Hello everyone, welcome to “The Startling Case Files of Dayu”.
Today’s focus: Generating traffic by “bashing Japan,” it backfires! Mainland China’s top bubble tea stock “Xiang Piao Piao” in trouble! “Patriotic marketing” backfires, two major scandals exposed, deceiving the public with a history of fraud; Chinese people in Japan can’t stand it anymore; Can Xiang Piao Piao’s “patriotic card” compete with Huawei? Huawei’s cutting corners exposed.
These past few days have been a roller coaster ride for the Xiang Piao Piao food company in Zhejiang, China: after experiencing a surge in popularity due to their anti-Japan packaging stunt, Xiang Piao Piao suddenly became an online sensation. Following two consecutive days of stock price increases on May 6th and 7th, Xiang Piao Piao’s stock price dropped on the 8th. What exactly happened?
When you think of Xiang Piao Piao, perhaps you might recall the classic advertisement slogan from 2009: “Selling over 300 million cups in a year, lined up, they could circle the Earth.” However, in the current landscape saturated with various bubble tea shops, are you still drinking Xiang Piao Piao’s instant tea? Against this backdrop, Xiang Piao Piao has been trying various ways to boost its sales. Over the past year, Xiang Piao Piao’s performance has finally shown signs of “recovery.” However, when viewed over a longer period of time, its performance in 2023 still falls short of pre-pandemic levels in 2019.
After successfully going public in November 2017 and becoming the “top bubble tea stock in China,” Xiang Piao Piao’s market value once approached nearly 14 billion yuan. However, it is currently far from those glory days, with a market value of only around 7.89 billion yuan as of May 6th.
Although Xiang Piao Piao leads the market share in cupped bubble tea beverages, it has been growing increasingly anxious due to the rapid expansion of the freshly brewed tea industry, much like how the rise of food delivery services has impacted instant noodles. Xiang Piao Piao worries about the waning popularity of bubble tea. So how can they adjust to meet the changing needs of consumers?
In their anxiety, Xiang Piao Piao made a crucial mistake: infringement of trademarks and deception. In 2017, Xiang Piao Piao claimed in its IPO prospectus that they had signed an agreement with Hong Kong’s Lan Fong Yuen on July 28, 2016, authorizing the permanent use of the Lan Fong Yuen trademark in Mainland China for 60.8 million Hong Kong dollars and producing cupped Hong Kong-style milk tea beverages branded with the “Lan Fong Yuen” name.
Subsequently, Xiang Piao Piao operated physical Hong Kong-style beverage shops using the name “Lan Fong Yuen” in Mainland China. Lan Fong Yuen is the pioneer of milk tea, founded in 1952 by Lam Muk Ho, renowned for its smooth silk stocking milk tea loved by locals and tourists from around the world. However, the second-generation owner of Lan Fong Yuen, Lim Chun Wing, stated in an interview in May 2018 that Lan Fong Yuen currently only operates in Hong Kong and has no other branches outside Hong Kong.
While using someone else’s name, the “Lan Fong Yuen” milk tea that Xiang Piao Piao hoped for did not bring them a “second growth curve.” On the contrary, the market has almost become dominated by freshly brewed milk tea.
According to the well-known market research company “Frost & Sullivan,” the market size of freshly brewed tea beverage stores in China reached 247.3 billion yuan in 2023. Additionally, according to a report from the China Chain Operation Association, due to low investment thresholds, high standardization, and strong replicability, new tea drinks had the highest chain ratio in all food categories in China in 2022, reaching 55.2%. Thus, choosing from a variety of freshly brewed milk teas and fruit teas in densely packed stores has become a more common consumer scenario.
At this time, the desperate Xiang Piao Piao made another wrong move. Let’s break down what happened here.
