In 2011, 58-year-old Xu Zhiwei ushered in the peak of his life.
In that era when foreign capital was rampant and local enterprises continued to disappear, Longrich, founded by him, carried a banner of China's local daily chemicals.
There are so many Chinese companies, why Longrich? Xu Zhiwei's answer was: "Longrich is responsible, honest and responsible enterprise. ”
But just a decade later, his words turned sarcastic.
In the winter of 2011, Longrich held its annual global direct selling conference.
The Suzhou Gymnasium was packed. Xu Zhiwei, who was proud of the spring breeze, and his wife accepted the cheers of more than 10,000 direct sales personnel on the scene.
These people come from all over the world. Standing among them, Xu Zhiwei couldn't help but think: catch up with or surpass Amway in five years!
Xu Zhiwei's confidence comes from a victory over the global daily chemical giant Procter & Gamble many years ago.
In 2003, P&G, which had swept through the Chinese daily chemical market for many years, felt a rare coolness. What made P&G nervous was not his old rival Unilever, but a snake catcher from rural Jiangsu.
In September of that year, a Chinese company called Longrich appeared on CCTV's nightly primetime.
For Procter & Gamble, which is accustomed to TV commercial bombardment, Longrich's appearance is somewhat unexpected. But this opponent has already flourished in the countryside.
In the vast countryside of China, where P&G has no time to take care of, Longrich's products grow like weeds.
Compared with these products, what caused P&G more headaches was that they met an opponent who really understood the Chinese market, Longrich founder Xu Zhiwei.
This carpenter-turned-leader is particularly good at seizing opportunities.
In 1978, while still working as a carpenter in Jieshan Village, Changshu, Jiangsu, he accidentally caught a snake and earned several hundred yuan by selling snake skin, snake meat and snake gall.
Jieshan Village has always had a tradition of snake hunting. Xu Zhiwei, who was nimble, immediately changed his career to the snake hunting business and soon became a famous local 10,000 yuan household.
Seeing Xu Zhiwei's agility and ability, the local cadres asked him to pick the lead and bring the villagers to become rich together. So, in 1986, he founded Changshu Snake Industry Company, the predecessor of Longrich.
At first, he mainly sold snake gall, snake skin, and made snakeskin products. The remaining snake meat is either sold to farmers as fodder or exported to Japan.
Xu Zhiwei was curious about what the Japanese bought snake meat in large quantities. After some inquiry, I learned that the processing of snake meat into snake powder has the function of beauty and beauty, and the profit is many times more than that of snake meat.
Why make the Japanese make a lot of money? Xu Zhiwei was not convinced and made snake powder himself.
In 1996, selling snake powder, he found that customers had a greater demand for gifted facial cleanser, so he decided to enter the daily chemical industry.
In this year, the snake company officially changed its name to Longrich.
Daily chemical industry is one of the earliest industries to open up in China, with fierce foreign investment and fierce competition.
Xu Zhiwei's sword went the wrong way, he avoided the big cities with fierce competition, turned to the countryside, and conquered the rural market with 1 yuan snake oil ointment and 3 yuan snake oil hand cream.
By 2002, Longrich was an invincible presence in the countryside.
After the great victory in the countryside, Xu Zhiwei, who was bursting with confidence, aimed at Procter & Gamble's rice bowl. But P&G has deep roots in big cities, and the quickest way to challenge it is:
Ad bombardment!
Xu Zhiwei's idea is to do the biggest advertising bombardment: to be the king of CCTV.
In that era when TV was king, competing for the crown of CCTV became a shortcut for many local brands to become popular overnight. Qinchi, Aiduo and other brands have left a memory of an era.
Qin Chi, Aiduo's products, hundreds of yuan at every turn, Longrich's 1 yuan snake oil ointment, also want to compete for the king? Many people think Xu Zhiwei is crazy.
But Xu Zhiwei did not hesitate, and there was one word in his mind: dry!
Since 2003, Longrich has won the local daily chemical CCTV champion for four consecutive years, investing hundreds of millions of yuan every year.
Driven by the CCTV engine, Longrich soared all the way and topped the first place in local daily chemical the following year. By 2008, the revenue exceeded 7 billion yuan.
Flipping through the operation, I saw that the multinational giant Procter & Gamble was blinded.
