In the current global economic environment, which is gradually recovering, the consumer sector continues to experience a wave of resurgence—bringing with it both unprecedented opportunities and significant challenges.

Since the end of September, a series of policy incentives have been rolled out intensively, aimed at boosting consumer confidence, driving consumption upgrades, and fostering domestic economic circulation—injecting strong momentum into the recovery of the consumer market, which has, in turn, shown a notably positive response. However, the road to recovery is far from smooth. Global supply chain disruptions, shifting consumer patterns, the rise of emerging technologies, and intensifying market competition are all placing higher demands on the consumer industry. In this new era of consumption, what additional growth areas and opportunities remain? And how can investors seize these promising opportunities?

Recently, Yuanhe Chencun hosted the Kunpeng Hui, featuring special guests including He Yu, Founding and Managing Partner of Black Ant Capital; Feng Jianjun, Deputy General Manager of Lao Pu Gold; Yan Yisheng, Founding Partner of Yuanyi Capital; Liu Huipu, Founder and CEO of Guanxia; and Wang Hang, Founding Partner of Housheng Investment. Together, they discussed the evolving dynamics of today’s consumer market and the investment opportunities emerging in its wake. Below is a recap of the insightful perspectives shared at the event:

The Three Structural Shifts in the Consumer Market and Investment Opportunities

He Yu, Founding and Managing Partner of Black Ant Capital Shared insights into the structural shifts in China's domestic consumer market under the new economic cycle, as well as the investment opportunities arising from these changes. According to He Yu, China's consumer market is currently experiencing three major structural transformations: The lower-tier markets are demonstrating strong resilience and growth potential, with efficiency gains driven by upgraded business models and technology, while service-oriented and experience-based consumption continue to rise.

He Yu stated that the expansion of lower-tier markets has driven overall growth in the national consumer market, with consumer demand promoting the emergence of multi-store chain formats. County-level cities in China’s third tier and below have even broader market opportunities. In offline retail, the shift of traffic among channels has triggered a restructuring of the value chain. Some innovative business models have captured traffic from traditional hypermarkets; for example, discount retail formats that compress profit margins are one of the very important trends. Offline retail is entering a transformation period and will see accelerated iteration of new business formats. Meanwhile, high-quality "white-label" products or private brands will rapidly rise in content e-commerce channels. At the same time, as the new generation of consumers increasingly values interest-driven and emotional consumption, experiential consumption driven by spiritual needs will continue to grow.

"The consumer sector holds long-term investment value, and now is an excellent time to invest in consumption." He Yu believes that under the new cycle, the fundamental logic driving consumer investment revolves around efficiency and differentiation. He identifies five key growth engines for the consumer market: globalization, expansion into lower-tier markets, supply-chain value, product innovation, and experience-driven consumption. These also align with Black Ant Capital's long-standing strategy and methodology for building its consumer-sector portfolio. Finding the most exceptional companies under experience-driven and efficiency-oriented approaches.

Take Laopu Gold as an example—Laopu Gold is one of the prime investment cases by Black Ant Capital, driven by a strategy focused on delivering differentiated, experiential consumer experiences. As the industry’s only high-end brand dedicated exclusively to traditional gold products, Laopu Gold creatively reinterprets China’s ancient gold-making techniques while maintaining its position as a top-tier luxury brand with a distinctive business model. In the first half of 2024, Laopu Gold reported a net profit of approximately RMB 588 million, representing a remarkable 199% year-on-year growth compared to the same period last year.

What kind of consumer brands can weather economic cycles?

Yan Yisheng, Founding Partner at Yuan Yi Capital We deeply analyzed the evolving logic and investment strategies behind today's consumer and investment landscape. According to Yan Yisheng, compared to the era of rapid consumption growth in the past, investing in consumer sectors has become more challenging—but that doesn’t mean opportunities have disappeared. In fact, niche categories within the consumer industry still hold significant growth potential. The business model of exceptional value for money continues to demonstrate growth resilience. 。 Currently, the underlying tone of mass consumer behavior is "practicality," with shoppers focusing on value for money—seeking the best-quality goods and services at the lowest possible cost. Yet, this emphasis on value doesn’t necessarily mean a decline in overall consumption standards. Take Luckin Coffee, an investment made by Yuan Yi in the past, as an example: not only does it offer exceptional value, but it has also become a leading coffee chain renowned for its strong brand identity, innovative product offerings, and robust operational capabilities. As of the end of Q3 2024, Luckin Coffee had already expanded to over 21,000 stores nationwide.

