Revenue returns to 10 billion yuan. Zhang Liaoyuan of Three Squirrels says the first success was just luck | Exclusive interview
Author | Li Xiaoxia
Editor | Qiao Qian
The lights came on, and Zhang Liaoyuan, the founder of Three Squirrels, appeared in the center of the stage. He was wearing a tuxedo and waving a baton.
This was the scene of the "2025 Global Ecosystem Conference" of Three Squirrels. After enduring the darkest moments of the previous years and leading the company out of the trough, Zhang Liaoyuan could finally relax a bit.
Looking back, in 2019, Three Squirrels completed its IPO on the A-share market and became the first company in the snack food industry to achieve annual revenue of over 10 billion yuan. It was at the peak of its glory. In Zhang Liaoyuan's words, it was also the beginning of the opposite direction of development. Subsequently, it fell into a four-year trough, with declining revenue and net profit.
As the helmsman, Zhang Liaoyuan fell into extreme anxiety, and insomnia became the norm. "Everything I did was wrong."
It wasn't until the end of 2022 at an executive meeting that everyone stopped looking at problems from a position of strength. After three days and three nights of discussion, they reached a consensus: Three Squirrels' products were too "expensive".
Subsequently, there was an exploration of a turn towards "high-end cost-effectiveness", and in addition to Taobao and JD.com, channels such as Douyin and Pinduoduo were deployed. In 2024, Three Squirrels finally returned to a revenue of 10 billion yuan.
Among them, Douyin played a key role.
In 2023, Three Squirrels' sales on Douyin were 1.2 billion yuan. Last year, it increased to 2.2 billion yuan, exceeding the sales on Tmall for the first time, which was 1.9 billion yuan.
Zhang Liaoyuan regarded "making Douyin successful" as a symbol of Three Squirrels getting out of the trough. But in his view, the great role of Douyin didn't lie in Douyin itself, but in the way of doing things they found and the organizational ability to "defeat a hundred with one".
Based on these methods and abilities, Three Squirrels wants to do more things. It has launched 33 self-owned brands, covering categories such as pet food, tonics, instant food, coffee, and female products. In addition, it also plans to open convenience stores and lifestyle stores.
In Zhang Liaoyuan's vision, Three Squirrels will become a super supply chain company integrating manufacturing, branding, and retail.
As for the result?
"If it fails, it fails. We can make adjustments again."
Zhang Liaoyuan, the founder of Three Squirrels
The following is an excerpt from the dialogue between 36Kr and Zhang Liaoyuan, the founder of Three Squirrels (edited):
Govern the company as a "weak" entity
36Kr: Did Douyin play a key role in Three Squirrels' getting out of the trough?
Zhang Liaoyuan: The great key role of Douyin doesn't lie in Douyin itself, but in the way of doing things we found.
36Kr: What kind of decision-making process did it go through to operate on Douyin?
Zhang Liaoyuan: We were successful on Tmall and JD.com and thought we were strong and didn't want to change. Before 2022, our attempts on Douyin and Pinduoduo all ended in failure because we didn't want to adapt to them at that time.
It wasn't until we fell into the trough that we had to succeed on Douyin. We no longer had the attitude of a strong entity and thought we couldn't do it.
The Tao Te Ching says that the Tao uses the weak. A truly strong entity needs to adapt to the laws in a "weak" posture and overcome the strong with the soft.
So we changed many practices for Douyin, including the pricing system, the profit and loss system, the organizational operation system, etc. We even extremely simplified the process of launching new products.
36Kr: What didn't you want to adapt to on Douyin and Pinduoduo?
Zhang Liaoyuan: There were many white-label products with low prices on them. Subjectively, we thought we couldn't do it.
But objectively, we should think about why others can do it while we can't. For example, others' express delivery boxes cost 80 cents, while ours cost 1 yuan. Others directly shipped from the factory, while we transported the goods to the warehouse and then shipped them together. But an arrogant company couldn't see these at that time.
Moreover, for an organization of thousands of people that has been operating for more than ten years, it's very difficult to change the status quo. At first, we hired a management consulting company and held change meetings, seminars, and learning sessions every day, but the situation got worse. Later, we decided not to shout big slogans anymore and proposed the strategy of "small changes, small units, small successes". We began to realize that we should govern the enterprise as a "weak" entity.