In the first decade of the 21st century, China's daily chemical industry suffered a great robbery. From Dabao and Little Nurse to Ding Jiayi... A large number of local daily chemical brands have been acquired, hidden, or even disappeared.
Longrich tore a hole in the encirclement of multinational giants, and its rise won a face for local brands.
The Wall Street Journal of the United States once commented: Longrich is the leading brand of local daily chemical in China today.
Xu Zhiwei also said that to compete with foreign daily chemical giants, Longrich is duty-bound. He even shouted: Don't be China's Procter & Gamble, be the world's Longrich.
Seeing that the product is selling more and more popularly, some people suggest Longrich, quickly increase the price.
Xu Zhiwei smiled and replied, "No rise!" Resolutely can't go up! If the price rises, many people in our rural areas will not be able to afford it! ”
This sentence, which touched many people at the time, was hidden behind Longrich's crisis: the great victory of the rural market was piled up with the tactics of a sea of people.
At that time, Longrich had tens of thousands of sales nationwide, and in Shandong alone, there were more than 2,000.
The huge number of people pushing people, coupled with huge advertising investment, has achieved amazing results, but also continues to erode Longrich's already small profits.
In 2006, just as Xu Zhiwei was worried about soaring channel costs and advertising investment, a big event happened in China's sales industry:
In February of that year, cosmetics giant Avon obtained Chinese mainland's first direct selling license.
This is the first eight years since the Chinese government banned pyramid schemes in 1998, and the sales policy has been relaxed again. Xu Zhiwei smelled a huge business opportunity.
By switching to direct sales, Longrich will save huge advertising expenses and channel costs.
The temptation is too great. Xu Zhiwei began to frantically supplement the relevant knowledge, and shouted for direct selling, claiming that he would write 100 articles about direct selling in a few years.
Many people thought it was just a joke, but Xu Zhiwei was serious. On Longrich's website, there is a 132-page document entitled "Direct selling in Longrich".
Many articles in it were personally handled by Xu Zhiwei.
It is not enough to make up for his own evil, Xu Zhiwei also recruits direct sales elites around the world and cooperates with them. Among them, including Qian Gangji, Yin Lian and other industry masters, and even the legendary Bill Nixon in the history of Amway.
After more than two years of preparation, Longrich finally obtained a direct selling license in 2008.
After that, Xu Zhiwei did not stop, continued to increase his efforts, and set up many direct sales teams. By 2011, Longrich's direct sales business in China had flourished.
Xu Zhiwei, who was proud of the spring breeze, began to comprehensively benchmark Amway.
That winter, Longrich held the annual global direct sales meeting at the Suzhou Stadium, which attracted the attention of everyone.
58-year-old Xu Zhiwei, with his wife on the rostrum, presented BMW and Mercedes-Benz awards to employees with outstanding performance, and bluntly said that Longrich bloomed all over the world.
Since then, this grassroots brand that originated in the countryside has become more and more directly sold to the rivers and lakes.
Take an excellent team to travel around the world, take Airbus A380, Dubai seven days and six nights luxury tour, products are exported to more than 60 countries and regions around the world...
The last one who was so arrogant was still Tian Shi and Quan Jian.
However, Xu Zhiwei, who is trapped in direct sales, seems to only see its good, but forgets its bad.
In China, direct selling and MLM are separated by only one layer of window paper.
With the addition of mass sales, Longrich's management fell into chaos. Many people who are contaminated with quacks and lakes do not play cards according to common sense when they blend into the team.
Xu Zhiwei is confident that he can control the situation, but in the eyes of some industry insiders, he "actually does not understand direct sales".
From 2012, the situation began to spiral out of control. That year, Longrich was punished by the Shenyang industry and commerce department for suspected pyramid schemes, followed by Jiangsu, Tianjin, Liaoning...
Such a "burning plain" trend forced CCTV Finance to stand up and criticize by name.
On the Chinese Judgment Documents website, a number of Longrich dealers were imprisoned for the crime of "organizing and leading pyramid schemes". Among them, a person named Zhang Bochuan was involved in hundreds of millions of yuan.
In an interview, Xu Zhiwei admitted that the dealer violated the law, but also said: This is a personal act, not on behalf of the company.
