Consumer Backlash Forces Chinese Premium Brands Baiguoyuan and Zhongxuegao to Rethink Pricing

The flashpoint for Baiguoyuan, the country’s largest chain of fresh‑fruit kiosks, was a livestream interview with its chairman, Yu Huiyong. Confronted with complaints that the price of a basket of apples or a box of strawberries was “out of reach” for the average shopper, Yu responded in a tone that many on social media described as “lecture‑like.” He told viewers that the company would not “pander” to consumers and that it needed to “educate” them about value. The remark, posted on a platform with millions of followers, was quickly clipped, memed, and dissected. Netizens accused him of flaunting a “success‑ology” mindset—an attitude that equates personal achievement with an unquestioned right to dictate market terms.

The backlash was not isolated. A professional investor who follows China’s consumer space drew a parallel to a similar episode that unfolded year with Zhongxuegao, the boutique ice‑cream brand that rose to fame on the back of its premium positioning and eye‑catching packaging. Its founder, Lin Sheng, had once made a comparable comment, suggesting that the brand’s lofty price points were a deliberate signal of quality and that consumers should “learn” to appreciate the difference. The comment spurred a cascade of negative sentiment, culminating in what one industry column titled “The Non‑Accidental Death of Zhongxuegao.” The implication was clear: when brands speak down to shoppers, they risk eroding the very loyalty that once propelled them to success.

Both stories intersect at another point—their financing. Tian Tu Capital, a Beijing‑based strategic investment firm that markets itself as a “global leading consumer‑goods partner,” has poured significant capital into each venture. In a 2021 press release Tian Tu hailed Baiguoyuan’s rapid expansion across more than 1,500 stores and highlighted Zhongxuegao’s “innovative product pipeline.” The firm’s dual stakes underscore a broader trend in China’s private‑equity circles: a rush to back “new consumer” brands that promise high margins through premium pricing. The recent consumer pushback, however, suggests that the calculus may be shifting.

What has changed? For one, Chinese shoppers have grown more sophisticated, thanks in large part to a digital ecosystem that rewards transparency. Platforms like Weibo, Douyin, and the myriad e‑commerce forums enable instant, mass‑scale feedback. A single disgruntled post can snowball into a trending hashtag, prompting journalists, regulators, and rival brands to take notice. In the cases of Baiguoyuan and Zhongxuegao, consumers used the same tools to flag perceived gaps between price and product, to catalog inconsistent quality, and to call out what they saw as an aristocratic tone from corporate leaders.

The backlash reflects a broader “premiumization fatigue.” In 2018, the Chinese middle class was eager to signal upward mobility through higher‑priced indulgences—whether a slice of imported cheese or a boutique gelato. Brands capitalized on this appetite, often positioning themselves as purveyors of an aspirational lifestyle rather than pure value. By 2023, however, economic headwinds and rising living costs prompted a wave of “smart consumption.” Shoppers began scrutinizing unit prices, comparing nutrition labels, and demanding concrete proof that higher fees translated into tangible benefits.

For Baiguoyuan, the challenge is twofold. Fresh produce is inherently variable; a flawless apple one day can be bruised the next, yet the brand’s price tags remain relatively static. Maintaining a uniform perception of premium quality across thousands of outlets requires a supply‑chain discipline that is difficult to achieve at scale. Moreover, the brand’s core promise—freshness and health—can become a liability if customers feel the product does not merit its cost.

Zhongxuegao’s predicament is equally intricate. As a packaged good, the ice cream’s ingredients, sourcing, and production standards are more controllable. Yet its early success hinged as much on hype as on taste. The company’s marketing narrative emphasized a “classical pedigree, with flavors named after literary works and packaging designed to look like a museum exhibit. Such storytelling resonated when consumers were willing to pay a premium for novelty, but it the brand vulnerable when the novelty wore off and price sensitivity rose.

Both firms are now feeling the pressure to adapt. Yu Huiyong, following the social‑media uproar, has appeared in a series of more conciliatory livestreams, offering discounts and emphasizing “customer‑first” improvements in store layout and fruit selection. Lin Sheng, meanwhile, has taken to live‑streaming his own kitchen, selling humble side‑products such as sweet potatoes and rice cakes at lower price points—a stark contrast to the high‑priced tubs that once defined his brand. Observers interpret these moves as pragmatic attempts to regain lost goodwill rather than genuine shifts in business philosophy.

Regulators are watching too. In recent months, the State Administration for Market Regulation (SAMR) has issued guidance urging companies to avoid “unreasonable pricing” and to maintain “fair competition.” While no formal investigations have been launched against Baiguoyuan or Zhongxuegao, the heightened scrutiny signals that repeated consumer complaints could trigger official inquiries—particularly if evidence emerges of price gouging or misleading marketing.

The fallout signals a turning point for China’s “new consumer” sector. Investors such as Tian Tu may need to recalibrate their expectations, focusing less on headline‑grabbing price tags and more on sustainable operational fundamentals. Companies will have to demonstrate value beyond the veneer of premium branding—through tighter supply‑chain controls, clearer ingredient disclosure, and, perhaps most crucially, a respectful tone when engaging with the public.

For the average Chinese shopper, the episode offers a lesson in leverage. The proliferation of social‑media platforms has transformed customers from passive buyers into active watchdogs. When a CEO takes the mic and adopts a patronizing stance, the response can be swift, viral, and costly. Conversely, brands that listen, adjust prices to match perceived value, and communicate with humility stand to benefit from a market that increasingly prizes authenticity over ostentation.

In the end, Baiguoyuan and Zhongxuegao are not just two companies grappling with price points; they are emblematic of a broader cultural shift. As China’s economy matures, the era of unchecked premiumization gives way to an age where consumers demand both quality and respect. Companies that fail to recognize this new balance risk becoming cautionary footnotes, while those that adapt may well rewrite the playbook for “new consumer” success in the world’s largest marketplace.