In this systemic “return to basics,” Harvest Capital and its founder, Song Xiangqian, have been the most active advocates and staunch practitioners of this philosophy. Song Xiangqian has repeatedly stressed that finance must revert to its service nature, reallocating resources to the real economy.

Known in the consumer sector as a leading investor who is both "frank and maintains his own style," Song Xiangqian recently spoke with ChinaVenture (投中网) and did not hesitate to discuss the “false prosperity” generated by excessive financial financialization.

He argues that while the 2008 U.S. financial crisis revealed systemic risks, subsequent global quantitative easing often failed to enter the real sector, instead fueling more complex financial arbitrage. This phenomenon resulted in a “crowding-out effect,” allowing large amounts of capital to idle and circulate solely within the financial system, making financing difficult and expensive for innovative and livelihood-focused enterprises. Crucially, this behavior also “distorted values,” diluting the spirit of “working earnestly in real industry” and accelerating the economic trend of decoupling from the real sector toward speculation. Ultimately, this leads to accumulated risks and a decline in overall investment returns.

This outspoken warning is a proactive call from Harvest Capital, based on the perspective of industrial development, advocating for a trend that “prioritizes the real economy and de-emphasizes capital”.

In fact, since its founding in 2007, Harvest Capital chose a distinct path: embedding “deep cultivation of the real economy and serving consumption” into its DNA. For 18 years, the firm has remained rooted in consumer industries—from food and beverages and chain restaurants to supply chain construction and brand upgrades—insisting on “long-termism” to accompany enterprise growth. Its portfolio includes industry benchmarks such as Jinmailang,Eastroc Beverage, Qiaqia Food,Jiajia Food,Laiyifen,Babi Food,Home Original Chicken,Aimer,Taikang,Meitu,Meituan,Didi.

01. Resource Allocation: Capital Must Flow to Efficient Sectors, Not Short-Term Arbitrage

Song Xiangqian explicitly notes that “prioritizing the real economy and de-emphasizing capital” will be the common choice for major nations globally as the world readjusts industrial profits and resident income distribution. He states that the financial sector must serve social livelihood and industrial development, emphasizing that increasing the return on real industry investment will be the main direction of future global competition.

Having witnessed multiple economic cycles, Song Xiangqian’s belief that “finance must serve the real economy” has become increasingly clear and is deeply integrated into his investment philosophy.

In his view, global economic development trends show that as GDP per capita gradually climbs, the economic structure inevitably shifts from being “investment + export driven” to “consumption + service driven.” This means consumption will be an indispensable stabilizer and “ballast stone” for China’s future economic growth.

“In particular, consumption has natural anti-cyclical properties,” Song Xiangqian explains. The rigid, high-frequency nature of consumer demand ensures sustainable repurchase behavior, providing enterprises with predictable, rolling cash flow. He considers this the “most scarce ‘stable asset’” during the era of financial idling, making it the optimal investment track for resource allocation.

However, this optimal sector faced a crisis of investment imbalance. During the irrational consumer investment boom of 2021, Song Xiangqian noted that much of the activity involved arbitrage detached from the real industry. Many participants were only concerned with rapid scaling, “burning money” for financing, and securing profitable exits in the capital market, rather than long-term corporate viability, genuine job creation, or generating satisfactory products for consumers.

Harvest Capital stands as a contrarian in this speculative frenzy. They define investing in consumption not as financial arbitrage, but as using capital to convert the “simple daily demands of 1.4 billion people” into positive social externalities like “stable employment, inclusive income, and quality life”. This is the core logic of “finance for the people,” guiding capital toward highly efficient sectors.

Harvest Capital demonstrated this commitment by maintaining self-control during the 2021 market frenzy. It was only after the market cooled in 2022 and 2023 that Harvest Capital made decisive moves, such as leading the first market-based financing round for Xiaocaiyuan and subsequently investing 500 million yuan cumulatively. They consistently allocate resources to high-frequency, rigid-demand consumer industries with stable cash flow and low debt, such as food, beverages, and chain restaurants, resulting in numerous national consumer brand representative cases.

02. Governance and Empowerment: Enhancing Productivity Through Strategy

While “engaging in real industry” is often mentioned by investors, truly going "down to the field" requires courage. Harvest Capital defines its role by focusing on the “Five Trues” (五个真的): Truly understanding the industry, truly creating value/profit for the enterprise, truly assisting with strategic positioning, truly helping optimize operations and management, and truly acting as an enterprise partner. This approach helps them transcend the limitations of being passive financial investors who merely provide funds, positioning them instead as a coach, consultant, and helper deeply bound to the enterprises.

