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Three Squirrels: From Street Hustler to Billion-Yuan National Snack Pioneer, Rebounding After Losing 70% Post-IPO

Founded: Zhang Liaoyuan (Founder and CEO, alias Squirrel Dad, Zhang Sanfeng, holding 45.41% stake) — Born in Jixi, Anhui in 1976, vocational school graduate, grass-roots background · Three Squirrels Inc. (SZSE: 300783, pursuing an A+H dual primary listing starting in 2025)

JOURNEY

Key Fields

FIELD STAMPS
IndustryFood & Drink
RegionChina
ScaleGiant
ChannelOther

Origin

Zhang Liaoyuan entered society before turning 20, failing at street vending, running a cold drink shop, and selling VCDs, self-deprecatingly calling himself a wanderer for years. A turning point came at age 22 when he read an entrepreneurial story book about Wahaha and resolved to go into business. In 2003 at age 27, he returned to Anhui and joined Zhanshi Food as a front-line pine nut salesperson, driving sales in Wuhu (a prefectural-level city) to surpass the provincial capital Hefei within two years. At 29, he was exceptionally promoted to Vice President of Marketing, scaling Zhanshi's annual sales from 4 million to 200 million RMB. In 2010, he created his own Taobao brand 'Kekeguo' to sell pine nuts online, hitting over 10 million RMB in sales in 8 months based on a '15-day fresh nuts' concept, earning the moniker 'Dad Keke'. At the end of 2011, he proposed making e-commerce the group's primary strategy at a board meeting, which was voted down by shareholders. Out of spite, he resigned. On February 16, 2012, along with childhood friend Ming Shanshan, former chef Hu Houzhi, and 3 others, he registered and founded Three Squirrels in a residential house in Wuhu, determined to build a pure internet nut brand.

