Actually, most of the time, "consumer investment" is quiet or even "opposite."

For example, in July 2004, Yao Jingyuan, then the Chief Economist and Spokesperson of the National Bureau of Statistics, talked about a hidden concern in economic development at the "High-level Forum on China's Economic Development Trends and Macro-control Direction." It was the "asymmetry of consumer investment," recognized as the future theme of macro-control. Yao Jingyuan believed it was necessary to further specify the problem and warned that if "consumption cannot grow rapidly to absorb the new industrial growth," there would be a risk of "big ups and downs."

In May 2007, a worried commentator article was published in the New Beijing News. Amid a global economic slowdown and the emerging subprime crisis, discussions arose nationwide about rearranging the "investment, exports, and consumption" sequence. Hunan Province took the lead in including "expanding consumer demand" in the work assessment "hard indicators," requiring governments at all levels to courageously address "hard bones" in expanding consumption. The author, Yang Shaofu, expressed strong concerns, pointing out that relying excessively on investment could lead to various anomalies, such as providing a monopoly market for investment enterprises through policies.

By 2009, the controversy between "investment" and "consumption" became a public choice. Economists like Zuo Xiaolei and Wang Dongjing suggested "not relying on investment to maintain growth," while scholars like Liu Fuyuan, Xu Xiaonian, and Mendel advocated directly boosting consumer spending through tangible forms like "shopping vouchers." On the contrary, with Gong Fangxiong and Pu Yonghao as representatives, some believed that direct "cash distribution might lead to a contraction in consumption." Economic Information Daily summarized these opinions in February of the same year, emphasizing the importance of "structurally reasonable consumption" as the "primary productivity" driving current economic growth and the ultimate goal of economic development.

In the face of the sweeping economic transformation, "consumer investment" has essentially become a "reference answer" handed to the Chinese market. For over twenty years, answering questions like "why is it like this now" and "how do we need to change" has almost become an instinct in the blood of Chinese consumer investors.

01  Investors Who Understand "Macroeconomics"

When discussing the controversy between Harvest Capital's founder and chairman, Song Xiangqian, and "Digu Tong," many like to use "challenge" for summarization. The basic logic is that Harvest Capital represents the traditional "equity investment model," while Digu Tong's DRC describes itself as non-stock and non-debt. There is disagreement on the risk of lending to small and micro-chain enterprises.

Song Xiangqian is known for his straightforwardness in the venture capital circle. For example, during the Luckin Coffee financial fraud in early 2020, he wrote a sharply worded article, directly stating that "Luckin is crazily robbing China's credit," and such behavior is "harming and squandering the hard work and culture of diligence and prosperity built over forty years of reform and opening up."

During the lockdown in Shanghai, Harvest Capital donated goods worth 8.14 million yuan to Shanghai. Song Xiangqian even wrote a total of 9 isolation diaries, lockdown diaries, and unsealing diaries expressing concerns and calls. He conducted live broadcasts with economists Guan Qingyou and Xiang Songzuo, expressing his thoughts on macroeconomic understanding and Sino-US relations. He has been outspoken on public topics, although it is unclear if his words can change anything, he has consistently insisted on speaking out.

In the debate about the relationship between consumption and technology, he has repeatedly emphasized that the two should not be opposed. Consumption provides significant application scenarios for technology, creates a large number of employment opportunities and tax revenues, and provides long-term financial support for technological development. Technology cannot advance into society without consumption scenarios and applications.

In essence, in the investment industry, there is a saying in recent years called "excellent investors dare to speak out and dare to stand up." Song Xiangqian fits this definition well, but he rarely stands up purely for his projects or his investment direction.

In Song's investment view, investors should realize that they are engaged in "economic work," often participating in industrial upgrading and industrial structural adjustment. Under this premise, "social responsibility" becomes the inherent meaning of the "investor" profession. There is a responsibility to break free from the preset framework of invested projects, requiring a deep study and contemplation of "macroeconomics."

Including Harvest Capital's now well-known label of a "long-established consumer investment institution," it comes from their proactive choice: "For so many years, we have constrained ourselves to high-frequency, rigid demand, and mass consumer goods. On the one hand, it's because we recognize our own ability boundaries, and on the other hand, we recognize (consumption's) infrastructure functions and altruistic empowerment capabilities."

However, with China as a vast single market, it has demonstrated significant "latecomer advantages" in the past few years. Investors have had a brief opportunity to "skip the technological route," making short-term gains from the "era's" beta.

