At the age of twenty-one, Zhang Hong-chao started selling ice chip products. A quarter of a century later, he and his younger brother Hongfu are billionaires.
In the late 1990s, Zhang borrowed three thousand yuan (about $422) from his grandmother to open a chip ice stand in central China’s Zhengzhou. His first business failed, but two years later he tried again with another stall, this time called Mixue Bingcheng.
Over time, the business took off and Zhang moved on to selling ice cream and later bubble tea, sodas and coffee drinks at ridiculously low prices. Today, the company of the same name operates over 36,000 stores and is the largest Chinese producer of bubble tea.
As a result, the 47-year-old Zhang and his 39-year-old brother Hongfu are, according to the estimates of the American Forbes, billionaires who are preparing to go on the Hong Kong stock exchange. The IPO filing revealed details of the company’s ownership: the brothers each hold a 42.8 percent stake.
Mixue’s revenue in the first nine months of 2023 jumped 46 percent to $2.2 billion, net profit up 48 percent to $338 million. The American Forbes calculates the total value of the company at almost three billion dollars, and the net worth of the Zhang brothers thus comes to about 1.2 billion dollars each.
The bubble tea maker last raised investor money in January 2021, during the economic bubble, when it raised $329 million at a valuation of $3.3 billion. Mixue already filed for an IPO last year in Shenzhen, but the IPO ultimately did not happen — and there is a possibility that the current application will not be successful either.
Hong Kong’s Hang Seng Index has fallen by roughly 25 percent over the past year, and shares there are off to their worst start to the year in nearly two decades.
The company stands out in the crowded bubble tea market on price, earning the nickname «Pinduoduo of bubble tea» — after billionaire Colin Huang’s Chinese discount platform.
Mixue’s products, which also include freshly made sodas, ice cream, fruit tea and coffee, cost from three cents, about the same as a can of Coke in China, to a dollar. Another popular Chinese bubble tea chain, Nayuki, listed in Hong Kong, charges triple for its drinks.
Mixue says it keeps prices low thanks to its comprehensive supply chain, including everything from ingredient procurement and production to logistics, R&D and quality control. Yet almost all of its revenue and profits come from selling necessities such as kitchen appliances and food ingredients to franchisees.
Hongfu Hong-chao, who is now the company’s CEO, joined Mixue in 2007 to unify its operations and management; Today, 99.8 percent of stores are operated by sixteen thousand franchisees, which makes it one of the largest franchise operators in the world — for example, it has almost twice as many outlets as Burger King.
Both brothers continued to innovate over the years. Under the name Lucky Cup, they opened their first cafe in 2017, and today the network of the same name has 2,900 branches. Six years ago, they exported the original Mixue brand to Hanoi, Vietnam, and today you can also find it in Indonesia, Japan, South Korea or Canada.
The Zhang brothers are the last to get rich from bubble tea. Other bubble tycoons include Wang Xiaokun, founder and chairman of Cha Panda, which is also waiting to go public.
Peng Xin and Zhao Lin, the husband-and-wife team behind the aforementioned competitor Nayuki, became billionaires after listing on the Hong Kong Stock Exchange in 2021. However, the pair have since fallen off the billionaire ladder – with their food safety issues sending their stock down eighty percent.