Milestones

2012
Started in a Residential House Growth
Zhang Liaoyuan resigned from Zhanshi and pulled together 5 old colleagues to start a business in a Wuhu residential house. The team was almost entirely grass-roots: childhood friend Ming Shanshan, former chef Hu Houzhi, heavy-accented Guo Guangyu, Wu Bin, and others. Before launching online, they secured a $1.5 million angel round from IDG Capital, the largest angel investment in China's agricultural e-commerce at the time. Li Feng of IDG told Zhang Liaoyuan, 'As long as you dare to do it, I will invest.' On June 19, 2012, Three Squirrels launched trial operations on Taobao Tmall, positioning itself as a pure internet nut brand where all products were outsourced to OEMs while the company focused solely on branding and operations.
2014
Singles' Day Viral Explosion PMF
Hit #1 in the Tmall nut category within 65 days of launch. Participated in Singles' Day (Double 11) for the first time on November 11, 2012, achieving 7.66 million RMB in single-day sales and ranking first among all food e-commerce platforms that day. Singles' day sales hit 35.62 million RMB in 2013. Zhang's playbook was to first break out pecans—a light-red ocean category without a dominant leader at the time—and then drive repeat purchases and word-of-mouth through squirrel IP imagery, complimentary opening tools, wet wipes, and sealing clips designed to make consumers lazy, alongside anthropomorphic customer service greetings like 'Master, master, I am your little squirrel.' Full-year 2014 sales exceeded 1 billion RMB, and Q1 2015 sales surpassed 1 billion RMB, creating a miracle in Chinese e-commerce development.
2015
Four Rounds of Financing Growth
Secured a $6.17 million Series B from Legend Capital and IDG Capital in May 2013; secured a $16.27 million Series C (approx. 120 million RMB) from Legend Capital and IDG in 2014 to build an intelligent integrated food park; in September 2015, Frees Fund led a fourth round of 300 million RMB, valuing the company at 4 billion RMB. Xu Xin's Legend Capital continuously added investment, becoming a core shareholder alongside IDG that accompanied the company for 7 years until its IPO. Propelled by capital, Three Squirrels began deploying omni-channels, expanding SKUs, and opening offline feeding stores.
2019
IPO Breakthrough Turning Point
Opened the first offline feeding store in Wuhu in September 2016, beginning the transition from purely online to offline. Generated 508 million RMB in total network sales during the 2016 Singles' Day, ranking 7th across all categories on Tmall. Submitted its first IPO application in October 2017, which was voluntarily suspended due to the resignation of the signatory lawyer. In the third queue in 2018, subscription was temporarily postponed from June 12 to July 3. Three attempts over two years led outsiders to dub it 'climbing to the IPO.' On July 12, 2019, it finally debuted on the ChiNext board at an issue price of 14.68 RMB, hitting the daily limit on its first trading day with a market cap exceeding 8 billion RMB. Zhang Liaoyuan topped the Anhui rich list with a net worth of 11.17 billion RMB, delivering over 300x returns for Series A investors, and was crowned the 'first stock of national snacks'.
2020
Peak at IPO followed by Decline Failure
2019 was Three Squirrels' most glorious moment, with revenue surpassing 10 billion RMB, making it the first leisure snack company to cross 10 billion RMB in annual revenue. Its stock price surged toward 90 RMB, pushing its market cap close to 36 billion RMB. However, Zhang later noted that this was also the year things began to turn in the opposite direction. Net profit dropped sharply in its first year as a public company, yet Zhang distributed a 40 million RMB dividend, sparking controversy. Three massive pressures converged simultaneously: traffic dividends peaking, high platform commissions, and difficult quality control in the OEM model. Revenue in 2020 dropped to 9.794 billion RMB, reversing growth, with the nut category growth rate plunging to -10.93%.
2023
Store Closure Wave Failure
Offline expansion suffered a severe crash. The 10,000-store plan fell through, and 2022 plunged into a wave of closures totaling over 500 stores, shutting down roughly half of its stores within a year. 85 feeding stores and 182 franchised stores were shuttered. The stock price plummeted over 60% from its peak, erasing about 27 billion RMB in market cap over two years, leading retail investors to joke that Three Squirrels had shrunk down to 'one squirrel, or half a squirrel.' Concurrently, revenue slid all the way from 9.794 billion RMB in 2020 to 7.115 billion RMB in 2023, marking four consecutive years of decline; net profit shrank to 129 million RMB in 2022. An internal corruption scandal also broke out in 2022, involving a post-90s director who solicited bribes and kickbacks totaling 5.3 million RMB, prompting Zhang Liaoyuan to heavily promote integrity culture exams within the company.
2023
Food Safety Scandals Failure
In 2023, the costs of the OEM model erupted intensely. Pine kernels exceeding peroxide value limits were called out by CCTV, potato chip acrylamide controversies arose, and a 2022 Red Scarf pattern advertisement was accused of violations, trending on Weibo and triggering an apology. Cumulative complaints on the Black Cat Complaints platform approached nearly 4,400 by 2025, and Tianyancha records showed 259 food safety-related issues. OEM contract manufacturing allowed Three Squirrels to outsource production while taking the blame for quality control. Almost every OEM mishap directly smashed the brand's reputation—its most fatal structural risk.
2024
Strategic Comeback Turning Point
At the end of 2022, Zhang Liaoyuan took the industry lead in proposing a 'high-end cost-effectiveness' strategy, cutting unprofitable sub-brands and inefficient SKUs, focusing on core large-single-item nuts, and building self-operated supply chain intensive bases in East, North, and Southwest China to convert OEM into self-production, boosting the nut gross profit margin to 23.98%. In April 2024, it announced plans to acquire discount snack brands Ailing-shi, Aizhekou, and Zhiyang Food for 360 million RMB to plug offline gaps, but the deal collapsed in 2025 and ended up in court, with valuations slashed from 200 million to 20 million RMB. Full-year 2024 revenue rebounded to 10.622 billion RMB, up 49.3% year-on-year, while net profit attributable to shareholders surged 85.51% year-on-year to 408 million RMB—the first time revenue returned above 10 billion in four years, seen as emerging from the trough.
2024
Sub-brand Breakthrough PMF
Sub-brand Xiaolu Lanlan focused on children's snacks, achieving 794 million RMB in sales in 2024 (approx. 7.5% revenue share) and turning profitable as a standalone brand, becoming one of China's top infant and child snack brands. Simultaneously, it incubated a multi-brand matrix including Chaodawan (convenient instant food), Dongfang Yanjiusheng (Chinese nourishing food), Qiaokegu (chocolate), and Qunqun A (pet snacks). In 2024, Douyin-related revenue reached 2.188 billion RMB, accounting for 29.5% of online revenue and surpassing Tmall as the top e-commerce channel, with total online share reaching 69.73%. Zhang Liaoyuan proposed the 'Three Beget All Things' strategy, transitioning toward a multi-category, multi-brand, and multi-channel consumer service provider.
2025
A+H Sprint Turning Point
Submitted a prospectus to the HKEX on April 25, 2025, with CITIC Securities as the sole sponsor, racing to become the first domestic snack brand with an A+H dual primary listing. On September 30, the China Securities Regulatory Commission issued the filing notice for overseas issuance and listing. However, by this time, the A-share stock price had shrunk by over 25 billion RMB from its peak, with its market cap standing at only 10.843 billion RMB on April 29, 2025, down about 20% for the year. Zhang Liaoyuan boldly set a 20 billion RMB revenue target for 2026, but investors had already begun questioning whether high growth could be sustained.
2025
Net Profit Halved Failure
H1 2025 revenue reached 5.478 billion RMB, up 7.94% year-on-year, but net profit attributable to shareholders plummeted 52.22% year-on-year to 138 million RMB, with Q2 alone registering a loss of 101 million RMB. Reasons included rising nut raw material costs squeezing gross margins, rising online platform traffic fee rates, increased market expense investments in offline distribution, and new property depreciation and amortization. Sales expenses totaled 1.119 billion RMB, up 25.11% year-on-year, with promotion and platform service fees hitting 761 million RMB. Online still accounted for nearly 80% of revenue, but the more offline stores opened, the lower the income; store count stood at 450, including 353 national snack stores, with offline revenue contributing only 3.8%. Under the siege of 10,000 discount snack stores, economies of scale failed.
2026
Food Safety Explosions Renewed Failure
The 2025 CCTV 3.15 Gala exposed Three Squirrels OEM moldy bread being refurbished and put back on the market, putting contract manufacturing chaos back on the blacklist. In December 2025, the Wuhu Municipal Market Supervision Bureau announced that contract-produced 'Chunchun Fresh Cakes' commissioned by Three Squirrels failed random inspections due to excessive peroxide values and required a recall. Ordered to rectify again in August 2026. Food safety issues repeatedly blowing up during the critical HK listing period made the OEM model and quality control dilemmas an inescapable burden post-IPO, and the greatest trust crisis feared by HKEX investors.

