As a consumer investor, the question I have been asked most often over the past two years is: “With the consumer sector being so cold, why are you still investing in it?”

Indeed, we all witnessed the heyday of China’s “new consumer” wave in 2021. Fueled by channel dividends and shifting consumer demand, the sector quickly became the next hot trend, intensifying competition and driving up market costs. Later, as the external environment cooled and quick money was no longer to be made, capital gradually withdrew, leaving behind a series of stories of failure.

In fact, there are two very different ways of looking at China’s consumer sector today: the capital perspective, which focuses on valuation, and the industry perspective, which focuses on development.

From a capital perspective, as the AI narrative has taken center stage, consumer assets perceived as “less exciting” have been priced at levels close to their lows of the past decade or more.

But from an industry perspective, the retreat of capital is accelerating the exit of inefficient brands that lack a strong core business and rely on cash-burning strategies, amplifying the perception of an industry-wide decline. Meanwhile, the “top students” that established omnichannel coverage early and built deep supply chain capabilities are gaining both market share and profitability, leading the consumer industry into its next stage of growth.

Human nature is such that we celebrate when we catch the tailwind, and lose heart when we fall into a downturn. Yet the outstanding founders I have encountered all share one common trait:

They possess a strong sense of existential urgency and a powerful drive for self-actualization. They neither stop to celebrate success here and now, nor allow external criticism to diminish their own conviction. Instead, they remain committed to the first principle of being “consumer-centric,” willing to do the hard, unglamorous work at every step simply to deliver better products and better experiences to consumers.

Luck may determine your upside and how far you can stretch, but capability is what protects your floor and your downside. That is precisely why these outstanding consumer companies are able to navigate cycles and continue growing against the tide.

There is a passage in Zen and the Art of Motorcycle Maintenance, a book I particularly like: reading every manual and knowing every specification may still be less useful than having an experienced mechanic sit on the motorcycle, give it a kick, feel the vibration, and listen to the exhaust to identify where the problem lies.

Consumer is an industry much like this. Smart people are often very good at studying dividends, trends, and data, and these can help a company scale rapidly. But to build a business that lasts, there is no substitute for long-term dedication and a return to the fundamentals—the painstaking work of building products, channels, organizations, and supply chains.

This is precisely what makes consumer so compelling: no matter how technology evolves, it remains, at its core, a business deeply connected to people. Here, the rewards of the long term will always belong to brands that are willing to do the hard, unglamorous work while retaining experience, discernment, and empathy.

Many people overestimate the power of tailwinds. But consumer has never been an industry won by novelty or trends alone. What truly matters is the craft of building a business. I’d like to illustrate this through several cases.

The first case is Yeswood. As the property market entered a downturn, the home furnishing industry also fell into a deep winter. Yet Yeswood continued to grow, surpassing RMB 20 billion in revenue and overtaking IKEA China.

Yeswood started with a 100% solid wood bed. Riding the combined trends of online retail, healthier living, and value for money, it carved out a fast-growing niche in an otherwise stagnant furniture market.

As its business expanded, Yeswood did not stop there. It broadened its category footprint from the bedroom to the entire home, and from solid wood to upholstered furniture, offering consumers a range of materials and price points. Today, it has more than 20,000 products on sale, with annual mattress sales alone reaching well over RMB 1 billion.

Behind this expansion is the founders’ determination to define industry standards and take on the harder things that few others are willing to do. When moving offline, Yeswood chose not to enter traditional home furnishing malls, but instead insisted on opening stores in shopping centers closer to consumers. It now has 1,700 stores nationwide. At the front end, it provides customization, delivery and installation, and after-sales services; upstream, it manages hundreds of factories and has even become one of the largest purchasers of North American timber.

At many points along the way, Yeswood could easily have deviated from its original path: adding a little engineered wood where consumers might not notice, or raising prices in line with the industry’s three- to fourfold markups. Both could have boosted short-term profits. What is most remarkable, however, is that in the face of repeated temptations, it has continued to hold firm to the choices it made at the very beginning.

The second case is Luxihe.

The new Chinese-style baking sector experienced a bubble in 2022, and many once-popular brands quietly exited the market. At the time, the prevailing playbook was to attract young consumers with innovative products, then open stores in high-cost, high-traffic locations.

At the time, expectations for consumer businesses had become somewhat excessive. Seeing a store generate RMB 100,000 in daily sales, people would extrapolate linearly to 500 future stores, rarely considering that once the traffic faded, daily sales might not even reach RMB 5,000. The baking business was being reduced to an overly simplistic equation.

Luxihe was different. Its signature peach pastry may be traditional, but it benefits from strong repeat purchase and consumer mindshare, allowing it to reach families and a broader range of age groups. This also enables the brand to choose more cost-efficient locations on streets and within communities. Its overall business model is therefore better able to withstand fluctuations in traffic.

