Disruptors
Those who traverse cycles understand the weight of time.
Zhang Liaoyuan
“During that time, we held internal review meetings. The most painful thing was not seeing the decline in numbers.”
From the No. 1 national snack stock to declining performance and reputation crisis. Zhang Liaoyuan used a "wrist-breaking" revolution to prove that: traffic is borrowed wings, and the supply chain is its own legs. The most dangerous moment is not when you have nothing at the starting point, but when you climb to the top and find that the ridge beneath your feet is collapsing. In 2019, Three Squirrels landed on the Shenzhen Stock Exchange with the aura of being the “No. 1 snack stock in the country”. Its market value once exceeded 40 billion yuan, and Zhang Liaoyuan stood on the altar of grassroots entrepreneurship. However, under the high light, cracks have appeared. Online traffic costs are high, offline expansion is faltering, and word-of-mouth controversies about some products have emerged like hidden reefs. When the tide of capital and attention began to recede, the naked swimmers had nowhere to hide - the "squirrel" who relied on e-commerce dividends and IP marketing to run at high speed felt gravity for the first time. 1. Scars: When the "first" halo becomes a scorching spotlight. Zhang Liaoyuan's "darkest moment" did not involve earth-shattering thunder, but a slow, all-round "stall" and "hypothermia." After listing, the company's revenue growth slowed down and its net profit fluctuated significantly. In 2025, its net profit fell sharply by 61.9% year-on-year. What’s even more troublesome is that with the expansion of scale, quality control issues have been pushed to the forefront of public opinion from time to time, and cracks have appeared in the reputation of users that we were once proud of. The capital market voted with its feet, and stock prices fell from highs. The halo of "national snack" suddenly turned into a spotlight that magnified all flaws, and every flaw burned the brand. "During that time, we held internal review meetings, and the most painful thing was not seeing the decline in numbers," Zhang Liaoyuan said.
Zhang Liaoyuan
The Business Contrarian | Zhang Liaoyuan: After the E-Commerce Myth Faded, Rediscovering the Tangible Reality of "Snacks"
Asian "Cover Figure" · The Business Contrarian
Issue No. 014-ACF-NXZ-2026
[Summary]
From "China's No. 1 Snack Stock" to declining performance and a reputation crisis. Zhang Liaoyuan proved through a "radical amputation" revolution: traffic is borrowed wings; the supply chain is your own legs.
The most dangerous moment is not starting with nothing, but climbing to the summit only to discover the ridge beneath your feet is collapsing.
In 2019, Three Squirrels debuted on the Shenzhen Stock Exchange under the glow of "China's No. 1 National Snack Stock," with market capitalization briefly exceeding 40 billion yuan. Zhang Liaoyuan stood atop the pinnacle of grassroots entrepreneurship. Yet beneath the spotlight, cracks had already formed. Online traffic costs soared, offline expansion stumbled, and quality controversies over certain products emerged like hidden reefs. As the tides of capital and attention receded, the naked swimmer was exposed — the "squirrel" that had sprinted at high speed on e-commerce dividends and IP marketing felt gravity for the first time.
I. The Scars: When the "No. 1 Stock" Halo Became a Blinding Spotlight
Zhang Liaoyuan's "darkest hour" was not an earth-shattering explosion but a slow, comprehensive deceleration and cooling.
After the IPO, revenue growth slowed and net profit fluctuated significantly. In 2025, net profit dropped 61.9% year-on-year. More troublesome, as scale expanded, quality control issues were repeatedly thrust into public scrutiny, and the once-proud user reputation began to crack. Capital markets voted with their feet; stock prices retreated from their highs. The "national snack" halo instantly became a spotlight magnifying every flaw, each one burning the brand.
"During that period, our most painful internal review meetings weren't about seeing numbers decline," Zhang Liaoyuan admitted at an internal meeting. "It was discovering that we'd drifted somewhat from our original mission of 'delighting every customer.'"
Externally, the snack sector was a brutal close-quarters battlefield; internally, a sprawling SKU base pushed supply chain and management capabilities to their limits. Three Squirrels was like a race car careening down a highway, suddenly discovering a fuel leak — the engine still roared, but the risk of losing control hung over every moment.
