Zhang Liaoyuan is included in the 'Business Contrarian' column not because his entrepreneurial start was particularly difficult, but because he dared to face the cracks beneath his feet after reaching the summit. The contrast between the 2019 IPO glory and the 61.9% net profit decline in 2025 constitutes a highly dramatic business sample. His archival value lies in: how an internet brand that once mastered traffic to the extreme, after the traffic receded, used a 'radical amputation' revolution to regain the foundation of industry. This is not a story of failure, but a proposition about the courage of self-negation and rebirth. Zhang's transformation path provides a mirror for all businesses that rely on trends.

Zhang Liaoyuan founded Three Squirrels in 2012, during the rapid development of China's e-commerce. He keenly seized the online opportunity for nuts, quickly opening the market with IP-based branding and precise marketing strategies. Just five years after its founding, the company listed on the ChiNext in 2019, becoming the 'No.1 national snack stock' with a market value briefly exceeding 40 billion yuan ^[2]. However, the post-IPO glory did not last. As online traffic costs rose and competition intensified, revenue growth slowed, net profit fluctuated significantly, and in 2025 net profit fell 61.9% year-on-year ^[3]. In reflection, Zhang admitted that the company had fallen into a 'growth illusion', over-relying on traffic and scale expansion while neglecting the foundations of supply chain and quality control ^[5]. To address this, he led a 'radical amputation' reform: drastically cutting non-core SKUs, focusing on core categories like nuts, while investing in own factories and going deep into raw material origins, pushing the company to transform from a 'brand operator' to a 'supply chain enterprise' ^[7]. These actions mark a shift from an internet model chasing speed to an industrial path emphasizing quality.

Zhang Liaoyuan's business philosophy has become clearer during the transformation. He initially believed in 'traffic is king', rapidly scaling through IP marketing and e-commerce operations, but this model exposed its fragility after the traffic dividend faded. He has repeatedly emphasized in public that 'the competition in snacks ultimately is supply chain competition' ^[4], and pointed out that the company had fallen into trouble because it 'didn't figure out who it was' ^[5]. To this end, he proposed 'sinking from the electricity level to the substance of commerce', meaning shifting from relying on online traffic to deeply cultivating products and the industrial chain. In practice, he drove the company to cut long-tail SKUs, focus on core categories, and establish a full-chain quality management system, shifting metrics from pure GMV growth to customer complaint rates, product pass rates, and other more fundamental dimensions ^[7]. Zhang believes that traffic is borrowed wings, and the supply chain is your own legs; only by solidifying the supply chain can an enterprise continue to fly after the wind stops.

Zhang Liaoyuan's transformation practice provides an important reference for many internet brands that rely on traffic. The Three Squirrels case shows that traffic dividends are not permanent; brands must return to the essence of product and supply chain. Despite the pain of transformation, such as declining net profit and slowing growth, Zhang's choice is seen as a kind of 'contrarian' courage—daring to operate on one's own successful past and sink into a harder, slower industrial path under capital and public pressure. Industry insiders believe that although Three Squirrels' transformation is not fully successful, its emphasis on supply chain and strengthened quality control has set a benchmark for the industry ^[7]. Zhang himself has transformed from a 'creator of e-commerce myth' to a 'practitioner of industrial return', and his reflections and actions offer profound insights into growth and sustainability for those who follow.

The business proposition Zhang Liaoyuan leaves behind is: when the traffic dividend is exhausted, how can a company complete the perilous leap from 'internet celebrity' to 'industry'? Although his transformation is not fully successful, the direction is clear—supply chain is the ultimate barrier for consumer brands. The Three Squirrels case reminds those who follow that while the speed of growth is important, the stability of the foundation is the long-term way. Zhang's 'contrarian' move is not escaping the battlefield, but adopting a more cumbersome yet reliable posture to re-root in the earth. The significance of this archive is to record how an enterprise at the crest of an era used self-revolution to counter the cycle.