In the tumultuous capital market of 2023, a vibrant panorama unfolded for the consumer investment industry, depicting a landscape full of variables. Policy directions acted as beacons in the night sky, and for Harvest Capital, a Chinese consumer investment institution navigating the surging currents, the weight of the current situation is keenly felt.

The changes in the capital market resemble a symphony. New guidelines, such as those for private equity fund filing, the supervision and management of private investment funds, and the trial measures for domestic companies issuing securities overseas and listing, have set the direction for industry reform. These policy guidelines are not just traffic lights; they are also lifting the curtain on financial market transformation.

In the ever-changing market, much like the technology sector, consumer and technology industries play equally crucial roles. It is the intersection of these two major domains that unfolds the market's fascinating diversity.

For the consumer industry, there is no need to be discouraged by the brilliance of the technology sector. The consumer industry has its unique advantages, such as relatively stable cash flow and strong self-generating capabilities, allowing it to focus more on internal cultivation during market downturns. Like a martial artist practicing internal skills in adversity, the consumer industry can welcome more victorious dawns in its troughs.

In this dynamic and transformative era,Harvest Capital has consistently adhered to the investment philosophy of investing in the human touch and empowering people's lives. We deeply understand the implications of the Matthew effect and comprehend the need to seize the momentum in the turbulent market. This is not only a challenge but also an opportunity.

As 2023 comes to a close, Harvest Capital is on the verge of entering its 17th year since establishment. On the occasion of bidding farewell to the old and welcoming the new, we present a summary of the journey we have traversed. This is both a retrospective of the past and a prospect for the future.

01 -Use of Raised Funds and Fund Withdrawal Management

Among the projects completed in 2023, Harvest Capital invested a cumulative total of 500 million RMB in Small Veggie Garden as the exclusive investor, marking the largest financing in the popular and convenient catering market in recent years. Small Veggie Garden is the undisputed leader in the rapidly developing track of popular and convenient Chinese cuisine, with a store scale exceeding 500, and its business scale, growth rate, and store profitability leading the industry.

In addition, we are concurrently completing the transfer of a leading domestic brand and a well-known fast-moving consumer goods brand. The team has been serving these companies for some time, helping them streamline their business and timing the announcement of good news.

The post-investment management of Small Veggie Garden has been one of the key tasks accomplished by the investment team this year. We have collaborated with Small Veggie Garden in the second growth curve, internal control rectification, group digitization, and improvement of management models, raising the company's management standards in finance, law, and business.

Small Veggie Garden's second growth curve aims to become a community canteen closely connected to people's lives. Harvest has been deeply involved in Small Veggie Garden's strategic planning, assisting in the implementation of strategies, such as the layout of new store types, equipment for individual stores, and coordination with suppliers. We conducted national market research together with Small Veggie Garden and upgraded the strategic direction at crucial times.

Harvest Capital Chairman, Song Xiangqian, has held numerous meetings to discuss business matters, frequently traveling to Tongling and Shanghai for business with Small Veggie Garden. To help introduce high-level financial managers, he personally interviewed each CFO candidate, raising the level of financial management.

Furthermore, significant improvements were made to Small Veggie Garden's internal control system. By analyzing weaknesses, participating in rectification steps, and driving the establishment of an internal audit department, a more modern management system was built.

We also helped enhance the company's digital efficiency. We assisted Small Veggie Garden in upgrading its membership system, from supplier selection and integration to process supervision, and facilitated the establishment of a membership operation department. We conducted weekly follow-ups on membership goals, were responsible for the implementation of plans, and assisted the company in achieving its objectives.

Deep involvement in the BI system was another aspect of our support. Due to in-depth due diligence in the early stage, understanding both finance and business, we actively participated in the BI system. We surveyed all available options in the market, conducted a detailed analysis of their strengths and weaknesses, and helped the company save time and effort. This enabled the company to better understand the management philosophy guided by data and improve the management team's methods and concepts.

In terms of fundraising, this year we raised a new round of RMB and USD funds. Regarding the exit of RMB funds this year, we also achieved good results, thereby rewarding our LP.

-02 2023 Updates on Some Invested Companies

Dongpeng Beverage

Product Innovation: Introduced coconut latte, carbonated specialty drinks, and electrolyte beverages.

Channel Deepening: Deepened nationwide channels in 2022, covering over 3 million terminal merchants.

In July, joined hands with Han Hong Love Charity Foundation for a hundred-person aid to Heilongjiang, participating in a large-scale rural medical charity event.

In August, donated 200,000 bottles of Dongpeng specialty drinks to Hebei through the Chinese Red Cross Society to support post-disaster reconstruction. Additional donations worth 3 million yuan in goods were made.

Earthquake in Gansu: Donated 120,000 bottles of products to support the affected areas.

Dongpeng Beverage received authoritative recognition from the China Beverage Industry Association.

Jimailang

New Mineral Water Products: Entered the mineral water track with new products.

Upgraded Packaging for Jimaolang Iced Tea.

Introduced a new electrolyte beverage: Power Balance.

