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author: qiao yue, a reporter from southern window

editor | he ziwei

it's another day when workers are being "made fun of". first, bmw posted a post on weibo, "i've already filled up the gas tank, how about you, workers?" then, nestle's packaging showed the words "i'm working overtime voluntarily".

this time, it was gu ming's turn again. it unprecedentedly turned the working people into an "abstract joke", and was scolded by netizens and became a hot search.

recently, a video released by gu ming has sparked widespread controversy. in the video, several gu ming employees wore paper trays for milk tea cups, which looked like handcuffs, and had cards around their necks with "forgetting to put in a straw," "missing the expiration date," "knocking over the tea bucket," and other "crimes" written on them. the text in the video reads "to show the prohibition, next time... there will be no next time."

recently, the video released by gu ming caused controversy/source: internet

although an employee who participated in the video shooting told the media that the three employees in the video participated in the shooting voluntarily and it was just for their own entertainment in their spare time and that there was no similar punishment system in daily life, the video still aroused doubts from the entire network.

netizens have expressed that gu ming milk tea's behavior not only lacks basic respect for employees, but also blatantly insults workers, which deeply hurts the hearts of workers. they believe that the brand is using curious traffic to attract attention.

on september 18, @古茗茶饮 publicly apologized on social media, saying, "sorry, we messed up our meme" and that the video borrowed ideas from the popular memes on social media, "dog licking" + "double cup holder handcuffs." currently, the video has been removed.

after issuing an apology for the meme-related incident, gu ming tea further stated in the comments section of weibo on the same day that it would issue coupons to consumers to make amends.

on september 18, 2024, gu ming apologized through its official weibo account/photo source: weibo@古茗茶饮‍‍

it has to be said that gu ming's marketing strategy failed miserably. it is hard to imagine that a company that survives mainly by earning money from its employees would plan to treat its employees as "criminals".

"stink marketing" is just a superficial phenomenon. the so-called "black and red are also red" business strategy exposes the value orientation of the entire enterprise. such a company cannot just wait for the storm of public opinion, apologize, do public relations, and wait until the storm subsides before everything goes back to normal. let me ask, if this matter had not fermented on the internet, would gu ming apologize and realize the problem?

in fact, this is not the first time gu ming has failed.

as early as this year's "315" period, gu ming was exposed for allegedly tampering with the date of raw materials;

less than a month later, at the end of march, another media report said that rats were found in a gu ming store. at the time, the store responded that "the rats may have run from the snack stand and were disinfected on the same day", but it still failed to quell the public's doubts about food safety.

in july, consumers even suspected that they had tasted blood in their phlegm when drinking beverages. although subsequent inspections found that gu ming's operations did not violate any regulations, the public's trust in the brand has further declined.

according to a review by a reporter from yan finance, there are currently 1,975 complaints about food safety issues at gu ming on the "black cat complaint" platform alone. the complaints mainly focus on foreign objects in milk tea and poor service attitude.

currently, there are 1,986 complaints about gu ming on the black cat complaint platform. image source: screenshot of black cat complaint

the repeated "failures" in food safety issues have already called into question gu ming's brand image. the company also hopes to get close to the young group through self-media memes, but it uses low-level eye-catching methods to challenge the bottom line of the public and is caught in a public opinion crisis. all these behaviors have cast a shadow on gu ming's already difficult road to listing.

braking ipo

this year, gu ming has had a difficult time. at the beginning of the year, gu ming submitted an application for listing to the hong kong stock exchange, attempting to further expand its business through ipo financing. however, the hong kong stock exchange showed on july 3 that gu ming's prospectus had expired, which meant that gu ming's listing process was forced to be postponed.

it is worth mentioning that tea beverage brands have almost collectively put the brakes on their ipos this year.

according to media statistics, on january 2, 2024, mixue bingcheng and guming submitted prospectuses to the hong kong stock exchange at the same time. on february 14, shanghai auntie submitted a prospectus to the hong kong stock exchange. together with chabaidao, which had previously submitted an application for listing on the hong kong stock market, there were a total of four new tea beverage companies that impacted the hong kong stock market ipo in the first half of the year. however, so far, only chabaidao passed the hong kong stock exchange hearing in march and successfully listed on april 23.

on april 23, 2024, chabaidao was listed on the hong kong stock exchange/photo source: weibo @chabaidao

founded in 2010 in zhejiang, gu ming is a new tea beverage brand that started in third- and fourth-tier cities and whose main products are fresh fruit tea and fresh milk tea.

gu ming is the largest brand of mass-produced tea shops in china in terms of number of stores and gmv. in 2023, gu ming's revenue exceeded that of nayuki and cha baidao, two listed tea companies, with 1.2 billion cups sold a year and gmv reaching 19.2 billion yuan, a year-on-year increase of 37.2%.

in 2023, gu ming's gmv will reach 19.2 billion yuan/source: gu ming's prospectus

although the company's performance has grown steadily, its debt problem still worries investors. the prospectus shows that in 2021, 2022 and the first three quarters of 2023, gu ming's total debt was 3.25 billion yuan, 3.85 billion yuan and 4.07 billion yuan respectively.

although the debt ratio has dropped from 159% to 95%, it is still at a high level. in comparison, the debt ratio of mixue bingcheng, which applied for listing during the same period, was only 30%.

most of gu ming’s revenue comes from franchising.

