(Editor's note: On November 13, 2021, on the occasion of the eighth anniversary of the establishment of Lu Yu International Group, we compiled a collection of major media interviews with the group over the past eight years, and published one article daily on an annual basis for readers.) ）
Standards and culture are lu yu's genes
Editor's Note: How deep is China's tea culture? How is the tea market in China developing? Is there a standard system for Chinese tea? Answering the first question will make many Chinese proud, while answering the last two questions will make people think deeply. The weakness of the traditional tea market and the lack of professional standard system have constrained the pace of China's tea and tea culture. Hubei is the indiscriminate place of Chinese tea culture, and the Wanli Tea Ceremony departs from here. Lu Yu, the "tea saint" of the Tang Dynasty, was a person from Tianmen in Hubei Province, and since he wrote the "Tea Classic", tea has entered the vision of ordinary Chinese people.
More than a thousand years later, Hubei Province is facing major development opportunities with the help of national strategies such as the rise of the central region, the Yangtze River Economic Belt, and the "Belt and Road", and a new type of tea industry group that inherits the name of "Tea Saint" is shouting loudly in this land, setting professional standards for the huge Chinese tea market with extraordinary courage. This is the Lu Yu International Group founded by Tianmen Yan Jianhong.
The counterattack of the cowherd
Yan Jianhong was born in 1973 to a rural family in Tianmen, Hubei Province. Although he was born in the countryside, Yan Jianhong frankly said that compared with the previous generation, his growth experience is complete and lucky. In 1990, Yan Jianhong was admitted to Hunan Institute of Finance and Economics, and after graduating in 1994, he entered the CCB. In the two years of CCB, the vision and pattern of this "cow herding baby" have been completely opened. Under the tide of the era of national financial system reform, Yan Jianhong happened to meet the key year of 1994, which was the turning point of development of CCB.
At that time, the major task facing China's financial reform was to establish financial institutions and the basic framework of the market that met the needs of the market economy. Among them, the most important agenda of banking reform is to separate the policy business of the four state-owned professional banks of ICBC, ABC, BoC and CCB, and no longer divide the business according to specialty, and can form cross-cutting and competition between them, and formally change the road to commercial banks. Under the leadership of Wang Qishan, then president of the Chinese China Construction Bank (later renamed China Construction Bank), CCB transferred the functions of acting finance agents and policy-oriented loans, began to comprehensively reform the operation and management system in accordance with the requirements of commercial banks, and began to establish a modern enterprise system with clear property rights, clear rights and responsibilities, separation of government and enterprises, and scientific management. In the important period of the drastic reform of the bank, as a fledgling apprentice, Yan Jianhong had the opportunity to fully understand the reform ideas of large state-owned banks, which became an important enlightenment for him to go down the river in the financial industry later.
In the general trend of financial reform, the development of the insurance industry is also very rapid. After the reform and opening up, state-owned insurance companies have continued to appear, foreign insurance companies have re-entered the Chinese market, and enterprises have also entered the insurance market as investment entities. After the 1990s, more sub-industry insurance companies, especially life insurance companies, emerged in large numbers; the stationing of foreign insurance companies developed into a Sino-foreign joint venture stage; in 1998, with the establishment of the State Insurance Regulatory Commission, the domestic insurance industry moved to the stage of industry self-discipline development under state supervision. Yan Jianhong, who has been training in CCB for two years, is keenly aware that insurance is a just-needed industry and has broad prospects. In 1996, he jumped ship to Ping An Insurance, which was only ten years old at the time.
Ping An Insurance is the first joint-stock insurance company in China, and in the nine years of Ping An, Yan Jianhong has penetrated the deep texture of market-oriented insurance companies. In the new century, the insurance industry has ushered in a period of rapid development, and domestic insurance companies have successively listed overseas and continued to "go global", while the industry system and laws and regulations have been further improved. In the period of rapid growth of the industry, Yan Jianhong's domestic first-class management ideas and global business vision made him initially take on the skills of an entrepreneur. After making a small career achievement, Yan Jianhong chose to return to the campus to continue charging and was admitted to Xi'an Jiaotong University to study for a doctorate. During his Ph.D., he went to NYU's Stone School of Business as a visiting scholar to continue learning advanced management ideas.
After returning from a study visit in the United States in 2006, Yan Jianhong felt that his mentality and thinking were gradually maturing, so he resigned from Ping An Insurance, joined Life Insurance, and spent eight years to become the executive vice president of an asset management company, managing more than 300 billion yuan of assets. With 17 years of deep roots in the insurance industry, Yan Jianhong has portrayed herself as a manager with a modern entrepreneurial spirit. Although it has a reputation in the insurance investment industry, for Yan Jianhong, it is obviously a more attractive choice than getting up to take a key position and earning an annual salary of one million yuan to start a business.
