Three questions about "Jibai," answered in one article

As a pathfinder in brand agriculture, the success of "Anji White Tea" was once considered a miracle. This tea brand, which grew from nothing to something, from small to large, from weak to strong, with a history of only about 30 years at most, not only "enriched the local people with a single leaf," but also influenced agricultural branding practices in many places.

But recently "Anji White Tea" has been somewhat troubled. Because the government guided the establishment of a tea industry fund, the state-owned enterprise "Anji Chengtou" relied on the fund to carry out industrial integration and launched the "Jibai" brand with a "red" background, which resulted in direct competition with many private tea enterprises. For a time, opinions were numerous and the whole city was in an uproar. There were those who approved, believing this was an exploration of great significance in regional brand development; while many private tea enterprises felt enormous pressure, exclaiming "the wolf is coming," and questioning whether "Jibai" was an integrator or a troublemaker; some even asserted that this was "the state advances while the private sector retreats" and "competing with the people for profits."

Local governments have a responsibility to support the development of the agricultural industry, but as a competitive field, should the government intervene in the tea industry, and how should it intervene? Where is the boundary for state-owned investment platforms undergoing reform to enter the competitive market? How can differentiated competition be achieved? Does positioning "famous premium tea" as a "quasi-fast-moving consumer good" for brand marketing violate the special attributes of agricultural products? As a geographical indication product, how should "Jibai" add value to the "parent brand"? What is the purpose and significance of agricultural enterprises carrying out capital operations, and after listing, will they become "one dominant player," forming a monopoly and damaging the pattern of fair competition?

A single stone stirs up a thousand waves. The "experience" of "Anji White Tea" has triggered a series of reflections.

"A single leaf enriched the local people"

Among the countless regional public brands across the country, "Anji White Tea" is the most legendary.

More than 30 years ago, "Anji White Tea" was discovered in Daxi Village at an altitude of 800 m. Identification proved that this albino variant of green tea has an amino acid content 2-3 times that of ordinary green tea, and its taste is fresh and brisk. Because of its outstanding quality, since the 1990s, "Anji White Tea" has been rapidly promoted throughout the county.

After achieving a certain scale, Anji carried out a series of explorations around standard formulation and brand creation. In particular, it explored the "parent-child brand" model, which not only helped the scattered tea farmers operating independently in thousands of households enter the market, but also maintained market order, ensuring that the "Anji White Tea" brand became increasingly well-known. This was regarded as an innovative move in modern agricultural development.

For a long time, Anji left people with the impression of being remote and poor. But now, "lucid waters and lush mountains have become invaluable assets," Anji's economy is developing rapidly, society is harmonious and stable, and the people are prosperous and secure. Among this, white tea plays an indispensable and important role.

Because the benefits are considerable, in recent years "Anji White Tea" has been continuously introduced and planted elsewhere, and then sold back to Anji, seriously disrupting the market order of "Anji White Tea." Faced with this, Anji also launched a targeted tea garden certificate system, registering and issuing certificates for tea garden area and output, and the certificates can also be used as collateral for loans. Since last year, it has further launched the Jinsu Card, integrating various functions of white tea production, management and transactions into a single "card," creating favorable conditions for the standardized development of the white tea industry.

From artificial introduction to large-scale development, and from large-scale development to standardized and branded development, in the course of white tea's development, Anji opened roads when encountering mountains and built bridges when encountering waters, enduring great hardships and countless dangers beyond description.

Statistics from 2015: "Anji White Tea" planting area was 17 wan mu, output was 1850 tons, and output value was 2.1 billion yuan. It involved more than 16,000 planting households, increasing Anji farmers' per capita annual income by 6000 yuan. Quoting General Secretary Xi Jinping's evaluation of "Anji White Tea" at the time, it is "a single leaf enriched the local people"!

After more than 30 years of development, Anji and white tea have formed a deep connection that is hard to separate and mutually expressive. When people see Anji, they naturally think of white tea; when they see white tea, they immediately think of Anji. "Anji White Tea" has become a veritable "golden calling card" for Anji. If anyone changes the direction of "Anji White Tea," it may trigger a chain reaction where "one hair moves and the whole body is affected."