Turning Points

  • In February 2012, Zhang Liaoyuan resigned after his primary e-commerce strategy was rejected by Zhanshi shareholders, founding Three Squirrels in a Wuhu residential house with 5 grass-roots partners. He transformed from an offline pine nut sales veteran into a pure internet nut brand entrepreneur, becoming one of China's earliest pioneers in pure internet food brands.
  • Reaching #1 in the Tmall nut category within 65 days and hitting 7.66 million RMB in single-day sales on Singles' Day in 2012 validated the formula of pecans in a light-red ocean category + squirrel IP + anthropomorphic customer service. This established Three Squirrels' industry position as the top internet nut brand, making Singles' Day a core battlefield for the following years.
  • In July 2019, after three attempts over two years, it finally debuted on the ChiNext board to become the first national snack stock, with its market cap breaking 8 billion RMB on day one and Zhang becoming the richest man in Anhui, alongside Series A returns exceeding 300x. This marked the glorious culmination of consumer brand capitalization in the traffic dividend era, but also served as the starting point for four consecutive years of declining revenue and net profit.
  • At the end of 2022, proposing the high-end cost-effectiveness strategy combined with self-built supply chain intensive bases—moving from pure OEM to manufacturing-brand-retail integration—marked the crucial turning point for Three Squirrels' transition from an internet traffic brand to a supply chain company, directly driving the 2024 revenue rebound above 10 billion.
  • Submitting an HKEX prospectus in April 2025 to pursue the first A+H dual-listing snack brand treated the dual capital platforms as a wager to break out of online dependency and offline weakness. However, concurrent profit halving and renewed food safety scandals left this wager full of uncertainty.