Yan Jianhong realized that tea, like insurance, is a potential demand. His hometown of Tianmen, everywhere is the story of "tea saint" Lu Yu. Although Chinese tea culture has more than 2,000 years of profound heritage, the development of the tea industry is far from matching its traditional values. In China's 500 billion yuan tea market, the tea companies with the highest share account for only 0.5%, not only do not have representative tea brands and popular tea standards, but also play an important role in the international market like Lipton tea. The decentralization and sectatization of the tea industry are more serious, and this traditional cultural business card has always been immersed in a loose trading system, which is difficult to upgrade.
Old brand new venture
The Chinese tea market, which lacks intensive and large-scale production, seems to be huge, but there is actually a big gap. In 2012, Yan Jianhong began to plan to enter the tea industry, and the question he faced was: What kind of path should be chosen? Relying on the large-scale production of tea products to replicate a Chinese "Lipton", this traditional model has long lost its first-mover advantage, and it is difficult to survive in the cracks; and China's two-thousand-year tea culture accumulation also needs to create a better export and platform to express.
In this context, Yan Jianhong chose to take a unique path, not directly joining the army of 200,000 tea enterprises to compete and fight, but to be a platform, a resource integrator, and a standard setter. "When the two ends of an industry are extremely fragmented, the most valuable thing is the B2B platform because it solves the problem of information asymmetry." This positioning ambition is large enough, which means that it needs multi-party support such as policies and funds, which is not difficult. Fortunately, at that time, Yan Jianhong was just at a meeting point where the time and place were favorable.
In 2013, Yan Jianhong officially began to prepare for entrepreneurship. He returned to his hometown of Tianmen and exchanged entrepreneurial intentions with the municipal government. Tianmen City originally had a thirty-year-old Lu Yu Research Association, as well as a large number of experts and people who invested in Lu Yu research, and the emotional charm and cultural value of tea were deeply immersed in this small city. With the support of the municipal government, Yan Jianhong transformed the tianmen Luyu Research Association, an old brand with the government background, into a market-oriented enterprise and established the Luyu International Group. In 2014, Yan Jianhong resigned from the senior management position of life insurance and officially threw himself into Lu Yu's inheritance and development career.
For so many years, the business model of China's tea industry has not been upgraded in essence, why does Lu Yu have the confidence to make changes? Yan Jianhong believes that he and the group are in a "favorable time and place" at the moment. Before Lu Yu, the traditional bulk trading state of the tea industry has lasted for decades, and the industry has not evolved because it does not meet the "time of day". The main force of tea sales is the tea farmers who enter the city, and most of the tea products on the market belong to the political and commercial etiquette tea, and they do not go among the people like Lipton, which causes the tea industry to become opaque. "Standardization and transparency are the foundation of the development of the cultural industry, and if you are not transparent, you cannot achieve cultural self-confidence." Yan Jianhong said.
In recent years, the general trend of national anti-corruption has also profoundly affected the nerves of the tea industry, and the phenomenon of selling tea through relationships has been curbed. Tea is produced as an agricultural product, sold as a cultural product, and broadly speaking, it is a category of cultural industry. Anti-corruption has made the tea culture industry face the real needs of consumers and realize the true value of grounding gas, which is the "time of day" that the tea industry has not encountered in the past two decades.
The "geographical advantage" factor attracts Yan Jianhong more directly. Lu Yu is a cultural symbol of Hubei and the originator of tea research respected by the global tea industry. The great value of the Lu Yu symbol made Yan Jianhong, who was also a Tianmen person, quickly find the entry point and successfully obtain the policy preferences of the provincial government. As for "people", Yan Jianhong believes that "demand is people". There is a huge demand for tea consumption in China, and consumers, manufacturers and distributors all have needs. The great improvement of the consumption efficiency of e-commerce platforms and the country's "Internet +" policy have increased the power of tea production and marketing. Yan Jianhong said: "The grateful era has given the opportunity and brought great changes to the 80 million practitioners in the industry. ”
In the three years since its establishment, Lu Yu Group has built the coordinates of Chinese tea culture and tea standards in Tianmen - Lu Yu Tea Jing Lou, established China's first provincial tea trading platform - Lu Yu Tea Exchange in Wuhan, issued China's first tea fund - Lu Yu Fund in Shenzhen, and planned China Tea Center in Hubei and Beijing, Shanghai and Guangzhou... Along with many "firsts", Yan Jianhong's strategic vision, international vision, entrepreneurial spirit and team management experience have gradually been polished and formed in this process.