Question one for Anji Chengtou: Where is the boundary for state capital entering the market?

Although "Anji White Tea" has developed rapidly and its overall scale is relatively large, industrial concentration is still low: among more than 300 processing enterprises, only 20 have an annual output value above 5 million yuan, only 5 have above 10 million yuan, and only one has above 30 million yuan. In addition, as premium tea has cooled in the past two years and production costs have continued to rise, profit margins have been declining day by day, and the development of "Anji White Tea" seems to have encountered another bottleneck.

Where should "Anji White Tea" go?

On July 24, 2015, approved by the county government, several parties cooperated to establish the "'Anji White Tea' Industry Fund," with a scale of 200 million yuan, of which the Anji government contributed 40 million yuan as guidance, Anji Chengtou subscribed 10 million yuan, and the rest was basically raised from the public by "Wanxiang Trust." At the same time, Anji Chengtou established "Anji Tea Industry Development Co., Ltd.," and using the "fund" as a link, sent invitations to private tea enterprises in the county, completing transformation through equity swaps, and established the state-controlled mixed-ownership "Anji Tea Industry Group."

Wu Jian, general manager of "Ancha Group," believes that the development of "Anji White Tea" has entered a new period and needs to advance comprehensively from the era of rival lords to an era of unity, requiring collective development to form a representative brand and bring "Anji White Tea" to a new level.

It is understood that "Ancha Group" has currently completed the mergers and acquisitions of three enterprises: Fengheyuan, Qiandaowan, and the e-commerce brand "Fangyu." The bosses of the acquired tea enterprises transitioned into group executives. The "Jibai" brand created by the group has also made a strong appearance, conquering markets.

"Mergers and acquisitions are not administrative orders, but market behavior. For many years, tea enterprise bosses have been all-rounders, having to know everything from growing tea, roasting tea, to selling tea. This development model has already hit a ceiling." Wu Jian told reporters, "Our goal is integrated development. Three years from now, we will achieve annual revenue of 500 million yuan and annual net profit of 40 million yuan, and list on the New Third Board."

But the sudden emergence of "Ancha Group" triggered strong backlash. This included private tea enterprises and government officials.

One government official excitedly commented: "The reason 'Anji White Tea' has today is because it created the 'parent-child brand' model. The functions and roles undertaken by the 'parent brand' and 'child brands' are each different." He believed that the arrival of "Jibai" has also thrown this model into confusion. Because whether it is the industry fund or the naming of Ancha Group, both are connected to the Anji government, making consumers immediately associate it with government action, but in reality, "Jibai" is an enterprise brand.

"The agricultural industry itself is an industry that enriches the people. The responsibility of a Chengtou company should be urban infrastructure construction. Running into the tea industry can be said to be completely amateur, and it has also formed direct competition with private tea enterprises. Isn't this using the power of the government to seize the rice bowl of private enterprises?"

A private tea enterprise owner sharply questioned: You "Jibai" call yourself an "integrator." What exactly do you want to integrate? Is it integrating private tea enterprises or integrating bases, and how much can you integrate? Can you acquire all 17 wan mu of tea gardens? What you are doing now is nothing more than using the brand accumulation of "Anji White Tea." What contribution does it make to industrial development?

A female boss worried: "With 'Jibai,' the government's concern and support for our private tea enterprises will inevitably weaken."

So, how exactly should we view state capital entering the tea industry?

A relevant person in the fiscal system offered two views: First, from the perspective of public finance, its revenue mainly comes from taxes, and its expenditure mainly meets public needs in order to solve the problem of market "failure." For economic fields that can be effectively regulated by market mechanisms, public finance should not enter; those that have already entered should gradually withdraw, and those that cannot withdraw for the time being should also change their support methods, such as adopting funds, interest subsidies, and other methods; the government's primary responsibility is to establish a legal environment of fair competition for market entities. Second, from the perspective of state-owned capital finance, its revenue mainly comes from dividends from state-owned enterprises, and its expenditure mainly supports the development of state-owned enterprises; state-owned enterprises may enter competitive fields, but mainly fields that are both competitive and foundational and strategic, focusing on long-term economic development.