In the face of doubts from the outside world, Xu Zhiwei can avoid it, but another problem makes him more anxious and more and more unavoidable.
In the decade since Longrich entered direct sales, Internet e-commerce has subverted traditional sales channels. Direct selling has not been spared, and even the originator of direct selling like Avon is declining.
In the face of the new competitive situation, Xu Zhiwei, who is good at seizing opportunities, is willing to miss it? In 2012, he founded Juhao Mall, which opened up an e-commerce channel for Longrich.
But he originally hoped to use this to reorganize Shanhe's e-commerce business, which eventually led him into the vortex of illegal fundraising.
Due to fierce competition and single products, Juhao Mall has been tepid after it was launched.
Until 2015, Longrich discovered a magical technique of gathering wealth, that is, to promote the original shares of Juhao Mall to mall members, direct sales personnel, etc.
According to Southern Weekend, Longrich conducted at least four rounds of original share offerings on the grounds of the listing and financing of Juhao Mall.
Many people, lured by interests, bought the original shares of Juhao Mall. But when Juhao Mall went public, they were told there was a 180-day lock-up period.
After the lock-up period ended, Longrich converted the original shares to 1/40 of the original price for various reasons.
The original shareholders, who lost money, began to complain about what had happened to them. For a time, Zhihu, Xiaohongshu, and stock bars were full of denunciations of Juhao Mall.
In February 2023, a number of media broke the news that Xu Zhiwei was released on bail by the police on suspicion of illegal fundraising. It is speculated that this is related to the dispute over the original shares of Juhao Mall.
Since 2008, Xu Zhiwei has been benchmarking Amway for more than ten years, trying to catch up and even surpass.
But Amway's success, in addition to direct sales, lies in its strong R&D capabilities and many products that sell well all over the world.
Longrich also tried. According to its official website, in the past ten years, Longrich has built five factories and ten R&D centers around the world.
But these efforts have not yielded much improvement. In the daily chemical market, Longrich's products are still snake oil ointment, hand cream and flower dew from more than ten years ago.
Longrich, who lacked product strength, not only failed to turn things around through direct sales, but was brought to the ditch.
Yin Lian, a veteran of direct sales who joined Longrich that year, once said: For direct sellers, it is important to adhere to principles, and relaxing the requirements for themselves can easily slide into danger.
The confident Xu Zhiwei didn't take this sentence seriously.
In the article "Direct Selling Business in Longrich", the promise of Chairman Xu Zhiwei was placed in a prominent position, one of which was: Longrich Company is wrong, lose money and pay gifts.
This promise is still on the official website.
The collapse of tall buildings begins with the expansion of desire.
In the past decade, Longrich in the eyes of consumers is still the local daily chemical brand that sells snake oil ointment and hand cream. But what is less known is that today's Longrich has a huge business that outsiders can hardly imagine.
According to public information, Longrich's products involve more than 1,000 varieties in six series, including cosmetics, health care products, washing products, medical equipment, real estate, and finance.
This is only on the bright side. Many specific businesses are poorly known to outsiders.
For example, Longrich also produces alcohol and also cooperates with Moutai.
Xu Zhiwei, a carpenter, has a soft spot for furniture. As early as the 90s, he started a mahogany furniture business, and today furniture is also one of Longrich's important industries.
Not only that, Longrich also produced a mobile phone called Star Glory and held a grand product launch in Boao.
It is also working with Israeli companies to enter the organic agriculture market.
Longrich, which claims to have five major factories in the world, also produces more than 100 daily chemical brands such as Avon and Hanshu, and acts as an agent for Adidas' personal care products.
Of course, what makes Xu Zhiwei most proud is the Longrich Industrial Park located in Changshu City, covering an area of more than 2,800 acres.
For these industries, Xu Zhiwei did his best. In his own words, he has been in the industry for more than 40 years, working 16 hours a day, all year round.
In the eyes of some media, Xu Zhiwei is known as the most diligent entrepreneur in Suzhou.
Qian Gangji, a legend in the direct sales industry who joined Longrich that year, talked about Xu Zhiwei's diligence and admired the five bodies.
In his oral account, one year on the first day of the Lunar New Year, it was snowing, Xu Zhiwei went to Chengdu to investigate, and on the way he met an old lady with her granddaughter, excitedly explaining Longrich's business to the other party.