During the May Day holiday, a piece of information circulated online. On May 3rd, blogger “Di Gua Xiong Lao Liu” claimed that a tourist submitted a post, saying that during the holiday in Japan, they found Xiang Piao Piao Meco’s packaging in a Chinese supermarket, bearing mocking words printed in both Chinese and Japanese regarding Japan’s nuclear contaminated water: “The ocean is not Japan’s sewage system, please let Japanese politicians drink the nuclear polluted water; 0.1% of the land pollutes 70% of the sea; there can be no Japan, but there cannot be no ocean.”
Xiang Piao Piao’s hard confrontation with Japan over nuclear waste emissions quickly garnered support from domestic netizens, relieving their frustrations. This trend also surged to the top of Weibo’s hot search list.
Regarding this matter, Xiang Piao Piao made an official statement for the first time on the evening of May 4th. The Xiang Piao Piao official Weibo responded with nine words: “Our employees are great!”
Then in the early hours of May 5th, Xiang Piao Piao’s chairman Jiang Jianqi held up a sign to greet employees returning from Japan. That same evening of May 5th, Xiang Piao Piao’s official flagship store’s live stream played the background music of the TV series “Bright Swords,” with the host addressing viewers as “comrades.” Xiang Piao Piao’s CEO, Yang Dongyun, entered the live stream and announced a reward of 100,000 yuan to the “excellent” employees and donated all live stream income from 8 pm to midnight to an environmental fund.
On their Taobao flagship store, Xiang Piao Piao also advertised “buy to receive trending cup sleeves.”
The implication of “trending cup sleeves” speaks for itself. As everyone knows, Xiang Piao Piao’s hype surged, attracting over tens of millions of netizens to its live stream, skyrocketing sales from the original 2,500 yuan to 1 million yuan, a 400-fold increase. On the first trading day after the holiday, which was May 6th, Xiang Piao Piao’s stock price hit the limit up, increasing the market value by over 700 million in a single day.
However, different opinions quickly surfaced online, with Xiang Piao Piao even being accused of engaging in “patriotic marketing.”
First, it was claimed that senior executives at Xiang Piao Piao increased their stake in the company during this incident. Implicit in this claim is that this incident was orchestrated by Xiang Piao Piao to artificially increase stock prices, benefiting the high-ranking executives.
I checked and on May 6th, Xiang Piao Piao did announce that company CEO Yang Dongyun, Director and Vice General Manager Yang Jing, Director and Secretary of the Board and CFO Zou Yongjian, and former CFO Li Chaonan all increased their holdings in the company, with a total increase of over 18 million yuan.
Secondly, it was alleged to be a staged farce.
It was said that the photos seen online were taken at the Kyowa Store in Japan, actually a Chinese supermarket where the majority of shoppers are Chinese rather than Japanese.
On May 5th, an employee of the implicated Chinese supermarket revealed that the entire incident was a staged publicity stunt by Xiang Piao Piao employees inside the store. Now that Xiang Piao Piao has taken the “patriotic traffic,” the supermarket has unfairly taken the blame and feels grievance.
The supermarket employee mentioned that their coworkers were discussing the matter recently. Xiang Piao Piao had played a dirty trick this time. The truth is, they never sold the kind of Xiang Piao Piao milk tea as mentioned on Weibo. If you carefully examine the photos and videos posted by that person, it’s not hard to see that it was staged and set up. The video seemed pre-recorded by an Xiang Piao Piao staff member, who then took the cup sleeve into the store and outside for photos, using a montage editing technique to make it look like it was in the store when it actually wasn’t there. It was entirely fake news just to grab attention.
They condemned Xiang Piao Piao, saying, “Allowing employees to do such things, and even endorsing them without explaining the truth, is embarrassing to witness. They increased their market value, sold more products. Whereas we, running an honest and decent small business in Japan, have unjustly ended up in a very embarrassing situation.”
Furthermore, some Chinese netizens living in Japan, on platforms like Douyin and X, posted videos or photos showing Xiang Piao Piao milk tea cups without any anti-Japan cup sleeves. Even Japanese netizens specifically visited the store and confirmed with the store manager that there was no such product.