Yan Yisheng believes that, There are still many niche industry opportunities in China's consumer market. For instance, in the sports and outdoor sector, new brands are emerging alongside the global running craze. Beyond mainstream competitive sports like running, basketball, and soccer, as Chinese consumers increasingly invest both time and money into outdoor activities, untapped market opportunities are beginning to blossom in niche sports categories. Additionally, promising growth prospects are also evident in areas such as health supplements, the pet industry, premium brands, and raw materials for medical aesthetics.

Yan Yisheng noted that brands capable of thriving across economic cycles typically possess the following key attributes: aligning with evolving industry structure trends; demonstrating strong product and brand power to capture consumers' minds; being relatively insulated from rapid technological shifts; maintaining robust barriers in product development or supply chain capabilities; benefiting from significant economies of scale; sustaining healthy cash flow; and staying focused on their core business rather than pursuing reckless diversification.

From cultural confidence to consumer confidence

Liu Huipu, Founder and CEO of Guan Xia Sharing insights from Guan Xia's growth perspective on how local consumer brands can break through. Guan Xia is a niche, original fragrance brand specializing in oriental botanical compositions, committed to staying true to Eastern imagery while reimagining traditional Eastern craftsmanship. Liu Huipu emphasized that every brand inherently carries strong ties to its local culture—encompassing elements like cultural heritage, raw materials, and artisanal techniques—which are essential for long-term growth. Meanwhile, Guan Xia has redefined the Western concept of fragrance by seamlessly integrating Eastern culture and modern lifestyles into both its product ethos and design, creating scents that authentically capture China's unique cultural essence.

In brand management, Liu Huipu believes that, Offline stores are also one of the brand's important cultural platforms. Take, for example, Guan Xia’s first flagship store in Shanghai. Housed in a nearly century-old Spanish-style mansion, the space underwent meticulous, 200-plus-day-long restoration to preserve its original charm. Guan Xia named it "Guan Xia Xian Ting," or "Guan Xia Serene Courtyard." Here, customers can slow down, quietly savor the fragrances, and fully immerse themselves in the beauty of everyday life. Since its establishment, Guan Xia has remained committed to maintaining tight control over its distribution channels—operating all offline stores directly—and at the same time, it continues to embrace channel flexibility, allowing both mall-based and neighborhood-store formats to thrive side by side.

In Liu Huipu's view, Offline spaces are about generating traffic, not draining it. , it's important to respect the differences between online and offline product consumption, treat offline customers with sincerity, and continuously engage them by delivering compelling offline content.

Under the new consumption paradigm, industry mergers and acquisitions are rapidly gaining momentum.

Wang Hang, Founding Partner at HouSheng Investment From a macro perspective down to a micro-level analysis, the report meticulously examines the current growth drivers and investment strategies in China's domestic consumer market. Wang Hang emphasized that we should adopt a positive mindset when considering external environmental changes and the evolving dynamics of the consumer industry. Even in today’s "new normal" of a relatively shrinking consumer market, there still exist opportunities for growth—both in emerging sectors and among innovative, high-potential companies.

Wang Hang believes that, Currently, companies driving consumption growth are primarily focusing on two strategic approaches: competing for existing market share and developing new markets. The strategies behind this include "climbing the mountain"—driving technological innovation to boost efficiency and cut costs—"heading to the countryside"—focusing on deeply cultivating the expanding lower-tier markets—and "going global," which means pursuing an international expansion strategy to tap into worldwide markets. From an investment perspective, these approaches will create numerous opportunities for mergers and acquisitions.

In Wang Hang's view, For professional investment firms, the key is to "become what others need." Take Housheng Investment as an example: Housheng Investment focuses long-term on the mid-sized M&A market, with a particular emphasis on the food sector—taking just one sip from the vast ocean. Leveraging the diverse growth aspirations of today’s listed consumer companies and multinational corporations across various industries, Housheng Investment will also capitalize on its strategic strengths to build a broader industry network, jointly fostering a future-oriented, circular, and value-driven ecosystem.