II. The Abyss: The "Quality Control Black Hole" and "Growth Illusion" of a Traffic Empire
The root of the trough required confronting the "black hole" once obscured by success. Zhang Liaoyuan and his team reflected that the problem lay in path dependency on "growth" and a misalignment in understanding "real business."
The early formula was clear and effective: strong IP traffic generation + vast SKU coverage for long-tail demand + e-commerce platform operations. This model propelled Three Squirrels far ahead during the e-commerce dividend era. But when traffic costs climbed and competition deepened into quality and supply chain battlegrounds, weaknesses were fully exposed.
Its rise was swift; its fall came just as fast. Over-reliance on contract manufacturing and private labeling became a "Sword of Damocles" hanging over quality control; SKU proliferation in pursuit of scale diluted R&D and management focus, blurring the core value of "snacks."
"Our biggest reflection is: why didn't we continue upward after reaching tens of billions in revenue?" Zhang Liaoyuan summarized in a 2024 interview with China Entrepreneur magazine. "The fundamental reason was that we hadn't figured out who we were at that point."
Scale without barriers; brand without reverence. The company had fallen into a growth illusion. This crisis was a lesson an internet brand had to learn when colliding with the hard core of the real economy.
III. The Token of Rebirth: The "Scalpel" Cut Against "False Bulk" and the Signpost Pointing Toward the Industrial Deep
Transformation held no miracles — only the resolve of scraping poison from the bone. Zhang Liaoyuan's "rebirth tokens" were two things: a scalpel cutting away the company's own bloated excess, and a map pointing deeper into the industrial chain.
He led a decisive strategic contraction: drastically reducing non-core and long-tail SKUs, refocusing resources on core categories like nuts. This meant cutting away large volumes of revenue-generating but energy-draining business — painful short-term surgery. Simultaneously, he drove the company's transformation from "brand operator" to "supply chain enterprise," going beyond merely selecting suppliers to working directly in fields and farmland, co-building planting bases, investing in proprietary factories, and extending quality control to the very front of raw materials.
"Snack competition ultimately comes down to supply chain competition. We had to move from the 'e-commerce' layer down to the substance of 'commerce.'"
The scalpel cut away the cult of traffic and the vanity of scale; the map pointed toward the arduous path to product essence and industrial foundations.
Traffic is borrowed wings; the supply chain is your own legs.
IV. Rebirth: Shedding the "Internet Celebrity" Coat, Forging "Industrial" Strength
The transformation path was destined to be quiet. Zhang Liaoyuan's attention shifted from e-commerce traffic rankings to factory production lines, nut origins, and warehouse logistics data.
The company established a more rigorous full-chain quality management system. Performance metrics expanded beyond pure "GMV growth" to include "customer complaint rates" and "first-pass inspection qualification rates" — more grounded indicators. The company that once pursued "speed" began learning manufacturing's "slowness" and "substance."
The deepest cost of this contrarian journey was the flattening of the growth curve and the "disenchantment" of the company image. Three Squirrels was no longer an internet-celebrity brand manufacturing constant buzz; it was striving to become a consumer goods company with a solid supply chain, stable quality control, and worth trusting long-term. Zhang Liaoyuan traded short-term growth speed for a healthier corporate body and a longer runway.
V. Enlightenment: Rebuilding Commerce's "Keel Stone" on the Beach Where Traffic Recedes
Today, looking back at Three Squirrels' transformation, the lesson may be this: every business that took flight on the winds of its era will eventually face an exam — when the wind stops, what keeps you airborne?
Zhang Liaoyuan's answer: return to the essence of commerce — products, supply chain, quality. He was once a apex predator of e-commerce dividends, but the ability to capture traffic cannot automatically translate into the ability to make good products. His rebirth came from acknowledging the limits of the old model at the most difficult moment, and daring to cut into his own successful past, sinking into that harder, slower, but more solid industrial path.
The scalpel that carved away redundant SKUs ultimately sculpted not financial statements, but an enterprise's redefinition of "good snacks." Business contrarianism has never been about fleeing the battlefield — it's about replanting into the earth with a heavier but more reliable posture.
Follow
Scan to follow for more stories
Cover ArchiveArchive
View archive file →Every cover publication is registered and kept in the ACF Cover Archive. The code is permanent.
Not Everyone Makes the Cover
Asia Cover Figure · Influencing Those Who Influence