The investor who incorporates altruism into the business model

The greatest truths are the simplest

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Jun 23, 2021, 21:39 ET

SHANGHAI, June 23, 2021 /PRNewswire/ -- The concept of altruism has been part and parcel of all civilizations since prehistoric times when man still adorned himself with animal skins to today when we find ourselves surrounded by the most advanced technologies. The concept is the basis for many a book, proverb and folk tale that has come into existence and entered the mainstream ever since man could first speak or write.

To cite a few examples, the Chinese parable "Heaven's Spoon", the story of Noah's Ark in the Bible, the traditional Chinese morality behind "Suffering loss brings blessings", the Buddhist mantra "To help others is to help yourself", and the story of the blind man walking at night carrying a lamp...

The importance of helping one another and the concept of altruism has been passed down through the generations. In the world of business, altruism is even more important: examine your own willingness to be altruistic, and always take into consideration the interests of your consumers, partners and peers. If you do so, you will find that concessions are not a weakness or a compromise, but rather a "magic key" to winning.

Harvest Capital, which has incorporated altruism into its business model, has not only achieved the most benefits as a result of its altruistic actions, but has made the ecology of consumption an integral part of the business's entire ecosystem. By doing so, altruism exerts a beneficial influence on the ecosystems governing the world of commerce, the greater society and day-to-day life.

As a mature institutional investment firm focusing on the consumer side for 14 years, one of the most distinguishing characteristics of Harvest Capital is its diligence and steadfastness. Such characteristics are further enhanced by the company's "altruism model".

Altruism benefits self-interest

From a secular perspective, being altruistic is, in fact, a clever business decision, in that, altruism serves self-interest. Famous Japanese industrialist Kazuo Inamori once wrote in a book: "The only key to success and happiness is to be altruistic."

What food we cannot consume ourselves can be given to others, and, in turn, through the hands of others, we can feed ourselves; Noah built an ark to protect a huge group of animals so that eventually both birds of prey and the animals that they prey on could be found on Mount Ararat; a travelling merchant narrowed his profit margin so he could sell his wares at a more attractive price and build a better reputation through word of mouth, eventually leading to improved sales; a blind man who carries a lamp at night cannot see others, but he can let others see and avoid bumping into him...

In the ever-changing modern society, the spirit of altruism is something to aspire to, guiding people to achieve progress in harmony. At the same time, the spirit of altruism has become an invisible force in a business battlefield that is being transformed by ongoing digitalization. Whether or not altruism is integrated into a business's corporate philosophy will affect its prospects, growth and reputation.

Companies are profit-oriented, and so is capital. Despite this being a given, Harvest Capital has incorporated the spirit of altruism into its business model. He who benefits others will benefit himself. Once the spirit of altruism was truly integrated into the business model, Harvest Capital has proven to be not only a genuine boon to the private sector and force that has helped to boost consumption in China, but also a contributor to the long-term and stable growth of Chinese companies and of consumption in China's new economy.

On the one hand, Harvest Capital, by adhering in practice to the principle of "investing in others with capital, and then helping them in all sincerity", both invests in and takes an active role in advising companies across a wide range of industries, assisting them to how to become the leaders in their sectors and on how to go public, guiding their strategic decisions, helping them to reduce costs, enhance efficiency, and, finally, to recreate value.

Since its establishment 15 years ago, Harvest Capital has invested in more than 30 companies that have become leaders in the consumer sector. One of the success stories was Babi Mantou, that, for all practical purposes, had all the appearances of a mom and pop operation looking to "go big": the firm, in its early stage, had been given the cold shoulder by virtually every institutional investor in China, but Song Xiangqian, Harvest Capital's founding partner and chairman, held fast to the opinion that the value judgment should be deeply rooted in the common people, and was a believer in the brand story that "small products make a big world".

As a result, in 2015, Harvest Capital invested in the brand and became a partner. It contributed indelibly to the development and growth of Babi Mantou's R&D, processing and production as well as chain store sales of its lineup of pastries, and enabled the business to post sales revenue of 1 billion yuan a year – based on a steamed bun that is priced at a mere two yuan ($US 0.31) - and to successfully go public in 2020.

Harvest Capital is not only a major booster for leading companies, but also a long-term companion for their growth.

The firm puts its professional services to work correcting the shortcomings in the growth path of the enterprise, guides the enterprise on how the investment funds should be deployed following a logic that is based on "buying industry growth, buying corporate growth, and buying the entrepreneur's learning ability, flexibility and openness to new ideas", and, by doing so, enables the entrepreneur in charge to further expand his or her horizons.

That Harvest Capital was able to witness Babi Mantou's, Eastroc Beverage's and Aimer's going public in quick succession, and all within a six-month period, is further testament to the success of its value-focused culture of returning to the essence of people and choosing outstanding entrepreneurs with whom to grow.

