The chain brand Zhou Hei Ya, which specializes in marinated duck neck snacks, recently opened its first store in Southeast Asia while attempting to revitalize its business in China.
<h4>Key Points:</h4>
<ul>
<li>Zhou Hei Ya has opened its first overseas store in Malaysia, hoping to alleviate the pressure from excessive local competition.</li>
<li>The marinated duck neck snack chain is reducing the number of domestic stores and, after the founder resumed the role of CEO, is trying to return the brand to its original intent.</li>
</ul>
Tan Ying
Some might say that the latest store opened by Zhou Hei Ya is a “35 million USD store.”
This is exactly the market value added after the brand, which is still well-known but has shown signs of aging, announced the opening of a store in Port Klang, Malaysia. Following the announcement, its stock price rose a cumulative 7.7% over three trading days. The excitement in the market is due to the fact that this chain brand, famous for its marinated duck neck, has finally stepped out of China to welcome its first overseas store, which officially opened on December 5.
This seems to indicate that investors are waiting for, or rather hoping that this “small overseas start” can bring some turnaround for the company. Zhou Hei Ya was still the “big brother” in the industry ten years ago, but in recent years, it has faced fierce competition from a number of emerging snack brands, and its overall performance has shown signs of fatigue. The deeper market expectation is that this step may signify the company is moving towards a more comprehensive transformation. Founder Zhou Fuyu has returned from a semi-retired state, hoping to lead Zhou Hei Ya International Holdings Limited (1458.HK) back onto a growth track.
Zhou Hei Ya stated in its announcement: “The opening of the new store marks an important step in the group’s overseas expansion strategy, helping to explore new markets and promote long-term sustainable development.” The company also pointed out: “The success of this store opening will not only enhance the brand's influence in the international market but also lay a replicable operational foundation for the group’s future steady expansion in Southeast Asia and other overseas markets.”
The location of Zhou Hei Ya's first overseas store, Port Klang, is the largest port in Malaysia, about 42 kilometers from the capital and largest city, Kuala Lumpur.
Now, with an increasing number of choices in the Chinese snack market, Zhou Hei Ya's appeal is not as strong as it once was. When Zhou Hei Ya was listed in Hong Kong in 2016, it was still at its peak, which was already 22 years after founder Zhou Fuyu set up his first stall in a market in Wuhan. Zhou Fuyu initially experimented with marinated duck sauces and later officially founded this chain brand with his wife Tang Jianfang in 2002.
At the time of its listing, Zhou Hei Ya had 715 stores in 38 cities, with an annual revenue of 2.4 billion yuan (339 million USD), and the marinated flavor segment it operated in had an annual scale of up to 52.1 billion yuan. The marinated duck neck it promoted was originally a traditional snack but unexpectedly gained favor among China's millennial generation ten years ago due to precise social media marketing.
“Success does not solely depend on taste,” said its CEO Hao Lixiao shortly after the listing in 2017. “What we sell is a unique experience.” To cater to the younger demographic, Hao introduced the latest virtual reality games in Zhou Hei Ya stores and launched packaging designs aimed at attracting the core customer group aged 18 to 35
Later, Hao Lixiao took over management, while Zhou Fuyu gradually stepped back from the management team shortly after the company went public. Two years later, the top management position was taken over by Zhang Yuchen, who had worked at several multinational consumer goods companies such as Procter &amp; Gamble, L'Oréal, Mattel, and Hasbro, and was the first to promote a franchise model to expand scale.
<h4>Rise of Competitive Chain Brands</h4>
However, a new wave of competitors in the marinated food segment, represented by Juewei (603517.SH) and Huangshanghuang (002695.SZ), quickly squeezed into this niche market and recorded strong profit growth as Zhou Hei Ya began to weaken. Zhou Hei Ya's revenue fell by 0.8% in 2019, with annual profits plummeting by 29.7%. Zhang Yuchen failed to stop the decline and resigned in June 2024, with founder Zhou Fuyu returning as chairman and CEO.
After Zhou Fuyu's return, he quickly set about slimming down the company's bloated operational structure, closing nearly 1,000 underperforming stores, reducing the number from 3,816 at the end of 2023 to 2,864 by mid-year.
Zhou Hei Ya's performance in 2024 was sluggish, with revenue declining by 10.7% year-on-year to 2.45 billion yuan, and profits also dropping by 15% to 98.2 million yuan; however, the company's interim report for the first half of this year showed some signs of improvement. Although revenue slightly decreased to 1.22 billion yuan in the first half, profits surged to 108 million yuan, more than doubling compared to the same period last year, indicating that Zhou Fuyu's reform strategy was beginning to take effect.
In the first half of this year, despite a significant reduction in the number of stores, Zhou Hei Ya recorded total sales of 14,383 tons, only a slight decline from 14,618 tons in the same period last year. More importantly, the average transaction price during this period dropped from 55.57 yuan a year ago to 53.56 yuan, which is part of the company's intention to downplay its &#34;high-end positioning&#34; strategy, as more and more Chinese consumers have become reluctant to spend amid economic slowdown.
Everbright Securities International stated that Zhou Hei Ya plans to optimize store operations and reshape its brand image in the second half of this year to re-attract millennial consumers. In the first half of the year, the company has entered channels such as Costco and Walmart Sam's Club, and expanded into popular snack chain channels like Mingming Hen Mang and Wancheng Group.
However, in the context of a weak Chinese market, the effects of closing stores and expanding new channels are limited. According to domestic media reports, Zhou Hei Ya set its latest overseas strategy for early 2025, with the first step being to introduce its vacuum-packed products through Malaysia's MiX convenience stores. The company stated that overseas business will become a &#34;key growth engine,&#34; starting in Southeast Asia and gradually expanding to Europe, America, and global markets.
Southeast Asia has always been the first stop for Chinese consumer brands going abroad, seeking growth while also diversifying risks from intense local competition. By the end of last year, at least 60 Chinese brands had opened 6,100 stores locally, seeking growth through the region's large Chinese population and similar dietary preferences.
Overseas expansion is not a new idea for Zhou Hei Ya; as early as November 2020, the company raised HKD 1.55 billion through the issuance of corporate bonds, with part of the funds originally intended for overseas expansion, aiming to establish 10,000 sales points in global markets within three years
However, this plan promoted by former leader Daniel Zhang seems to have never been implemented. Now, Zhou Fuyu is trying to make up for lost time by promoting products on social media to potential audiences both domestically and internationally. He has been promoting the company's marinated products through live streaming for many years

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ZHOU HEI YA opened its first overseas store in Malaysia to alleviate domestic competitive pressure. Founder Zhou Fuyu has resumed the role of CEO, attempting to bring the brand back to its roots. The market is excited about this overseas expansion, hoping the company can achieve a more comprehensive transformation

Old "Duck" is determined to go a thousand miles, ZHOU HEI YA aims to regain its position in the market