally more rational, pay more attention to the cost-effectiveness of products, and are not so prone to impulse purchases."

At the same time, the dealer also expressed his regret for Zhong Xue Gao. "Zhong Xue Gao's marketing is very good. If it only targets high-end channels and high-end customers, this brand will actually do well. But unfortunately, this brand smashed the freezer and entered too many low-end channels, and it killed itself."

Author: Li Xinting

Source: WeChat official account: "Times Finance APP (ID: tf-app)"