Failures & Pitfalls

  • Peak at IPO followed by four years of decline: 2019 was both its peak and turning point. Net profit dropped sharply in its first year as a public company, yet Zhang distributed a 40 million RMB dividend, sparking controversy. From 2020 to 2023, revenue dropped continuously for four years from 9.794 billion RMB to 7.115 billion RMB, and market cap evaporated by about 27 billion RMB over two years, mocked as shrinking down to 'one squirrel or half a squirrel.'
  • Offline 10,000-store plan fizzled: Starting offline expansion with feeding stores in 2016, it fell into a closure wave in 2022 totaling over 500 closed stores, including 85 feeding stores and 182 franchised stores. The more offline stores opened, the lower the income; store business revenue accounted for only 3.8% by H1 2025, a classic failure of diseconomies of scale.
  • Frequent food safety issues in OEM model: Pine kernels exceeding peroxide limits called out by CCTV, potato chip acrylamide controversies, Red Scarf ad violations, 3.15 exposure of OEM moldy bread refurbishment, cake recalls for peroxide overages, nearly 4,400 cumulative Black Cat complaints, and 259 Tianyancha food safety entries. Outsourcing production while carrying the brand liability for quality control has been an inescapable structural risk post-IPO.
  • Missed discount track and botched M&A: In 2024, planned a 360 million RMB acquisition of Ailing-shi and Aizhekou to patch offline discount gaps. The deal fell through in 2025 and ended up in court, with valuations cut from 200 million to 20 million RMB, losing the chance to quickly acquire 1,800 stores. Meanwhile, competitor Ring Resources (Mingming Henmang) reached 14,000 stores, and Wanchen Group's discount snack business generated 22.3 billion RMB in H1 2025, up 109% year-on-year.
  • Internal corruption and out-of-control talent: A 2022 corruption scandal exposed a post-90s director soliciting 5.3 million RMB in kickbacks, with employees stealing even waste cardboard boxes. Zhang Liaoyuan was forced to institute rigorous integrity culture exams and tie onboarding to integrity tests, exposing internal management loss of control during rapid expansion.
  • Short-term inability of multi-brand matrix to carry the banner: Aside from Xiaolu Lanlan turning profitable with 794 million RMB revenue in 2024, other incubated brands generated a combined revenue of only 3 million RMB in 2024, remaining in trial stages. R&D expenses of only 28 million RMB could not support multi-category innovation. The main brand relied on online traffic while sub-brands required offline maternal-child store penetration, creating obvious channel conflicts. The multi-brand strategy struggled to solve the growth bottleneck in the short term.

关键成功要素

  • Choosing the right category dividend: Zhang Liaoyuan broke out first in pecans—a light-red ocean category without a dominant leader at the time—avoiding the deep-red oceans of bulk roasted goods and packaged nuts. A sufficiently large market and shallow competition ensured the first wave of momentum, a rare shallow-red opportunity amid the crowded Chinese merchant landscape where any blue ocean quickly turns red.
  • Executing the full internet brand playbook: Squirrel IP imagery, experience design featuring opening tools, wet wipes, and sealing clips to make consumers lazy, anthropomorphic customer service ('Master, master, I am your little squirrel'), a global customer satisfaction center handling 30 million customer service interactions annually, and leveraging cute culture and product placements in TV dramas as primary marketing weapons, turning contract-manufactured nuts into an internet brand with a distinct persona.
  • Maxing out capital leverage early: Secured $1.5 million from IDG at inception, setting the record for the largest angel investment in China's agricultural e-commerce. Subsequent four rounds of financing from Legend Capital and Frees Fund continuously added fuel, with Xu Xin accompanying the company for 7 years until its IPO and generating over 300x returns on Series A. Capital provided both ammunition and endorsement early on, serving as the foundation enabling a Taobao brand to IPO in 7 years.
  • High-end cost-effectiveness and self-built supply chain turnaround: At the end of 2022, took the lead in proposing the high-end cost-effectiveness strategy, building self-operated supply chain intensive bases in East, North, and Southwest China to convert OEM to self-production, raising nut gross margins to 23.98%. This was the core action enabling revenue to return above 10 billion RMB in 2024 and the key turning point from an internet brand to a supply chain company.
  • Capturing short-video dividends via Douyin channels: In 2024, Douyin-related revenue reached 2.188 billion RMB, accounting for 29.5% of online revenue and surpassing Tmall to become the primary e-commerce channel. Relying on content e-commerce to sustain life after traditional e-commerce traffic peaked, it became one of the few Taobao-born brands that successfully transitioned to content e-commerce.