by the end of 2023, gu ming will have more than 9,000 stores. the prospectus shows that franchise stores contribute about 99.9% of gu ming's gmv, and revenue mainly comes from selling goods and equipment to franchisees, as well as providing franchise management services.

in order to attract more franchisees, gu ming launched an installment franchise policy in march this year: no franchise fee is required in the first year, and payment is made in installments in the second and third years.

however, even with the preferential policies, gu ming's expansion has slowed down. according to data from zhaimen canyan, gu ming opened 525 new stores in the first half of 2024, which is only 25% of the same period in 2023.

it is worth noting that the peak period for tea brands to expand stores is generally in the first half of the year. summer is the peak time for tea consumption, and fewer stores are expanded in autumn and winter. therefore, if the number of store expansions in the first half of the year is not good, the number of new stores added throughout the year will not be ideal.

the slowdown in expansion may also be related to gu ming’s brand positioning.

some netizens said that gu ming used the "surrounding the city from the countryside" strategy in the milk tea industry/source: internet

currently, about 79% of gu ming's stores are concentrated in second-tier and lower-tier cities, and the brand adopts the strategy of "surrounding the cities from the countryside". however, gu ming's competitiveness in first-tier cities is insufficient, especially in super first-tier cities such as beijing and shanghai, where it has not yet established stores. with the strong expansion of low-priced brands such as mixue bingcheng in the sinking market, gu ming's competitive pressure is becoming more and more obvious.

gu ming's trust problem

gu ming, which first claimed to be a "heytea alternative", focused on the lower-tier markets with its 10-20 yuan price range. however, as competition in the tea and coffee market intensified, brands such as heytea and nayuki continued to lower their prices, and the market structure quietly changed. there was even a topic online: "who is the alternative between heytea and gu ming?" this reflected the embarrassing situation of gu ming's lack of brand power and the loss of young customers.

faced with market pressure, gu ming also started a price war. from the 4 yuan lemonade trial in may to the "limited time 9.9 yuan event" launched in july, gu ming tried to regain its momentum with its price advantage.

gu ming launched a limited-time 9.9 yuan promotion in july 2024/photo source: weibo @古茗茶饮‍‍‍

however, in the fierce competition in the low-end market, gu ming still finds it difficult to shake mixue bingcheng, which has the largest number of stores, and the price war has limited results.

under heavy siege, gu ming attempted to break out of the tea market through brand marketing. gu ming mentioned in its prospectus that the effectiveness of marketing and promotion directly affects operating performance, and the company has been planning and launching creative and diversified marketing activities to resonate well with consumers.

from "the cooking master boy", peachfiv, "lotus tower", trendy toy ip 52toys, cartoon ip pink rabbit, to "heaven official's blessing", barbie, "love and space", etc., gu ming tries to establish a deeper emotional connection with young consumer groups through a wide range of brand collaborations.

however, high-density brand collaborations also bring potential risks.

for example, in june this year, in the joint event between gu ming and "love and deep space", there were problems such as employees leaking materials in advance and insulting players. although gu ming quickly apologized and fired the employees involved, the brand public relations were still negatively affected.

gu ming and "love and deep space" joint offline event site photo/source: weibo @古茗茶饮

not long after, gu ming launched a new logo, and its design also caused controversy. some netizens thought that the design was suspected of "skirting the line", questioning its vulgar design techniques, which once again pushed gu ming to the forefront of public opinion.

for gu ming, 2024 is destined to be an uneasy year.

the delay in listing, slowed expansion and frequent public relations crises have made gu ming's future uncertain.

in the future, how gu ming can enhance its brand image and stabilize consumer trust will become the key to its development.

speaking of the crisis of trust, two years ago, gu ming had a tax evasion incident.

in march 2022, zhejiang guming technology co., ltd., an affiliate of guming milk tea, was fined more than 11.61 million yuan by the taizhou taxation bureau. according to the website of the national enterprise credit information publicity system, zhejiang guming technology co., ltd. failed to file tax returns, failed to pay or underpaid taxes, and did not list or underlisted income in its books. the tax bureau imposed a fine of 50% of the underpaid value-added tax, corporate income tax, and urban maintenance and construction tax of more than 23.22 million yuan, totaling more than 11.61 million yuan, and a fine of 50% of the underpaid stamp tax of 6,360.30 yuan, totaling more than 3,180.15 yuan.

as for the reason for this tax evasion, gu ming explained that "in the early days of its establishment, gu ming technology did not establish a complete internal control system to adapt to the rapid growth of its business and ensure that all tax reporting responsibilities that must be properly fulfilled were fulfilled."

now, gu ming mentioned in its prospectus that the company's cash and cash equivalents, expected cash flow from operating activities and expected net ipo proceeds can support at least 12 months of operations, but continued growth still requires additional financing.

gu ming mentioned in its prospectus that the company's continued growth still requires additional financing.

faced with fierce market competition, the sustainable development of a brand not only depends on products and marketing, but also requires refined management to avoid falling into a public relations crisis again.

this failure thoroughly exposed the challenges that gu ming faces in grasping social trends and maintaining a good public image, and sounded a wake-up call for many brands: brand marketing should not only stay at the surface of entertainment and eye-catching effects, but should return to the essence of business and stick to the bottom line of truth and respect. this is not only a respect for consumers, but also a respect for every employee within the company.

at present, social media has become the "second battlefield" for business marketing. however, the value of a brand is not only reflected in the product itself, but also in the emotional resonance and value recognition it conveys to consumers.

"playing with memes" and "playing with abstractions" are not shields for any "stink".