Two-wheel drive
Lu YuHui and Tea Exchange are the two inseparable wheels of Lu Yu Group, and cultural and financial "two-wheel drive" is Lu Yu's main strategy. Lu Yuhui belongs to the cultural sector, representing the Group's commitment to the strategy of "being a high-quality tea culture service provider". With the Tea Scripture Building in Tianmen as the center, Lu Yu's Tea Scripture Building radiates to all parts of the country and becomes a transit station for tea culture exchange and promotion. After Landing in 30 cities, Lu Yu will find partners to take stock in the local area and use its wealth and resources to carry out business.
Another wheel is the Tea Exchange. In the past, tea cities across the country were only offline transactions, there were no third-party warehousing agencies, and there were no farmers' markets and shop markets with safe funds. By drawing on the tea industry management experience of Sri Lanka, the United Kingdom and Japan, Lu Yu has built an upgraded modern tea exchange, which has promoted the systematic inheritance of tea culture and the innovation of tea trading models.
Through the cooperation of two wheels, Lu Yu has realized the online trading of tea city and the online of the tea collection market, and is becoming the most professional tea collection and investment platform in China. In addition to the tea exchange, Lu Yu is also building a content e-commerce website, focusing on the recommendation function of tea products and related exchange activities. The establishment of the Lu Yu Fund can also enable mainstream financial institutions and new financial institutions to slowly recognize and accept the valuable asset of tea.
Lu Yu implements a diversified shareholding structure. With Yan Jianhong as the major shareholder, the contributors of the former Lu Yu Research Association and the management of the current company all hold shares, coupled with the supplement of social capital, which constitutes the entire equity distribution system. Lu Yu also implements an equity incentive system for employees. The group's team of more than 400 professionals has a slightly "cute" name - Lu Xiaoyu, who has conducted in-depth field research in 21 tea-producing provinces and cities across the country, and has studied and disseminated Chinese tea culture in major tea-producing and consumption areas around the world. In the internal training system, "Lu Xiaoyu" will be trained as professional tea culture and tea finance talents in a planned way.
In addition to training internal talents, Lu Yu has also established an open platform for cultivating cultural talents for the tea industry - Lu Yu College. At present, Luyu College has three types of entity institutions, one is an open training college; the other is the college cultivation system of Tianmen Vocational College, which may develop into an independent Luyu International Tea Academy in the future; and the third is an institution that disseminates tea culture to the middle and high-end groups, such as the China Tea Industry Business School in Changsha.
Yan Jianhong divided tea market transactions into four eras: the era of farmers' markets, the era of commodity markets, the era of e-commerce department stores, and the era of exchanges. Yan Jianhong said, "The exchange is a real market economy, and it needs qualified investors, enterprises and consumers to enter. "The model of the Luyu Tea Exchange is of great reference significance to the industry, and the things that the industry has not done well in thirty years, we can do well in three years, because the industry has complicated things and lacks architectural capabilities." The industry needs to build an architecture, to have modern financial talents to join, to need new business models, but also to take time. For Yan Jianhong, time is probably the only factor that cannot be controlled by himself at present.
Build trust with standards
The tea exchange and the tea industry standards established by it are the foundation of Lu Yu Group. Before Lu Yu, there were also tea trading platforms in China, but because they did not grasp the pain points of the industry, the effect was not significant. Whether in the national trading platform or a certain industrial trading platform, people have put excess energy on speculation, and there is very little investment that is truly integrated with industry. Doing business is a more basic path, but the difficulty and cost of lobbying the government and tea companies are very large, and it is even more difficult to establish industry standards. "No matter how hard it is, you have to do it." Yan Jianhong said.
The operation of Lu Yu Tea Exchange has a 12-character positioning: transparent consumption, professional collection, and value investment. Yan Jianhong has stressed on many occasions that "standards" are the core competitiveness of Lu Yu Group. In the past, although Chinese tea had standards, they were not sorted out, and there was no platform for enforcement, "the standards were placed in the drawer and handed over to the farmers' market or Taobao to be implemented, and the people did not feel it." And what Lu Yu has to do is the promoter and executor of the standard. In 2015, Lu Yu established the "China Tea Standard Rating Center" (now officially defined as the Lu Yu Standard Rating Center), which plans to open to 600 million tea consumers across the country. Known as the "Tea Consumer Douban", the Lu Yu Composite Index and the Lu Yu Pu'er 100 Index have been launched for professional tea production trade and collection investors. At present, Lu Yu has done basic research on 1200 kinds of tea, and has done in-depth research on 50 production areas and 30 Chinese time-honored tea enterprises, forming a list of Core Tea Enterprises in China.