Song Xiangqian believes that the existence of these two objective conditions has created a trap: "Many people have earned the beta of the era but think that it is the alpha of themselves, mistakenly believing it is their ability." He thinks BYD is a typical example, stating, "BYD has also endured for more than ten years, finally finding the opportunity of the new energy vehicle track. It has accumulated advantages in technology, talent, market, and manufacturing capabilities for more than ten years to achieve today's advantageous profits. It is a result of joint efforts, and it cannot be simply attributed to a specific investment institution or entrepreneur."

"So, you see that many institutions are now hiring chief economists." Old Song hopes that a qualified investment institution should understand the "Kondratiev Wave" and not just "go with the trend." The "Kondratiev Wave" was proposed by Soviet economist Nikolai Kondratiev, suggesting that there is a cyclical pattern in economic development, divided into four stages: prosperity, recession, depression, and recovery. The prosperity phase starts with innovative technological changes, leading to rapid economic development. Before giving birth to the next major technological innovation and entering the recovery phase, there is inevitably a period of economic downturn with a relative lack of growth momentum.

Specifically for Harvest Capital, Old Song has prepared for the difficulty of implementation, ready to "sharpen the sword for ten years, even if it takes 30 years to persist." Perhaps this is also determined by the nature of "consumer investment" itself because, in classical economic theory, consumption not only meets immediate needs, allowing labor to be reproduced with instant effects but also has lagging or delayed effects. Only when accumulated to a certain degree does it have the expected impact on individual life opportunities and social conditions.

02 "Return the stage to entrepreneurs"

In terms of data, the "delayed effect" belonging to Harvest Capital has already begun to materialize. According to the latest data released by the National Bureau of Statistics, the contribution rate of final consumption expenditure to economic growth continued to rise in the third quarter of this year, reaching 94.8%, contributing 4.6 percentage points to GDP growth. The contribution rate of total capital formation to economic growth is 22.3%, contributing 1.1 percentage points to GDP growth. Further breaking down the data, the main reason supporting the high growth of consumption is the improvement of residents' consumption tendency. The average consumption tendency in the third quarter was 69.8%, exceeding the same period from 2015 to 2022. The China International Capital Corporation believes that this performance reflects the faster growth rate of quarterly consumption expenditure and the recovery of consumption tendency, indicating that "residents' consumption willingness is boosting and sustaining the recovery of consumption."

When shooting "Super Investors" in April of this year, Old Song expressed his sentiment about this matter, mentioning that after 28 years in the industry, with 17 years of professional consumer goods investment, he finally "hoped that the contribution of Chinese consumption to the final GDP growth in China's economic growth would exceed 50%." Half a year later, Old Song and I discussed these data again, appearing even more confident. The reason is that "from the perspective of development laws, when a middle-income country transitions to a high-income country, it inevitably undergoes the transformation from a production-oriented society to a consumption-oriented society"—according to the data published in 2022, with China's per capita GDP of about $12,800, China has approached the entry standard of the "high-income country" defined by the World Bank. He can feel that "everyone has begun to realize this issue," and "consumption has become the true stabilizer and driving force of China's economy, as well as the main force behind China's economic development."

However, Old Song drew a "line" for Harvest Capital: investors should not become protagonists.

Old Song likes the term "entrepreneur" very much. In the more than one-hour conversation with Old Song, the term "entrepreneur" appeared more than 20 times in my shorthand notes. A considerable portion of it was used to describe the difference between "entrepreneurs" and "founders." The latter represents a career choice, while the former is more like a collection of abilities, "understanding Drucker's management science, capable of managing R&D, managing the market, having a profound understanding of the enterprise, product, and market."

Old Song considers this collection of abilities as the true alpha in an era lacking major challenges. For Harvest Capital, as an investment institution, becoming the "business partner of the enterprise, an off-book CEO of the enterprise, a training partner for the enterprise to sprint towards champion, and being able to participate in the company's operation" has become their alpha.

This mindset is implemented in practice, and post-investment has become the most important work for Harvest Capital, occupying nearly 80% of the investment team's energy. Each invested project has a dedicated team focusing on the structural cultivation of ROE, brand building, channels, markets, and digitization. Many knowledge trees, mind maps, and industrial maps are simply drawn by Old Song himself. He has publicly expressed several times that this is a "counter-human competition advantage" because "it is not a vision or a kind of inspiration, but the accumulation achieved by the team every day in each enterprise through specific management and operations," and "the sunk cost is too high."

