The cultural and creative industry in our country is experiencing a development boom. More and more enterprises are attempting to achieve scale expansion through listing and financing.
Recently, Hangzhou Tongshifu Cultural and Creative (Group) Co., Ltd. (hereinafter referred to as “Tongshifu”) submitted its prospectus to the Hong Kong Stock Exchange, which has attracted much attention.
Public information indicates that Tong Shuifu is a leading brand of cultural and creative craft products in China. According to the prospectus, as of the end of 2024, Tong Shuifu ranked first in the Chinese market for copper-based cultural and creative craft products in terms of total revenue, with a market share of 35.0%. It has been dubbed “the Bubble Mates of the copper world”. The founder, Yu Guang, received investment from Lei Jun with just a PPT.
Compared to the title of founder and chairman of Copper Master, Yu Guang’s identity as “Mr. Rice Noodles” is more widely known:
He has expressed his admiration for the founder of Xiaomi, Lei Jun, and his praise for Xiaomi’s business model on multiple occasions in public.
In the early stage of his entrepreneurship, Yu Guang not only read extensively about the relevant models of Xiaomi, but also participated in training courses for Xiaomi’s senior executives. He became a staunch believer in Xiaomi’s strategies such as “affordability” and “fan participation experience”. In the brand operation of Tongshifu, the “shadow” of Xiaomi can be seen everywhere: for instance, fans are called “Tongfans”, and the “Tongfans Hero Conference” is held every year.
Yu Guang recalled in an interview with the media that when he first sought financing, he went to the Shunwei Capital for a presentation. Finally, he met his “spiritual idol” Lei Jun.
At that time, lacking experience, he only prepared a simple PPT and a sample of the statue, but after the presentation, Lei Jun highly praised his project and decided to invest.
In 2017, Tongshu Company completed a $110 million Series A financing, led by Capital and Xiaomi Group, with participation from institutions such as Haiquan Fund and Jin Yuan Asset. After the first round of financing， Tongshu officially joined the Xiaomi ecosystem chain and became the only home decor and cultural craft enterprise within the ecosystem. In 2018， the company completed a $310 million Series B financing， with additional investment from Capital and Xiaomi Group. Since then， Tongshu has successively attracted more investors. As of the disclosure of the prospectus， Capital and Tianjin Jinmi Fund of Xiaomi Holdings ranked as the second and third largest shareholders respectively.
The growth rate of revenue is sluggish and the business structure is monotonous, which poses risks. In terms of the overall market demand, copper-themed cultural products have obvious shortcomings in terms of audience breadth and market penetration ability, which to some extent limits the growth space of Copper Master: On one hand, copper handicrafts belong to a niche market, and the consumer group mainly consists of men aged 30 to 50. On the other hand, according to the Frost & Sullivan report, in 2024, the penetration rate of copper-themed cultural craft products in cities is only 2.34%, and in rural areas, it is even less than 1.4%. Even by 2029, the expected penetration rate in cities is only expected to increase to 2.58%.
From the perspective of the income structure, Tongshifu is highly dependent on copper-themed cultural products. The revenue contribution of this category reached 95.4%, 96.3%, and 96.6% respectively in 2022, 2023, and 2024. This relatively single product structure makes it highly sensitive to copper price fluctuations. From 2019 to 2024, the copper price rose from 47,600 yuan per ton to 75,000 yuan per ton, reaching a peak of 88,600 yuan per ton (according to Frost & Sullivan). Recent market trends indicate that due to global supply tightening and the growing demand in areas such as electric vehicles and renewable energy, the copper price may continue to rise. If the copper price continues to increase or consumers’ preferences shift to other material products, the company’s revenue may fluctuate significantly.
Although Master Tong has attempted to expand into plastic figurines, silverware, goldware, and wooden cultural products as supplementary businesses, in order to explore the “second growth curve”, it seems that these business segments have still made a relatively small contribution to the company’s revenue at present.
From 2022 to 2024, the revenue of Tongshifu was 503 million yuan, 506 million yuan and 571 million yuan respectively. The average annual compound growth rate was only 6.54%, which was significantly lower than the overall industry growth rate during the same period (from 2019 to 2024, the compound annual growth rate of the Chinese copper-based cultural and creative craft product market was 8.2%).
However, behind its leading position in the industry, there are many problems such as weak revenue growth, reliance on a single product category and online channels, and a discrepancy between the growth rate of directors’ salaries and that of the company’s performance.
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