Luxihe also seized the opportunity presented by the nationwide expansion of shopping centers. It entered different cities through standardized channels while using street-front stores to penetrate local communities. These two routes complemented each other and ultimately enabled the brand to build a nationwide chain.

Its rapid yet stable expansion was enabled by earlier and heavier investment in the upstream supply chain than many regional players. Once a nationwide chain was established, product innovations from individual stores could be quickly replicated across hundreds of locations. Take butter rice cakes, for example. Luxihe was not the first to create them, but its ability to rapidly adapt the supply chain allowed the product to scale quickly and generate significant growth momentum. This created an overwhelming advantage over regional and non-chain brands.

With its nationwide brand presence and supply chain foundation, Luxihe’s retail products can move into Sam’s Club, key accounts, and online channels faster than other baking brands. Once stores, retail, and supply chain form a triangle, they create a more stable growth structure for the next stage.

Traditional VC can invest across a broad portfolio, accepting a high failure rate in exchange for outsized returns from a few winners. Consumer investing offers far less valuation elasticity. Even backing the few companies that ultimately emerge as winners may not be enough to offset the cost of earlier misjudgments.

For us, the focus is therefore to reduce our reliance on broad coverage and market tailwinds, and instead identify consumer businesses capable of generating sustainable profits and consistent growth.

No investment process is immune to misjudgment. As channels, media, and industry structures evolve, capabilities that once worked can quickly lose their edge. But the true appeal of consumer investing lies in the stability of profits, cash flow, and sustained compounding.

We do not simply wait for an IPO; we step in to help solve problems at critical moments. Therefore, GenBridge’s strategy is to select a small number of distinctive businesses, invest with conviction, and partner with them for the long term. Because our stakes are meaningful and our partnerships are long-term, we have a responsibility to step up when companies face critical challenges.

For us, post-investment value creation is not simply about providing information or advice. It starts with identifying the problem, helping the company build alignment, and bringing in external perspectives, industry research, and best practices. We also bring in people with real hands-on experience to work alongside the team, and stay involved through execution until results are achieved.

Beyond knowing what problems to see, we also understand when to step in. The timing of partnership matters. When a company is performing well, founders may not need much external input. But when challenges arise, an outside perspective can be invaluable. That is when we bring in our team, methodologies, and accumulated experience, increasing the likelihood of successful execution.

For example, in 2023, shopping mall traffic began to decline, driving up effective rental costs for offline businesses and putting pressure on profitability. We recognized this as a potential systemic risk and brought together several portfolio companies and cost-reduction experts to develop effective cost and profit improvement plans.

We subsequently took a deep dive with one portfolio company, working with the founder and management team to establish the strategic importance of cost reduction, develop monthly action plans, and deploy team members on-site. We also added key talent responsible for growth, ensuring that cost reduction did not come at the expense of the core business.

More than a year later, the company had not only turned from loss to profit, but more importantly, developed a repeatable approach spanning risk identification, alignment, talent deployment, processes, and oversight mechanisms.

The process of solving these problems ultimately became part of our team’s own capabilities and experience. Over the past decade, from content e-commerce and product development to franchise management and strategic systems, our advice has never been theory brought in from the outside, but practices we have actually built, tested, and proven. These experiences are highly transferable, helping our portfolio companies move forward one step at a time.

All of this starts with focus. Since our founding in 2017, GenBridge has remained deeply focused on consumer investing. Today, our investment strategy centers on two areas:

First, partnering with Chinese companies as they expand globally. The scale, efficiency, and channel expertise forged through competition in China are increasingly extending into global markets. At the same time, some entrepreneurs are building brands from the outset around local lifestyles and consumer needs overseas. While experience from China can be leveraged, global markets require companies to navigate broader and more complex omnichannel ecosystems.

Second, focusing on product innovation driven by technology and emotional value. As channels and operating infrastructure mature and platform capabilities become increasingly standardized, advantages based purely on operational techniques will diminish. The market will increasingly favor brands with genuine product creativity and the ability to serve consumers deeply.

Yet regardless of how the direction evolves, one measure remains unchanged: opportunities cannot substitute for execution, and shortcuts cannot build enduring businesses. Growth becomes sustainable only when companies translate external trends into real capabilities across products, channels, supply chains, and organizations.

When the tide goes out, the sector may no longer offer dazzling valuation stories. But that may be precisely when it becomes most real and most healthy. Rather than waiting for fortune to smile upon us, we would rather take our destiny into our own hands and stand alongside entrepreneurs who dream big while keeping their feet firmly on the ground, using solid, high-quality products to respond to the most genuine needs of our time.