Core Insights - The essence of national-level businesses in China is to serve the largest survival-oriented consumer group through cost control and sociological insights, rather than catering to the refined needs of a minority [2][5][20] - Approximately 90% of the Chinese population earns less than 5,000 yuan per month, with 62% earning below 2,000 yuan, highlighting the importance of understanding the true income levels of ordinary consumers [1][2][5] Income Distribution - The income distribution in China reveals that 560 million people earn below 1,000 yuan, 310 million earn between 1,000-2,000 yuan, and 380 million earn between 2,000-5,000 yuan [2][3] - Only 711 million people, or about 5%, earn over 10,000 yuan per month, indicating a significant majority of the population is focused on essential consumption [2][5] Consumer Behavior - Consumers with monthly incomes below 2,000 yuan allocate 83% of their income to essential goods, demonstrating a zero-tolerance for price sensitivity [5][9] - The decision-making process for purchases under 5% of daily income is quick, with a repurchase rate exceeding 83%, indicating a strong preference for value [9][19] Business Strategy - Successful businesses in China must find a balance between price sensitivity and quality, as consumers are willing to pay for perceived value but are cautious about unnecessary premiums [9][11] - Companies like Mi Xue Bing Cheng and Pinduoduo exemplify the strategy of targeting large consumer bases with affordable pricing, thus capturing significant market share [7][19] Market Dynamics - The current market is characterized by a split between high-end personalized consumption and bottom-tier essential needs, with the latter being more prevalent among the majority [11][21] - The rise of extreme cost-performance businesses is driven by a combination of economic cycles, supply chain innovations, and rational consumer behavior [21][20] Conclusion - The phenomenon of extreme cost-performance in the Chinese market reflects a broader trend towards efficiency and value, where businesses that understand and cater to the real desires of the majority will thrive [20][21]

Group 1 - The core issue in the current retail market is not "consumption downgrade," but rather a collective weariness of mediocre offerings from consumers [2][6] - The market has shifted from a "supply shortage" to a "supply surplus" era, leading to a situation where many companies are still using outdated strategies to address modern challenges [3][6] - Price wars are a sign of companies' inability to innovate and meet higher-level consumer expectations, resulting in a cycle of despair and competition without real value creation [3][5] Group 2 - Consumers are not unwilling to spend money; they are simply not finding products that excite them, leading to a silent outcry for better offerings [6][8] - The concept of "pseudo-innovation" is prevalent, where companies focus on superficial improvements rather than addressing the core needs and desires of consumers [5][6] - Successful brands are those that can create genuine desire and excitement among consumers, rather than just competing on price [7][8] Group 3 - The solution lies in shifting from merely meeting basic needs to creating "expectation" and "excitement" demands, as outlined in the KANO model [9][10] - Companies must focus on delivering value resonance rather than just functional satisfaction to engage consumers effectively [10][18] - Examples like Sam's Club and NIO illustrate how understanding and fulfilling consumer expectations and excitement can lead to significant business success [12][14] Group 4 - Companies need to undergo a three-step evolution to escape the cycle of internal competition: mindset revolution, capability upgrade, and cognitive restructuring [20][22] - The first step involves adopting a long-term perspective, akin to farming, rather than seeking quick profits [22][23] - The second step emphasizes the use of scientific methods to understand consumer needs deeply, moving beyond intuition [23][25] Group 5 - The final step is to redefine the company's role from merely selling products to being a partner that helps consumers achieve their goals [27][30] - This shift in perception can lead to a restructured business model that prioritizes experience, community, and emotional value [30][32] - The ultimate goal is to create desire rather than just meet existing needs, which is essential for long-term success in the market [38]

Core Viewpoint - The article discusses the challenges faced by the popular tea brand Mixue Ice City in the Hong Kong market, particularly focusing on food safety issues and the sustainability of its low-price strategy. Group 1: Market Entry and Challenges - Many mainland restaurant brands are attempting to enter the Hong Kong market, seeing it as a lucrative opportunity due to the spending power of Hong Kong residents [4][5]. - The year 2023 marked a peak for mainland restaurant brands entering Hong Kong, with at least 42 brands having established a presence by June [5][7]. - However, the Hong Kong market presents significant challenges, including higher rent and labor costs, as well as stricter regulatory scrutiny compared to mainland China [8]. Group 2: Food Safety Issues - Mixue Ice City was recently highlighted by Hong Kong authorities for food safety violations, specifically for exceeding bacterial limits in frozen dessert samples [9][22]. - The Hong Kong food safety system is known for its strict regulations, with a compliance rate of 99.9% for food safety [12]. - The specific violations included a 70% exceedance of the allowable limit for coliform bacteria and a 50% exceedance for total bacterial count in their products [26]. Group 3: Consumer and Market Response - Despite the food safety issues, consumers have shown a degree of tolerance towards Mixue Ice City, with its stock price remaining relatively stable after the incidents [36][37]. - The brand's low pricing strategy, such as offering lemon water for 4 HKD, has created a strong psychological barrier for consumers, making them more forgiving of the brand's missteps [40][38]. - Mixue Ice City's stock price has seen significant growth, with a cumulative increase of over 160% since its listing, reflecting strong market resilience [51]. Group 4: Financial Performance - For the fiscal year 2024, Mixue Group reported a revenue of 24.83 billion RMB, a year-on-year increase of 22.3%, and a net profit of 4.45 billion RMB, up 39.8% [52][53]. - The company's gross margin stood at 32.5%, indicating strong profitability compared to its peers [52]. Group 5: Future Outlook and Risks - Despite its current success, Mixue Ice City faces significant challenges, including the need to balance expansion with food safety management [69]. - The brand's overseas operations have encountered setbacks, with negative net openings in international markets and a 35% decline in same-store sales growth [64][66]. - Analysts have downgraded Mixue Ice City's rating due to concerns over high valuations and underperformance in overseas markets [60][61].