Subsequently, the growing skepticism regarding Xiang Piao Piao’s staged publicity stunt started to escalate. On May 8th, Xiang Piao Piao’s stock opened lower, with the decline reaching 6.48% at one point. Thus, due to this “startling suspicion,” Xiang Piao Piao not only lost its appeal but also found itself in a precarious situation.
In the afternoon of May 8th, netizens discovered that the Xiang Piao Piao anchor announced that after 3:30 pm that day, cup sleeves were no longer available for purchase. When asked why the trending cup sleeves were removed and whether they would be restocked, the Xiang Piao Piao official flagship store customer service stated that if there were no cup sleeves, it meant they were out of stock. A search revealed that the Xiang Piao Piao e-commerce platform flagship store no longer featured the promotion slogan “buy to receive trending cup sleeves,” instead, emphasizing the products as “national goods.” That day, “Xiang Piao Piao removes anti-Japan cup sleeves” and “Xiang Piao Piao live stream sales plummet” both trended on Weibo.
What twists and turns occurred in this story? Although the CCP brainwashes the Chinese people: loving the party is loving the country, portraying fascist nationalism as “patriotism,” many Chinese people do indeed blur the lines between the party and the nation. When Chinese internet users previously attacked Nongfu Spring, it was for so-called nationalist reasons. So why did Xiang Piao Piao’s “patriotic card” fail this time?
Mainly, it’s because the public couldn’t tolerate Xiang Piao Piao using deceitful means to exploit their patriotic sentiments, playing out this self-staged drama, treating consumers as fools. Thus, it was destined to backfire.
Why did Chinese people in Japan expose Xiang Piao Piao’s staged stunt? Aren’t they patriotic while abroad?
In reality, Chinese people in Japan have a straightforward logic: “Don’t eat the food of the Japanese and ruin their reputation.” When Chinese people living in Japan witness the periodic anti-Japanese campaigns in China, how do they feel? Their biggest fear is, what if Japan reciprocates the hostility towards the Chinese?
Recently, on May 3rd, The Wall Street Journal reported that “Chinese tycoons are moving en masse to Japan, purchasing real estate in large numbers.”
The report interviewed a Chinese person last year who had moved to Tokyo as the owner of a metal trading company. Not only did he promptly adopt a Japanese name to quickly integrate into Japanese society, he also spent around $650,000 to purchase a luxurious waterfront apartment and reunited with his family here in March this year — now, his two sons are attending elementary school in Japan.
This wealthy Chinese individual avoids discussing domestic politics, stating that they “like Japan, they appreciate its cuisine, culture, education, and safety.” Most of the affluent Chinese moving to Japan share this sentiment. A report released by Henley & Partners last June, tracking global migration trends, estimated that the net total of high-net-worth individuals emigrating overseas from China in one year would reach 13,500, making China the country with the most significant outflow of high-net-worth individuals worldwide. Many opt for Japan.
They choose Japan because it is only a few hours’ flight from China. Due to the weak yen, property prices in Japan are relatively low for foreigners, making it easy for them to purchase real estate. Moreover, the Japanese writing system partly uses Chinese characters, making it easier for new immigrants to find their way around. This makes Japan attractive to Chinese immigrants, many of whom come from affluent families. But with the CCP frequently initiating waves of anti-Japanese sentiment in China, it endangers the interests and even the safety of the Chinese residing in Japan.
This isn’t difficult to understand; when Japanese-Chinese netizens post calling Xiang Piao Piao the “most disgusting corporate of the year” because the company “sent people to the Chinese store to stage a scene, removed it after taking photos, the staff didn’t even know about it, deceiving the Chinese into believing they are showing support for Japan, then immediately began live streaming the same product. The CEO even showed up at the airport to greet the staffers, the whole act was scripted,” they are essentially trying to distance themselves from the antics of the Chinese nationalists.
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