• Xiaocaiyuan Case: Harvest Capital acted as a “strategic partner,” helping the company clarify its long-term positioning as “popular, convenient Chinese catering,” focusing on the core solution of “delicious and inexpensive”. In the digital transformation phase, they aided in building membership operation systems, data management platforms, and BI data analytics, pushing the firm toward “data-driven decision-making”. This deep empowerment enabled Xiaocaiyuan to successfully list on the Hong Kong Stock Exchange in just one year. Harvest Capital achieved a double return on its investment, with Xiaocaiyuan’s HK market value stabilizing near HK$14 billion.

• Dongpeng Beverage Case: Harvest Capital’s strategy was crucial to Dongpeng Beverage, which maintains a stable market capitalization of 160 billion yuan and has sustained high growth (over 35% for consecutive years). Dongpeng is a benchmark for digital capability, leading the industry with its “five-code-in-one” and “one-item, one-code” digital marketing systems, which directly enhance product turnover. The growth of this national brand, which has defeated international rivals in China, was deeply accompanied by Harvest Capital. The firm's “1+6 strategic plan” for Dongpeng garnered Harvest Capital nearly 9 billion yuan in excess returns.

Reflecting on this hands-on experience, Song Xiangqian emphasizes that finance returning to its service essence means creating real output and employment for society.

03. The Brand Behind the Brand, The Giant Behind the Giant

Harvest Capital’s deep-involvement philosophy determines its investment selection criteria. By assisting its portfolio companies to become industry leaders—acting as a “super coach”—Harvest Capital has evolved into the “brand behind the brand, the giant behind the giant”.

Harvest Capital’s successful investments—including Qiaqia Food, Babi Mantou (which became the “No. 1 steamed bun stock” in 2020), Xiaocaiyuan (one of China's largest full-service restaurant chains), and Laoxiangji (the leading Chinese fast-food chain)—all share consistent traits: they are pragmatic, low-key, prioritize fundamentals, treat supply chain construction as their lifeline, and relentlessly focus on the mass consumer market.

These shared qualities form Harvest Capital's core screening standard. This investment process transcends mere financial returns, generating profound economic and social value. The vast external value created by investing in consumer enterprises includes:

1. A Ballast Stone for Employment: High-frequency, rigid-demand industries, which contain many small entrepreneurial entities, are key forces for absorbing massive employment and stabilizing the market.
2. Boosting Public Welfare: These industries focus on necessities, striving for extreme cost-performance to benefit consumers, addressing the fundamental livelihood needs that are yet to be fully met.
3. Amplifying the Economic Multiplier: Enterprises in these industries create significant tax revenue, which is vital for providing financial support for technological development. The consumer sector is far more effective than financial arbitrage at “amplifying the economic multiplier”.

04. The Mission of Capital: Driving a Social Shift Toward Consumption

Today, as “enhancing consumption” is once again key to economic growth, Harvest Capital is ready to move forward confidently, while capital that only chased short-term trends has quietly retreated.

Song Xiangqian is an advocate for the consumer sector, daring to publicly argue that consumption and technology are not opposites but two essential, integrated facets of national economic development. Consumption creates vast application scenarios, while technology enables consumption upgrades; they must collaborate. He argues that policies discriminating against the consumer sector and hindering normal financing/listing processes should be challenged.

*Song Xiangqian publicly advocates that consumption and technology are not opposites but rather two integrated and indispensable facets of national economic development

China is currently undergoing a structural transformation from a production-based society to a consumption-based society. Song Xiangqian believes the fundamental solution to exiting deflation and boosting domestic demand is to increase per capita disposable income levels, stabilize employment, and improve livelihoods. He suggests that China needs a sustained National Income Doubling Plan supported by scientific social security, medical, and pension systems to enhance consumer expectations and confidence.

In this transition, capital plays a critical role. Song Xiangqian emphasizes that investors must not only earn money but also undertake the responsibility of optimizing the social industrial structure. By helping entrepreneurs improve their capabilities, the return on investment in the real economy can be restored to the highest market level.

Harvest Capital's philosophy is rooted in deep research into China's economy, industry environment, and comparisons with developed economies. The firm’s practice proves that when capital focuses on livelihood-related domains with “real industry genes” and binds itself to them for shared growth, the created social value ultimately returns as more stable and long-term economic rewards.

The firm's success as the “champion behind the champion” is not just capital leverage, but a congruence of philosophy and a co-creation of value. Time, Song Xiangqian concludes, will ultimately reward those long-termists who align with the era's trend and advance alongside the real economy.