Lessons

  • Internet viral traffic dividends have an expiration date: Three Squirrels exhausted Tmall traffic dividends from 2012 to 2019, but once traffic peaked, three massive pressures—platform commissions, soaring customer acquisition costs, and difficult OEM quality control—converged simultaneously. Four consecutive years of decline from 2020 to 2023 proved that the moat of pure traffic-driven brands is very shallow; an IPO is not the destination, but rather the beginning of the test.
  • The OEM model is a double-edged sword: Asset-light contract manufacturing allowed Three Squirrels to reach a 10 billion IPO in 7 years, but outsourcing production meant taking the blame for quality control. Frequent food safety issues directly battered brand reputation and were nearly impossible to eradicate. Self-building supply chains after 2022 was locking the stable door after the horse has bolted, showing that consumer brands must control their own supply chains at scale, otherwise the brand is built on castles in the air.
  • Offline expansion cannot rely on forcing internet playbooks: Three Squirrels transplanted online traffic playbooks offline to open feeding stores and franchised stores, resulting in a failed 10,000-store plan, store closure waves, and diseconomies of scale. The more offline stores opened, the lower the income, proving that offline is another professional domain requiring heavy assets, heavy supply chains, and heavy store operational capabilities. Internet brands moving offline must maintain the mindset of starting over as students.
  • Missing the discount track means missing it for good: While Three Squirrels trial-and-erred offline, discount snack brands like Ring Resources and Wanchen scaled stores to 14,000 and achieved 22.3 billion RMB in H1 revenue. Three Squirrels' attempt to catch up via M&A fell through, showing that the new channel dividend window is very narrow. Hesitate for a year or two and the landscape is set; old brands struggle to turn around while new species never wait.
  • Multi-brand matrix cannot solve immediate thirst in the short term: Xiaolu Lanlan broke out, but other sub-brands generated a combined revenue of only 3 million RMB, and 28 million RMB in R&D expenses could not support multi-category innovation. Channel conflicts and brand perception dilution made the multi-brand strategy unable to carry the revenue banner in the short term. Consumer brands building sub-brand matrices must endure long cycles and be willing to invest in R&D; they cannot be treated as quick-fix remedies.