On this basis, Harvest Capital has refined two consensuses: one is at the philosophical level, emphasizing that the essence of investment is to buy the future profit growth of the enterprise and buy the dividends generated by time. "Sending an analyst team to analyze past financial data can only prove that they were excellent in the past." The other is at the technical level, emphasizing that the essence of investment is to evaluate a company's cash flow discounted valuation model (i.e., DCF). The real value that investors can create lies in "helping the company achieve a higher and more stable profit level in the future."

Talking about this topic, Old Song is full of complaints: "I see now (many institutions) have a lot of scattered things in the contract, a big pile of investment contracts, a hundred or two pages... Investment agreements, value-added agreements, shareholder agreements, and additional agreements. It seems that as long as you present enough agreements, you can buy a great enterprise... doing this can only make arbitrage money."

In fact, if I were Old Song, I would be annoyed too because I have seen a "pre-research review" through one of Old Song's colleagues. In the collaborative document of Feishu, this pre-research is included in a large category called "preparation before entering." The pre-research itself is divided into legal, business, financial, and industry research, and each item has dozens or even hundreds of reports updated on a weekly basis. For professional reasons, I wanted to confirm the accessibility of these works, so I had the following conversation with that colleague:

"Have you communicated with peers? Will they do the work you do?"

"From what I know, the details of our work even exceed those of M&A funds. For example, the investment team will be involved in operational analysis, member operations, service SOP, brand second curve, HR recruitment process management, etc."

"Can these reviews really enter their decision-making?"

"Yes, we will participate in major business decisions of the enterprise. And these works are our philosophy. We can only share the other party's profits if we create value."

03 "Harvest Industry"

In Old Song, I often see the shadow of Professor Wen Tiejun. For example, Professor Wen Tiejun has repeatedly talked about the issue of "capitalization of resources" in public speeches and forums—before fully embracing the market economy, the monetization level of China's economy was very low. In 1978, when the total output value of the national industry and agriculture was about 1 trillion yuan, social deposits were only 22.6 billion yuan. After the transformation to embrace the market economy, a large number of unfinished monetized resource assets entered the market through transactions, and financial capital gained more dominance—this is a kind of alarming "virtual expansion."

Old Song also often unabashedly believes that finance has a certain "original sin." He believes that the high added value of China's finance is "inappropriate," and the current situation where "more than 5,800 listed companies jointly create profits, and more than 30 financial companies and banks take away half" deviates from the essence of the financial industry as a "service industry." He hopes that financial institutions and investors cannot just shout "upgrade the strategy" but "must truly operate the business themselves."

To a large extent, this is also the direct reason why Old Song decided to have a direct conversation with me. Before the formal dialogue, I had a brief communication with Old Song. I hoped to determine the topics in advance and prepare the materials with good pertinence. However, Old Song rejected this proposal. He hoped that the conversation could take place in a "topic-free" state, hoping to let everyone "reflect" after seeing it, rather than just talking about "phenomena"—since the whole industry is anxious about "no time to think, no time to accumulate, no time to do research," Old Song is willing to provide a "reference answer" in the face of the new tide of economic transformation.

But Old Song still brought a "surprise." At the end of the conversation, he revealed to me an idea: he considered changing the name of "Harvest Capital" to "Harvest Industry" someday in the future.

"We don't think of ourselves as a fund company. A lot of the self-operated parts in our investment process, you can say, are the largest LP in almost every project, probably accounting for about 30% (of the total investment amount)." Old Song believes that the new name can more accurately summarize their actual work content. I subconsciously thought of the round of financing conducted by Harvest Capital in 2021. They introduced Prologis and Sequoia China as shareholders rather than LPs. Old Song referred to this as a "historical turning point" during an interview, declaring that Harvest, through resource integration, has the ability to "iteratively upgrade and fight together as partners."

"Do you have a specific timetable?" I asked at last, "like, expected to reach a certain point at a certain time?"

"No, this thing depends on us to do it ourselves, it takes a long time." Old Song's answer was without any hesitation, and he turned back to that investor with typical macroeconomist temperament. "Industry can help improve people's lives more effectively, but the return on investment in industry drops very quickly. We have dropped from 12.5% in 2008 to around 5% to 6% in 2022... I think we have accumulated enough experience and ability. The most convincing chip in the market is to go down and do an experiment yourself." In terms of worldly costs, Old Song seems to appreciate achievements with a sense of bitterness and dedication, perhaps the process is far more important than the result.