The entrepreneurs who blossomed as a result of the investment they received from Harvest Capital returned the favor, by taking all the knowledge they had acquired and judgment sense they had cultivated and applying it, lock, stock and barrel, to perfecting the product and building the power of the brand, the perfect example of this success being Aimer's (the lingerie firm) elevation of the undergarments that they sold into something that the shopper chooses as an expression of how much she cares for herself and for her wellbeing. As for Eastroc Beverage, another Harvest Capital investment, its founder, Lin Muqin, openly expressed gratitude to his "rivals" when the company went public, with his actions and words showing how he had opened his heart and had become a more generous person. When sales of the beverages reached 2.4 billion bottles a year, Harvest Capital was still its only external institutional investor. A company can only meet a customer's expectations by providing their wares in a heartfelt manner and, at all times, showing the customer their due respect.

Several of China's renowned brands, among them, Easyhome New Retail, Chacha Food, Jiajia Food, Lyfen, Xiao Guan Cha, Home Original Chicken, New Pearl Ceramics, Meituan and DiDi Taxi, have all been recipients of investment from Harvest Capital, each one creating a moving story of a successful partnership.

On the other hand, Harvest Capital continues to create corporate, investment and social value through its professional services, and has realized symbiotic growth with each of its clients.

Behind the heartfelt companionship and capital assistance, there is not only investment foresight, but also the fundamental altruism that is part and parcel of Harvest Capital's corporate philosophy, which fosters the creation and enhancement of value for the benefit of others as well as for itself.

In the digital era, a thoroughly altruistic mindset can give a company a leg up on rivals when it comes to business competition, while truly integrating the spirit of altruism into the business model will undoubtedly deliver the most benefits back to the company and the entrepreneur, no matter how rewarding or challenging the particular business environment might be.

The ultimate in altruism is ecological integration

Behind the adoption of an altruistic approach to business for purely selfish purposes, there is a higher level of thought and a whole different set of perspectives.

The ultimate in altruism is ecological integration. In an age where all things are interconnected, all things are one. Altruism in a larger sense is not only the result of something that one has spent a long time to understand and integrate into one's being, but also the openness to embrace everything.

Within the entire business ecosystem, Harvest Capital has chosen to focus on and continuously increase its investment in the consumer sector, putting its money into companies involved in clothing, food, housing, transportation, entertainment, education, medicine and health, forming a huge footprint in the consumer sector while laying a solid foundation for interconnected development among the companies in which it has invested and its own plans for further expansion.

Moreover, Harvest Capital not only directs its investments to the leading companies in each market segment but also takes an active role in cultivating the selected companies, such as drinks producer Eastroc Beverage, and lingerie provider Aimer, with the goal of assisting vertical industries grow under the leadership of the top players and facilitate the entire industry's ability to achieve a virtuous cycle for top-line growth.

Harvest Capital has taken all steps possible to avoid becoming arrogant, blindly following the herd, or rushing into any investment out of fear of missing an opportunity. It knows that there is never a shortage of talented individuals capable of finding value in the market, what is missing is the patience and determination to create value together.

As Song Xiangqian has always stressed to his team, all efforts are worthwhile: choose the right one, embrace it with all of your passion, the rest just needs to be left to time. With a right choice, coupled with the willingness to invest wholeheartedly, one can certainly succeed over time. Embrace the entire industry ecosystem with an open mind, maximize the value of an opportunity through a sophisticated approach, observe as the efforts pan out into something successful and continue observing as that success spreads across that industry's entire ecosystem.

It may well be worth mentioning at this juncture that the connection between business and society as well as people's day-to-day lives is becoming ever more intertwined. A company's growth model and the set of values that the company adopts for itself not only have a profound impact on each other, but also bring about subtle changes in people's lives.

Given the importance of the above statement, Song Xiangqian has taken everything he has learned as a result of interacting with a generation of entrepreneurs and used that knowledge to provide guidance to his peers, advocating that an era led by broadminded business executives who want to contribute positively to society is in the offing, and predicting that the trend pointing the way to how goods and services will be consumed in the society of tomorrow is already well under formation.

Such an era must not be seen simply as "bad money driving out the good", but as the rational return of a forgotten business culture. Only genuine products and sincere services, and respect for the consumer will be something that will be accepted. These will be the factors that determine a business's reputation, and, by the same token, the business's success. The total lack of a moral compass which seems to afflict many a business today will eventually be rejected by the market.

A new consumption trend is coming, in which an increasing number of ethical companies and the entrepreneurs that run them are being noticed by consumers, which, in turn, increases the happiness quotient of the general public. These companies form a large closed loop ecosystem encompassing business, society and lifestyle.

Altruism is the "life force" that connects all the elements in this massive ecosystem, the microorganisms being the healthy businesses that operate within it, where everyone adheres to a philosophy that has proven to be beneficial to business, society and the overall quality of life.

As Adam Smith said, "To do altruistic deeds by following one's own heart is the most beneficial combination of thought and action for the development of society, and the greatest good."

SOURCE Harvest Capital