Core Data

  • Establishment Time：February 16, 2012 (public data basis, independent verification unverified)
  • Founder Stake：Zhang Liaoyuan holds 45.41% (public data basis, independent verification unverified)
  • Angel Round 2012：IDG Capital $1.5 million, record for China's agricultural e-commerce largest angel investment (public data basis, independent verification unverified)
  • Series B 2013.05：Legend Capital and IDG $6.17 million (public data basis, independent verification unverified)
  • Series C 2014：Legend Capital and IDG $16.27 million approx. 120 million RMB (public data basis, independent verification unverified)
  • Series D 2015.09：Frees Fund led 300 million RMB, valuation 4 billion RMB (public data basis, independent verification unverified)
  • IPO 2019.07.12：ChiNext 300783.SZ, issue price 14.68 RMB, first-day market cap breaking 8 billion RMB (public data basis, independent verification unverified)
  • Zhang Liaoyuan Net Worth 2019：11.17 billion RMB, Forbes China 400 Rich List #235, richest person in Anhui (public data basis, independent verification unverified)
  • Series A Investment Return：Over 300x (public data basis, independent verification unverified)
  • Stock Price Peak：Approx. 90 RMB, market cap once approached 36 billion RMB (public data basis, independent verification unverified)
  • Market Cap Evaporated 2022：Approx. 27 billion RMB evaporated over two years, stock price dropped over 60% (public data basis, independent verification unverified)
  • Revenue 2018：Approx. 7.001 billion RMB (public data basis, independent verification unverified)
  • Revenue 2019：Crossed 10 billion, first leisure snack industry company with annual revenue over 10 billion (public data basis, independent verification unverified)
  • Revenue 2020：9.794 billion RMB (declined year-on-year) (public data basis, independent verification unverified)
  • Revenue 2021：Approx. 9.77 billion RMB (public data basis, independent verification unverified)
  • Revenue 2023：7.115 billion RMB, net profit 220 million RMB (public data basis, independent verification unverified)
  • Net Profit 2022：129 million RMB (public data basis, independent verification unverified)
  • Revenue 2024：10.622 billion RMB, up 49.3% year-on-year (public data basis, independent verification unverified)
  • Net Profit 2024：408 million RMB, up 85.51% year-on-year (public data basis, independent verification unverified)
  • Xiaolu Lanlan 2024：Revenue 794 million RMB, profitable (public data basis, independent verification unverified)
  • Douyin Revenue 2024：2.188 billion RMB, accounting for 29.5% of online revenue (public data basis, independent verification unverified)
  • Online Revenue Share 2024：69.73% (public data basis, independent verification unverified)
  • Offline Stores H1 2025：450 stores, including 353 national snack stores, offline revenue share only 3.8% (public data basis, independent verification unverified)
  • Revenue H1 2025：5.478 billion RMB, up 7.94% year-on-year (public data basis, independent verification unverified)
  • Net Profit H1 2025：138 million RMB, down 52.22% year-on-year, Q2 single-quarter loss of 101 million RMB (public data basis, independent verification unverified)
  • H Share Prospectus 2025.04.25：Submitted prospectus to HKEX, sole sponsorship by CITIC Securities, aiming for first A+H dual-listing snack brand (public data basis, independent verification unverified)
  • Filing Notice 2025.09.30：CSRC overseas issuance and listing filing notice (public data basis, independent verification unverified)
  • Market Cap 2025.04.29：10.843 billion RMB, shrunk by over 25 billion RMB from peak (public data basis, independent verification unverified)
  • Black Cat Complaints 2025.04：Nearly 4,400 cumulative (public data basis, independent verification unverified)
  • Tianyancha Food Safety Issues 2025：259 items (public data basis, independent verification unverified)

Competitors / Peers

The leisure snack sector features large industries with small enterprises. In 2024, China's snack market scale was about 1.4 trillion RMB, but the top five enterprises held a market share of only 5.9%. Online peer Taobao-born brands include Bestore and Laiyifen. In H1 2025, Bestore lost 93.55 million RMB and Laiyifen lost 50.68 million RMB, as three legacy brands collectively fell into increasing revenue without increasing profit. True high-growth competitors are the new forces in discount snacks: Ring Resources (Mingming Henmang) reached 14,000 stores at the end of 2024 and is pursuing an HK IPO; Wanchen Group's discount snack business generated 22.3 billion RMB in H1 2025, up 109% year-on-year, squeezing Three Squirrels toward the high end via the lower-tier market and extreme low prices. Yanjinpuzi leveraged supply chain manufacturing and multi-category expansion to post a positive sample in H1 2025 with 2.94 billion RMB in revenue and 370 million RMB in net profit. Three Squirrels' differentiation lies in retaining top-of-mind awareness in the nut category and children's snack brand Xiaolu Lanlan, but OEM quality control and offline channels remain its biggest shortcomings, and the costs of being late to the discount track are increasingly becoming apparent.

Sources

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⚠️ This entry draws on self-reported accounts and public reporting, not independently verified, and is not investment, startup, or legal advice; revenue figures are case-specific and not representative of typical results.