36Kr: Would these changes not have happened without the trough?
Zhang Liaoyuan: They wouldn't have changed. It's human nature. From 2017 - 2018, we were on cloud nine and felt that everything we did was right. In fact, many things were wrong. It was just that we caught the dividends at that time.
Going through a trough usually leads to two results: either death or rebirth and maturity.
36Kr: When did you find that Three Squirrels' products were "too expensive"?
Zhang Liaoyuan: We held an executive meeting and discussed for three days and three nights what was wrong with the company. Finally, we reached a consensus: the products were too expensive. Why were they so expensive? When we examined each link from raw materials to production to logistics, it was a complete mess. After finding the problem, each executive had to go to the front line in person, delegate power, and let every aspect make some changes. That's how we started operating on Douyin.
36Kr: Didn't you know about the "high price" before?
Zhang Liaoyuan: Actually, we also knew that the products were too expensive. But after building the brand for more than a decade, it takes courage to turn it into a civilian brand overnight and focus on cost-effectiveness.
At that stage, we didn't care about white-label and emerging brands at all. Later, we changed our mindset. Regardless of whether others were successful or not, we should first buy their products and take a look. Suppose their daily nuts cost 19.9 yuan, and your products are 20% better in quality but sold for 59.9 yuan. Isn't it also too expensive? Can you make it 39.9 yuan with better quality? It's such a simple logic, but we used to be too one-sided.
36Kr: How do you ensure the price advantage?
Zhang Liaoyuan: Model innovation. Looking at the entire supply chain, by the end of this year, we will complete four major supply chain intensive bases in Wuhu, Tianjin, Chengdu, and Foshan. The one in Wuhu is almost completed, with seven factories and 17 production lines, capable of producing 65% of the snacks.
We manufacture all nuts ourselves, and for other products, we jointly build factories with high-quality suppliers. The products produced are directly supplied to consumers in these regions. The transportation radius is shortened, and the cost is reduced. I can control all production and operations, and we can save a few percentage points on raw materials. My market information will also continuously promote the improvement of R & D capabilities.
"Isn't success achieved after multiple failures?"
36Kr: Everyone says that the traffic on Douyin is getting more and more expensive. You can't rely on it forever, right?
Zhang Liaoyuan: Douyin is just one of my channels. All you see now are means. Ultimately, I want to build a super supply chain, create my own closed-loop from the supply chain to the retail terminal, and at the same time, open my products to any retail terminal in society.
36Kr: Build a super supply chain at this juncture?
Zhang Liaoyuan: Currently, all hard discount stores, as well as Sam's Club and Hema, haven't deeply penetrated into the supply chain. This is my last barrier.
Moreover, the threshold for opening stores is very high. I can't open 1000 stores overnight, but I have the sales ability across all channels, which can help me run through the supply chain. Ultimately, it will serve the lifestyle stores, convenience stores, and hard discount stores.
36Kr: Do you really have to engage in such capital-intensive businesses as lifestyle stores and convenience stores?
Zhang Liaoyuan: In the final round of urbanization, the population density in communities will further increase. So we must occupy the community scenario.
36Kr: Three Squirrels became popular on Taobao and was reborn on Douyin, both of which are online platforms. Can this ability be replicated offline?
Zhang Liaoyuan: Everyone has different definitions of ability. Some people regard experience as ability, but I think knowledge is the real ability. In fact, whether it's online or offline, it all belongs to the same ability - retail ability.
After 13 years of hard work, we already have the operation ability across all categories and channels. For us, from snacks to sanitary napkins, in essence, it's all about the process of "transforming raw materials into products and putting them on the shelves for sale". Whether it's online or offline channels, the underlying logic remains the same.
36Kr: But Three Squirrels' previous attempts to open offline stores failed.
Zhang Liaoyuan: Why did it fail? Because the timing was wrong. At that time, there were neither good opportunities, nor good resources, nor good abilities. But failure at that time doesn't mean failure now. We also failed in pet food and instant food before, but now we are starting to deploy again. Isn't success achieved after multiple failures?
36Kr: You still have a strong desire to open offline stores.
Zhang Liaoyuan: For ten years, through seven generations, we've lost 198 million yuan, but we're still opening stores.