The Luyu Tea Exchange is also an electronic tea trading and collection market. At present, the 200 tea enterprises signed by the Land Exchange account for 20% of the national output, and the production area service accounts for 60%. The formulation of standards and the formulation of the price system are very important, so the entry process is more stringent, and interested tea enterprises must first go through the internal audit of the landmark center, the external audit of experts, and the jury before entering the exchange transaction.
There are quantitative and qualitative tea evaluation indicators, and when there is a dispute between the evaluations, the final review will be conducted by the Lu Yu Tea Standard Quality Evaluation Center in Hangzhou. Now the transaction information sent through the Land Exchange is a direct transaction with distributors, investors and consumers, breaking the past lengthy five-level distribution system of "tea enterprises - distributors - tea city - distributors - consumers", and the price has also achieved transparency.
Lu Yu's core values lie in standards and culture. "Standards and culture are Lu Yu's genes, but also my genes", Yan Jianhong said, Lu Yu does not do production, nor does it set up a real estate company, but focuses on establishing a professional, easy to understand, trustworthy standardization system and cultural promotion system for consumers. Chinese tea is the ancestor of the world's tea culture, in recent years, Chinese tea is facing severe market challenges, the root of which is that the industry is not transparent, and a standardized system of consumer trust has not been established. If the standard level is not high, it is impossible to form a professional dialogue. Therefore, the formation of a unique cultural language system of the tea industry, so that it can describe products in standard terms like French red wine and Italian perfume, yan Jianhong is also working hard to study.
China tea industry, Lu Yu standard
Yan Jianhong positioned herself as an idealist. "Ideals are not fantasies, ideals must be illuminated into reality." For the expert who has worked in the financial industry for 20 years, the first priority is always strategy. "Utopian people are only suitable for consultants, not entrepreneurs. Ideals must become execution. "Positive energy and progress are the prominent words in Yan Jianhong's dictionary. The improvement of the corporate governance structure and the sound management mechanism, from the development of start-up companies to modern enterprises, there must be many difficulties and setbacks in this process, but Yan Jianhong tends to dilute the description of setbacks and turn to the long-term future.
Yan Jianhong attaches great importance to the value of tea culture. He said that he was only the business leader of Lu Yu, and the role of the director of the tea museum and the general manager of the tea scripture building hoped to be taken over by religious people to "spread tea culture in the form of preaching." The most difficult thing for a business is to turn the ideal of the individual entrepreneur into the ideal of the team. In Yan Jianhong's view, he has basically completed this task in three years, and the longer-term mission is to let the people drink high-quality Chinese tea.
With the combination of tea element market, standards and financial professions, Lu Yu has grown very fast, and has grown from a team of 5 people at the beginning of entrepreneurship to a medium-sized enterprise with more than 400 people, and its revenue has developed from more than 100 million in the first year to more than 500 million in 2016, "the goal for 2017 is 2 billion". At the same time, Lu Yu's plan to seek listing is also very compact, and Yan Jianhong has already calculated the timetable in his mind.
In Yan Jianhong's view, starting a business in the tea industry is an incomparably correct choice: "The cultural genes of tea are the gifts left to us by our ancestors, and it has inherent advantages in completing the conception of the financial system and cultural system." "Collecting the Internet, finance, sales and cultural elements required for tea culture and tea trading business is by no means achieved overnight, on the one hand, thanks to the changes of the times and the dividends of government policies, and the valuable experience accumulated by the founders in the field of finance and investment is equally important, which gives him the ability to make accurate and unique observations of an unfamiliar industry." He used the "target theory" to compare the difference between investment and entrepreneurship: when investing, it is faced with a mobile target, and when you see a good project and a good company, you will invest; and entrepreneurship is a fixed target, shooting darts at a target every day, morning and evening are pondering this "tea" word, and driving all employees to aim at this target to shoot.
Now, yan Jianhong's sooner or later pondering this matter has realized his previous vision, and is unfolding a larger pattern - China's tea industry, Lu Yu standards. These eight words not only express Lu Yu's corporate self-confidence as a professional platform for domestic tea trading, but also represent Yan Jianhong's ambition to lead Lu Yu Group to dialogue with the global cultural industry.
(This article is an excerpt from the interview draft of Chairman Yan Jianhong's interview with Beijing Hubei Chamber of Commerce)