The diligent Xu Zhiwei has done a lot of things in the past few decades.
He not only personally created a national daily chemical brand, but also learned Porter's competition theory, Trout's positioning theory, and implemented advanced Western management ideas such as Six Sigma and Amoeba within the company.
In recent years, it has also actively built intelligent factories and industrial Internet platforms.
However, compared with Xu Zhiwei, who painstakingly commissioned Shanghai Medical University to analyze the composition of snake powder 30 years ago, Xu Zhiwei now seems to be more keen to chase the wind and talk and laugh with partners.
Longrich, which kept up with the times, eventually expanded its business line to the extreme.
But the stall is so big, the money is still the old three, the revenue is only more than 6 billion, less than a fraction of Procter & Gamble, or even worse than himself more than ten years ago.
A snake oil ointment obviously can't support Xu Zhiwei's ambition to do "World Longrich".
Many people don't understand why this brand, which once carried the banner of national daily chemistry and left the memory of the next generation, is now caught in the vortex of pyramid schemes and illegal fundraising, and even spurned by many people?
The sluggish main business, resulting in the rupture of the capital chain, is undoubtedly an important inducement.
In China, there are two kinds of entrepreneurs: hunter-type entrepreneurs, who are good at seizing opportunities, but it is difficult to deepen their cultivation in a certain field with a shot in a different place.
The other is a farmer-type entrepreneur who has been rooted in a certain field for decades, deepening the moat.
In the early stage of reform and opening up, the market was in the pioneer stage, everything was profitable, and hunter-type entrepreneurs were like fish in water.
From Wu Bingxin of Sanzhu Pharmaceutical, to Ji Changkong of Qinchi Distillery, Song Ruhua of Top Group... Generations of hunter-type entrepreneurs, creating a miracle in China's business history.
But as the market continues to mature and competition becomes increasingly fierce, the days when you can pick up money with your head down and hit a rabbit with grass are gone.
Hunter-type entrepreneurs are gradually fading out of the historical stage.
In contrast, farmer-type entrepreneurs like Ren Zhengfei and Wang Chuanfu began to dominate the market.
In this sense, Xu Zhiwei, who is good at seizing opportunities, is more like a hunter-type entrepreneur.
In Longrich, Xu Zhiwei often said a word: seize the opportunity to pounce. But Michael Porter, the strategic management guru he looked up to, apparently disagreed.
In Porter's view, the main reason why Asian companies, especially Chinese companies, are rare for a century-old enterprise is that many companies gain benefits by breaking the rules of the industry.
The implication is that opportunists, good at horse racing, but lack enough patience to work hard.
Xu Zhiwei, who is good at capturing opportunities, ultimately failed to create the world's Longrich, but had to sell goods in the live broadcast room in order to promote his own products.
"I'm 70 years old, so there's no need to lie to you to sell products."
"There is no effect when you buy it back, you can come to Longrich to find me." Someone really looked for customer service, but was told, "I can't find the chairman." ”
Similar "jokes" and consumer complaints abound online. Many people think that Xu Zhiwei is just to sell products, but he probably really believes it.
At the training meeting inside Longrich, Xu Zhiwei personally taught everyone to drink small molecule protein peptides and demonstrated on the spot:
Since starting the regimen, I have been able to complete 100 squat frog jumps, 50 sit-ups, and crawling back and forth at one time.
Xu Zhiwei also attaches great importance to the construction of factory style, and emphasizes that honesty and self-discipline are Longrich's factory style.
In 2014, he drove more than an hour from Shijiazhuang to relive the spirit of Xibaipo and admonish his employees: be humble and cautious, not arrogant and impatient.
But since dabbling in the direct selling business, he seems to be more keen to promote health products, forgetting that the snake oil ointment of 1 yuan is the root of Longrich, and forgetting that the working method of carpentry is "not messing around".
In 2015, at the company's annual Chinese New Year meeting, Xu Zhiwei and other executives sang a song belonging to Longrich - "Keep the Roots".
When he sang "A year has passed, ah a life is only for this day", I don't know if he thinks of his current day eight years later.
Many times, the roots are gone, and the building collapses.
This article originated from China Business Strategy