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Duo's vegetable business idea shows growth
By Xu Wenwen |
February 22, 2011, Tuesday
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Print Edition
Print Edition
WITH a private investment of more than 1 million yuan (US$152,275), 24-year-old Wang Fengmao and Liu Hongzhou who run a chain of vegetable stores are much encouraged.
"We'll set up 100 vegetable stores in Hangzhou soon, and the price will be cheaper than those of the food market," the duo says with all seriousness and no hint of boasting.
The two graduates are both from the countryside. Wang majored in mechanism and Liu studied Chinese in university. But they persist on selling vegetables rather than taking a secure office job. In fact, Wang, who was employed as a civil servant, quit after three months and has devoted his efforts into the business since then.
"I come from a small village in Zhejiang Province," Wang says. "I've witnessed that tons of cabbages, though 0.14 yuan per kilogram, rot in the farm because no one buys them, while people in the city will buy cabbages at 5 yuan per kilogram.
"Information asymmetry leads to the situation, and I want to alter that, to help farmers and to serve city people with cheaper vegetables."
The enterprising pair has done a good job so far. Last year, they successfully managed four vegetable stores in Jinan, capital of Shandong Province. The average daily turnover was about 8,000 yuan, four times the amount a booth in a food market can make.
The secret of their success is very simple - to sell cheap vegetables. Generally, 30 percent cheaper than those inthe food market.
And the cheapness is the result of direct selling - they wholesaled vegetables right from Shandong's vegetable bases and therefore the goods didn't have to change hands.
However, they shared little financially from what they earned for the Jinan Organic Vegetable Market, since they were not shareholders but had only contributed the idea and the labor.
At the end of last year, they quit the company and established their own Hangzhou Maozhou Electronic Business Company. They will copy their successful business model and apply it to Hangzhou.
This time, they are able to put their expertise to good use because of the 1 million yuan invested by a generous entrepreneur, while more services will be added to serve Hangzhou residents.
Hangzhou model
As a chilly wind whistles through the crack of a window, Wang, Liu and their new business colleagues Wang Yuqi and Xu Jianping, who are also fresh graduates, are wandering through Gouzhuang Food Market, the largest wholesale food market in Hangzhou, very early in the morning.
They are calculating when the price of vegetables will fall to the lowest level.
They've been doing this for half a month, in order to grasp the rules of how the market's vegetable prices vary.
Their findings are that at 2am, when abundant vegetables are transported to the market, vegetables are the cheapest and freshest. By 6am, the time most food market sellers come to stock up, the price is 20 to 40 percent higher.
When the prices hit their lowest, the young vegetable wholesalers buy, load the goods into their small van and drive to their small store in the urban area 10 kilometers away.
Three weeks ago, they set up their first outlet in Mishi Community in the city. Covering more than 40 square meters, the store provides around 30 kinds of vegetables, with the price 20 to 40 percent cheaper than the food market.
But cheapness is only one policy. The young entrepreneurs have other ideas.
"To sell vegetables in single stores, just like selling vegetables at a booth in a food market, will not solve the imbalance between farmers and citizens," Liu says.
"But if we play the role as a vegetable supplier who can offer vegetable sellers large amounts of vegetables that are purchased from farmers, vegetable bases or the primary market, the problem will be solved."
"And the larger the quantity of stock, the lower trade prices," adds Xu. "Plus, a sound logistics system will help save resources. For instance, one van used to deliver goods for one store can be utilized to serve 10 stores."
Wang Fengmao is considering the idea of setting up a food safety review system which, via bar codes stuck on every vegetable, is available to determine product details such as place of origin, time of harvest and quality testing results.
"I hope the aim of 100 chains in Hangzhou will be achieved this year," Wang says ambitiously.
Through online advertising, the company has received tens of mails and calls from potential retailers asking to join the chain, and they've selected 20 to cooperate with.
"So now, as long as we find a suitable storefront, we rent, we run and we earn - it's a simple procedure," says Xu.
"We'll set up 100 vegetable stores in Hangzhou soon, and the price will be cheaper than those of the food market," the duo says with all seriousness and no hint of boasting.
The two graduates are both from the countryside. Wang majored in mechanism and Liu studied Chinese in university. But they persist on selling vegetables rather than taking a secure office job. In fact, Wang, who was employed as a civil servant, quit after three months and has devoted his efforts into the business since then.
"I come from a small village in Zhejiang Province," Wang says. "I've witnessed that tons of cabbages, though 0.14 yuan per kilogram, rot in the farm because no one buys them, while people in the city will buy cabbages at 5 yuan per kilogram.
"Information asymmetry leads to the situation, and I want to alter that, to help farmers and to serve city people with cheaper vegetables."
The enterprising pair has done a good job so far. Last year, they successfully managed four vegetable stores in Jinan, capital of Shandong Province. The average daily turnover was about 8,000 yuan, four times the amount a booth in a food market can make.
The secret of their success is very simple - to sell cheap vegetables. Generally, 30 percent cheaper than those inthe food market.
And the cheapness is the result of direct selling - they wholesaled vegetables right from Shandong's vegetable bases and therefore the goods didn't have to change hands.
However, they shared little financially from what they earned for the Jinan Organic Vegetable Market, since they were not shareholders but had only contributed the idea and the labor.
At the end of last year, they quit the company and established their own Hangzhou Maozhou Electronic Business Company. They will copy their successful business model and apply it to Hangzhou.
This time, they are able to put their expertise to good use because of the 1 million yuan invested by a generous entrepreneur, while more services will be added to serve Hangzhou residents.
Hangzhou model
As a chilly wind whistles through the crack of a window, Wang, Liu and their new business colleagues Wang Yuqi and Xu Jianping, who are also fresh graduates, are wandering through Gouzhuang Food Market, the largest wholesale food market in Hangzhou, very early in the morning.
They are calculating when the price of vegetables will fall to the lowest level.
They've been doing this for half a month, in order to grasp the rules of how the market's vegetable prices vary.
Their findings are that at 2am, when abundant vegetables are transported to the market, vegetables are the cheapest and freshest. By 6am, the time most food market sellers come to stock up, the price is 20 to 40 percent higher.
When the prices hit their lowest, the young vegetable wholesalers buy, load the goods into their small van and drive to their small store in the urban area 10 kilometers away.
Three weeks ago, they set up their first outlet in Mishi Community in the city. Covering more than 40 square meters, the store provides around 30 kinds of vegetables, with the price 20 to 40 percent cheaper than the food market.
But cheapness is only one policy. The young entrepreneurs have other ideas.
"To sell vegetables in single stores, just like selling vegetables at a booth in a food market, will not solve the imbalance between farmers and citizens," Liu says.
"But if we play the role as a vegetable supplier who can offer vegetable sellers large amounts of vegetables that are purchased from farmers, vegetable bases or the primary market, the problem will be solved."
"And the larger the quantity of stock, the lower trade prices," adds Xu. "Plus, a sound logistics system will help save resources. For instance, one van used to deliver goods for one store can be utilized to serve 10 stores."
Wang Fengmao is considering the idea of setting up a food safety review system which, via bar codes stuck on every vegetable, is available to determine product details such as place of origin, time of harvest and quality testing results.
"I hope the aim of 100 chains in Hangzhou will be achieved this year," Wang says ambitiously.
Through online advertising, the company has received tens of mails and calls from potential retailers asking to join the chain, and they've selected 20 to cooperate with.
"So now, as long as we find a suitable storefront, we rent, we run and we earn - it's a simple procedure," says Xu.
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