Dongfang Honghu Receives Financing from ByteDance

On Thursday, Chinese media outlet 36Kr reported that Dongfang Honghu recently completed an angel round financing of over 100 million yuan ($15.69 million). This round of financing was strategically invested by ByteDance, and will be used for technology and product development, marketing, and expansion of offline channels.

Dongfang Honghu was established in September 2018 and identifies itself as a digital soft drink group. Tang Xiaotong, the founder of the company, started the business because of the epidemic. Wang Laoji and Dongfang Honghu hit it off and cooperated to develop a new product line which was then developed by Wang Laoji and operated by Dongfang Honghu.

At present, the company mainly deals in Wang Laoji Black Herbal Tea, and its sales have exceeded 100 million yuan. After nearly a year-long development and debugging process, Wang Laoji Black Herbal Tea has made strides in flavor, health, formula and packaging.

The company is situated within the beverage industry which is experiencing a new round of fierce competition. With rising stars such as Genki Forest’s sugar-free soda water, many new players have poured in while traditional giants have launched sugar-free soda water one after another. New tea brands such as HEYTEA and Nayuki have also participated in the competition.

But Tang Xiaotong and his team found a new opportunity: to digitally reconstruct the industry, a feat that attracted ByteDance’s attention.

The company instantiated the digital transformation in four ways: production, channels, branding and organizational efficiency. Every product has a unique QR code through which the company provides subsidies to consumers.

More importantly, the digital QR code allows the visualization of the consumption habits which can then help dealers omit unnecessary transaction processes and speed up product circulation. In addition, the costs saved along the way will also be passed on to consumers.

SEE ALSO: Beijing-Based Beverage Firm Genki Forest Undergoes Organizational Adjustment

As for the company’s next focus, it is mainly divided into two dimensions. On the one hand, the company wants to accelerate the process of digital construction while continuing to build up a senior technical team with a scale of 100 people on the existing basis. The company hopes to complete the first version of the platform model in the middle of 2022. On the other hand, the depth of products offered will be commensurately expanded. According to previous market research, it is estimated that more than 10 new soft drink flavors  will soon be released.