Launched a "green" zero-fried braised beef noodle.

Hebei Floods: Donated 350,000 bottles of cold boiled water to support Zhuozhou and other areas.

Gansu Earthquake: Donated nearly 7,000 boxes of halal instant noodles to support disaster-stricken areas.

Laoxiangji (Old Town Chicken)

20th Anniversary Celebration: More than 1,120 stores nationwide distributed over 600,000 meal sets, 1.2 million eggs, and 2.4 million candies.

Self-Examination and Self-Rectification Report publicly displayed for 12 consecutive months this year.

Amour's 30th Anniversary:

Body Aesthetics Underwear, Amour Sleepwear, and other products made a significant debut.

Amour's professional sports brand, CHICHU Beijing Guomao Mall store, opened.

The third anniversary of the Double Carbon Target: Amour Holdings collaborated with industry partners to promote the green development of the industrial chain.

Babi Foods

Babi Baozi launched on 7-ELEVEN in Beijing.

Completed the annual store opening target in the third quarter, with a growth rate of 31.23% in the group meal business, and a year-on-year increase of 23.70% in the non-GAAP net profit attributable to the mother.

Babi R&D chef won the Gold Award in the first National Golden Kitchen Exchange Invitational.

The first phase of the Babi Wuhan Smart Manufacturing Center project reached the topping out ceremony.

Small Veggie Garden

10th anniversary of Small Veggie Garden's establishment, with the number of stores exceeding 530 direct-operated stores, covering 118 cities.

Harvest Capital invested a total of 500 million RMB in two rounds.

New digital CRM membership system and BI system launched, enhancing digital capabilities.

Qiaqia Food

Qiaqia and Dongpeng joined hands on Chinese Valentine's Day and are both companies invested by Harvest Capital.

Qiaqia Food donated nearly 4,000 boxes of nutritious convenience food to support Beijing and Hebei.

Qiaqia Food was listed in the "2023 Asia's Top 350 Brands."

-03 -Harvest Honors

• We have received honors from various media outlets, including PREQIN, Shanghai International Private Equity Association, Zero2IPO, Financing China, Titanium Media, Yicai, 36Kr, Tuozhong, Investor's Home, China Venture Capital Research Institute, the 108th National Sugar and Liquor Fair, Interface News, Food Capital, IPO Early Know, Blue Shark Consumption, Watching New Consumption, CXO Innovation Center, 21st Century Economic Report, Forbes China, Golden Brick Finance, Lieyun, Mother Fund Research Center, and Mother Fund Weekly, to name a few. We appreciate the recognition from associations, media, and research institutions.

-04 -Advocacy and Expression

This year, we published multiple articles expressing our thoughts on the consumer industry and the macro economy.

1. "Discrimination against Consumption, Technology Must Taste Bitter Fruits": In the current technology investment boom of the year,Harvest Capital Chairman Song Xiangqian was the first to point out the overheating of technology investment and the chilling of consumption. We call for policies to provide more windows and space for consumer enterprises.

1. "Population Peak Changes": New considerations for how companies should develop in response to the population crisis.

1. "Don't Waste the Red-Hot Zibo BBQ, the Business Philosophy of City Management Based on Livelihood": The importance of livelihood, the long-term efforts of urban management.

1. "Hu Hanyong Line of the Human Heart": How to choose at the boundary line of geographical differences, survival and development, and values.

1. "Victory of Pinduoduo": The progress of Chinese business lies in achieving the order of "good quality" and "low price," solving the high-quality growth password with the "system beauty" concept, and implementing the rational prosperity of "years twining, lush and fragrant."

1. "Kong Yiji's Changshan and China's Consumption of Uniqlo Moments": Calling for more companies to focus on consumers and create consumer benefits.

1. "Consumerism in the Cold War Era": Only when it is implemented in people's lives is it the specific connotation of a happy life.

Media Communications:

36Kr "Back to the Hopeful Field";

Investment China "Harvest Capital's Understanding of 'Consumer Investment'", "We Are Entering a Golden Age of Super Brands Birth";

Lead Dao "Discrimination against Consumption, Technology Must Taste Bitter Fruits";

Tencent Deep Net "Why Discuss Quality Growth Now";

Zhengjing Shu "China's Consumption in an Era of Unprecedented Changes, Success in a Low-Desire Society";

Chaos Academy "High-Quality Growth in China's Consumption in an Unprecedented Era of Change" and interviews with other media.

Video Production:

This year, we produced over 130 video contents. Follow @Harvest Capital / @Song Xiangqian626 Video Number for a review.

In the new year, Harvest Capital will continue to closely monitor market changes, continuously optimize investment layouts, and help more enterprises soar on the stage of capital, finding the code for sustainable growth. With more passion and solid professional competence, we will constantly challenge ourselves, create greater value, walk hand in hand with the times, and sketch a beautiful future for consumer investment in China.

Let us join hands to write a new chapter of investment, growth, and win-win. May 2024 be a new starting point for our common efforts, witnessing more achievements and possibilities together!