This is an English adaptation of a FoodBud historical article originally published on September 7, 2021.
Juewei Food was no longer simply selling duck necks. By 2021, the company had built a widening investment map around its core chain-store and supply-chain capabilities.
In its financial reports, Juewei described its strategy as “deepening the duck-neck core business and building a food ecosystem.” The company said it would open up its supply-chain network, chain-channel management, and organizational capabilities to partners through “industrial investment + value-added services.” Its stated coordination model covered shared procurement, warehousing, capacity, delivery, sales systems, and intellectual resources, with the aim of becoming an accelerator for specialty food and light foodservice companies.
Juewei established its investment platform, Shenzhen Wangju, in 2014. Beyond direct investments, Shenzhen Wangju also acted as an LP in other funds, extending Juewei’s industrial investment reach. Examples cited in the source include Juele Capital, jointly formed with Ele.me, and Tomato Capital, where Shenzhen Wangju was also an LP.
According to Juewei Food’s 2020 annual report, the company invested another RMB 800 million into Shenzhen Wangju that year.
On August 5, Shenzhen Wangju contributed RMB 644 million to establish Sichuan Chengdu Xinjin 415 Equity Investment Fund Partnership (Limited Partnership), taking a 58.5% stake. Linzhi Yongchuang Information Technology Co., Ltd., a Tencent-linked entity, contributed RMB 150 million for 13.6%, while Qiaqia Food contributed RMB 60 million for 5.5%.
Based on Juewei’s disclosures, the only company directly invested in by Juewei Food was Inner Mongolia Saifeiya Agriculture. Other investments were made through Shenzhen Wangju.
On September 6, Qianwei Yangchu, a Shenzhen Wangju portfolio company, listed on China’s A-share market. After the IPO, Qianwei Yangchu had a market value of RMB 1.9 billion, and Shenzhen Wangju held 3.85%. Qianwei Yangchu’s prospectus disclosed Shenzhen Wangju’s 2020 financials: total assets of RMB 1.6 billion, net assets of RMB 700 million, and a net loss of RMB 43.475 million for the year.
According to Juewei Food’s 2021 interim report, Shenzhen Wangju’s largest disclosed project-level investment, aside from larger LP commitments to other funds, was Hefu Noodle.
Shenzhen Wangju invested RMB 230 million in Hefu Noodle for a 23.08% stake. Juewei’s 2020 annual report said that because other Hefu Noodle investors increased capital in 2020, Shenzhen Wangju’s ownership percentage fell, but its share of Hefu Noodle’s net assets increased by RMB 28.55 million.
In July 2021, Hefu Noodle completed nearly RMB 800 million in Series E financing, with a post-money valuation of RMB 6.4 billion.
The 2021 interim report also showed that, besides Hefu Noodle, Shenzhen Wangju invested RMB 130 million in Yaomazi for a 13.68% stake.
According to Qichacha information cited in the source, Shenzhen Wangju’s investments included:
In the first half of 2021, Juewei Food had RMB 92.55 million of related-party transactions with Jiangxi Xianpei Logistics, which the source identifies as Fresh Life Cold Chain Logistics. The next largest cited transaction was RMB 18.56 million of raw-material purchases from Inner Mongolia Saifeiya.
Fresh Life Cold Chain Logistics’ controlling shareholder was Grass Green Group, an investment and M&A platform initiated by Xi Gang, chairman of New Hope Dairy.
In the first half of 2021, Juewei Food reported revenue of RMB 3.144 billion and net profit of RMB 502 million, up 30.27% and 82.91% year over year. Main business revenue was RMB 3.06 billion, and fresh-product sales accounted for 92.61% of sales value.
By business segment, braised-product sales revenue was RMB 2.899 billion, up 27.59%, accounting for 94.87% of total revenue. Franchisee management revenue was RMB 33.2469 million, down 9.40%, accounting for 1.09% of total revenue.
Central China, Juewei’s home market, contributed 27.02% of sales. South China and East China followed at 21.83% and 21.63%, respectively.
Juewei continued accelerating national store expansion. In the first half of 2021, it opened 737 net new stores, taking the store count above 13,000. During the reporting period, single-store sales reached RMB 239,300, exceeding the level of the same period in 2019.
Because leisure braised products have short shelf lives, Juewei raised funds multiple times after listing to expand production capacity. Based on an incomplete estimate cited from Changjiang Commercial Daily, including the August 2021 fundraising proposal and IPO fundraising, Juewei had raised a cumulative RMB 4.189 billion.
At the time, Juewei was laying out its supply chain around a 300-500 kilometer radius model. It had built a national supply-chain network centered on 21 production bases, including two under construction, to support the operating target of “same-day order, same-day production, same-day delivery, and sales beginning within 24 hours,” extending effective product shelf life.
On franchising, Juewei had designed and implemented a franchisee committee system. The committee was an autonomous management organization made up of Juewei franchisee representatives and served all Juewei franchisees.
The system was intended to strengthen communication between the company and franchisees and among franchisees, create an effective manufacturer-franchisee interaction platform, promote shared Juewei values and integrated franchisee development, and support franchisee business growth.
Through gradual development, the committee structure moved from a two-level system to a four-level system consisting of a national general committee, regional committees, provincial subcommittees, and operating-zone committees. Regional committees were granted certain autonomous decision-making powers, improving communication, support, store inspection efficiency, franchisee motivation, and cohesion. At the time, Juewei Food’s franchisee committee covered 128 operating zones and more than 3,000 franchisees.
Note: IPO, financing, valuation, fundraising, ownership, and forward-looking operating-target figures are historical references from the 2021 source article.