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The Coffee Industry's "Dark Horse"

An outsider who, within five years of entering the industry, connected the online and offline coffee supply chain and built a diversified professional coffee company integrating cultivation, fresh-cherry processing, primary processing, finished products, and export—a company widely called the coffee industry's "dark horse."

Yunnan's Rich Coffee Heritage

Yunnan coffee has a long history. Its small-bean coffee is praised across the industry as rich without bitterness, aromatic without heaviness, with a slight fruitiness. Statistics put Yunnan's coffee planting area at about 1.5 million mu—99% of China's total coffee area and production—mainly distributed across Pu'er, Dehong, Lincang, and Baoshan. Yunnan coffee has attracted multinational giants like Nestlé and Starbucks and become fertile ground for entrepreneurs.

The "Dark Horse" Emerges

That dark horse is Xu Zhengxiong of Lujiangba in Baoshan City, a major coffee-growing area, and his Hemei Coffee Company. In 2007, Xu, then in the medical device business in Shenzhen, returned to his hometown and invested over 3 million yuan in a distillery—but the business was lackluster.

A Fortunate Opportunity

"My family always had five or six mu of coffee, but I never really paid attention to it until 2010, when a classmate invited me into the coffee business," Xu recalls. They approached Dehong Hougu Group, decided to start by trading coffee beans, and borrowed 300,000 yuan from relatives to establish the Shuanghong Agricultural Planting Professional Cooperative.

In 2010 coffee prices climbed steadily, peaking above 40 yuan per kilogram. During the 2010-2011 season, Xu netted over 3 million yuan in just three months.

Challenges of Entry

For a "latecomer" like Xu, entering agriculture was full of unknowns. With passion alone it was easy to become "cannon fodder." From planting and harvesting to processing and sales, everything was unfamiliar and technically demanding, with all the inherent risks of traditional agriculture.

Looking back, the high market prices at the time masked his inexperience. "Squeeze a handful and smell it" is the standard quality check when buying cherries—but Xu admits he was just "copying others."

"I had no experience buying cherries—I just imitated everyone else, biting a little, rubbing a little, putting on a show. Really, everyone was scrambling for beans then and couldn't be choosy. Luckily prices were high, and everything we bought could be sold," Xu says.

Strategic Development

In January 2012, Xu founded Hemei Coffee Company. Compared with traditional farmers, the internet opened a window for agricultural entrepreneurs. The conventional path is to develop products first, then sell through e-commerce; Xu instead used e-commerce to drive the company's growth.

In 2012 he received the "Governor's Entrepreneurship Award." He then met three partners interested in e-commerce, and the four joined forces to establish Sizhi (Four Cats) Coffee Company specifically for e-commerce operations.

Driven by the e-commerce plan, he immediately began building a coffee deep-processing plant in Baoshan. By March 2014, a fresh-cherry processing plant with an annual capacity of 50,000 tons was complete, along with a roasting plant handling 1,000 tons a year and a 2,000-ton three-in-one instant powder plant. In May that year, the instant powder line began production; by August, sales had exceeded 10,000 orders—remarkable speed.

Seamless Integration

To fuse sales and production, Xu also built a coffee instant-powder factory in Kunming with the e-commerce team stationed directly on site—a true "front shop, back factory" model. The moment instant products came off the line they could be packed and shipped to consumers.

"Agricultural cycles are long, so execution matters. Meanwhile, internet thinking has to align with target consumers' psychology and needs. The average age at our e-commerce company is 27. Because our buyers are young, we mostly hire people born after 1990—their thinking is closer to the consumer's," Xu says.

From Seed to Cup

"From seed to cup"—cultivation management determines quality. After the e-commerce breakthrough, Xu expanded both upstream into planting bases and offline into experiences.

Today Hemei Coffee runs a 5,000-mu high-altitude coffee planting base in Liuku Town, Lushui County, and controls 20,000 mu of quality coffee base in Mangkuan Township through the Shuanghong Cooperative. Both bases have passed International 4C Coffee Certification, and the whole company holds ISO 9001 certification.

O2O Model Expansion

The O2O model is also being tested. In Lijiang, Xu has opened 3 experience stores built on experiential sales with on-site beverage making and coffee roasting. In Baoshan he created a one-of-a-kind coffee shop decorated with wine bottles—Baoshan's first "wine bottle" café.

Business Philosophy

Xu believes government support is only auxiliary and can never replace one's own effort. "From founding to now, Hemei's total investment is about 50 million yuan, of which government support amounts to roughly 3 million yuan. You have to forge your own iron. If you rely on government support alone, you won't grow tall or go far," he says. Government, he adds, should strengthen public services for the industry—organizing companies to go abroad and helping brands take root overseas.

At the same time, companies should pursue win-win outcomes with farmers rather than competing with them for profit. "When we buy from farmers, we pay premium prices for quality. That motivates farmers and improves the beans we receive—a virtuous cycle. Malicious price suppression, by contrast, creates a vicious one," Xu says.

Talent Challenges

Talent shortage remains one of the problems troubling Xu and many fellow entrepreneurs. "The problem with Yunnan's agricultural e-commerce right now is the relative scarcity of talent. I hope the government can invite outside experts to train local e-commerce talent," he says.

FrontStreet Coffee Recommendation

Yunnan coffee's rise owes much to pioneers like these. To taste the region yourself, FrontStreet Coffee recommends:

FrontStreet Coffee Yunnan Small-Bean Coffee (Baoshan) — Our gateway Yunnan bean: washed-processed, medium roasted, showing soft nut and chocolate aromatics with a light plum-like acidity at a friendly price. The ideal first encounter with Yunnan's terroir.

FrontStreet Coffee 2013 Natural Typica — For a deeper dive into Yunnan, our estate Typica—planted in 2013 on the oldest variety brought to the region a century ago. Only fully ripe red cherries are natural-processed, then medium roasted for balance: dark-berry tones with caramel sweetness, chocolate, a hint of dried apricot, and a black-tea finish.