36Kr: Is Three Squirrels a brand or a retailer?
Zhang Liaoyuan: From the perspective of a brand, how could we engage in female products? We have stores, convenience stores, and lifestyle stores. In essence, we belong to a retailer. From the perspective of opening stores, we need to produce high-frequency and essential products and create many self-owned brands.
36Kr: Huang Zitao also launched sanitary napkins recently.
Zhang Liaoyuan: I believe in our company's organizational ability. In addition, due to the need to match the strategy of the lifestyle stores, I have enough time to let the products iterate and evolve. In the Internet strategic thinking, there's no need to be perfect from the start. The key is to first find the direction and then test and verify it in the real scenario.
36Kr: What's your logic for entering different categories?
Zhang Liaoyuan: We start from the necessities of a community store and a family, such as rice, flour, oil, snacks, and sanitary napkins.
36Kr: Do you have the worry of brand aging?
Zhang Liaoyuan: There are no aging brands, only aging products.
36Kr: You've mentioned "Guo Zi Shu Le" several times. Is Three Squirrels also going to launch sugar-free tea?
Zhang Liaoyuan: We plan to. "Guo Zi Shu Le" has maximized the shelf competitiveness. It launched the new category of sugar-free tea, with better packaging design, relatively better prices, and a more diverse flavor matrix. It entered convenience stores to build momentum and then deeply penetrated into traditional mom-and-pop stores.
Price is the most important indicator to measure value
36Kr: What kind of company does Three Squirrels want to become?
Zhang Liaoyuan: A unique Chinese company integrating manufacturing, branding, and retail. At the bottom, it's a super supply chain company. On the basis of a strong supply chain, many self-owned brands will emerge, such as the pet food brand "Golden Daddy", the daily chemical brand "Panda Liangliang", the ready-to-eat food brand "Aunt Apron", and more than 30 other brands.
36Kr: Some people say that Three Squirrels has spread itself too thin and isn't focused enough.
Zhang Liaoyuan: True focus lies in one's own cognition and ability, which can cross boundaries, rather than focusing on the surface. As our company has evolved to the present, we focus on organizational ability, that is, a group of people can produce high-end and cost-effective products.
From another perspective, Fortune 500 companies are large and comprehensive. Why doesn't anyone think they're not focused? In addition, we made mistakes in terms of focus. When we were in the trough, we thought we should focus on nuts and cut off many single products. Did we succeed? No, because our ability was insufficient.
36Kr: What's special about Three Squirrels' organizational ability?
Zhang Liaoyuan: Everyone's achievements can be objectively and fairly evaluated. Based on this objective and fair evaluation, reasonable material and spiritual incentives are given.
36Kr: Do you listen to the skeptical voices from the outside world?
Zhang Liaoyuan: You can question me, but you can't deny me.
36Kr: When innovating, do you have benchmark companies to make it easier for the outside world to understand?
Zhang Liaoyuan: There's no direct benchmark for our model. But when it comes to self-owned brands, I definitely look at Fat Donglai and Aldi. However, the biggest mistake in benchmarking is to finally become like others.
36Kr: Self-owned brands are becoming a trend.
Zhang Liaoyuan: The era of Chinese self-owned brands has arrived. Self-owned brands can eliminate the premium and reduce the price to 60 - 70% of the original. Looking at all business models simply, the key is where the final value of the product lies. Price is the most important indicator to measure value.
36Kr: It seems that it's not that easy to launch a new brand now.
Zhang Liaoyuan: We use Three Squirrels to promote the sub - brands we launch. Consumers are far more likely to choose a product they know than one they don't. It's easier to sell products with the label "Under Three Squirrels" than without it. When the sub - brands grow up, we can remove the Three Squirrels label. Since we know how difficult it is to create a brand from scratch, why not use the existing resources?
Bulk snack business is a 100% dividend
36Kr: The bulk snack business is very popular now.
Zhang Liaoyuan: Compared with the previous e - commerce dividend of Three Squirrels, the bulk snack business is a 100% dividend. To be honest, we used to look down on the bulk snack business, but now we respect them very much.
36Kr: Why did you look down on it?
Zhang Liaoyuan: Any form of looking down is essentially pretending not to see. Actually, we were touched inside, but another voice told us we couldn't