Value Discovery and Creation: An Interview with Liu Zhifeng, Early Investor of Ruipeng Pet Healthcare

This article is reprinted from JRJ, with authorization granted to VCBeat for republication.

1. Hello, Mr. Liu. Ruipeng Pet has now become a highly sought-after project in the capital markets. As one of the earliest investors in Ruipeng Pet, when you invested five years ago, the company’s scale was likely still small, and the capital markets had not yet begun to pay attention to this sector. How did you identify Ruipeng’s potential and decide to invest in it at that time?

Liu Zhifeng:Yes, indeed. Five years ago, when we made the investment, the pet industry had not yet attracted the attention of the capital market. At that time, Ruipeng Pet Healthcare operated only about 20 clinics, all located in Shenzhen and Guangzhou. After my first meeting with Mr. Peng Yonghe, Chairman and Founder of Ruipeng Pet Healthcare, and his management team, my partner Sheng Lijun and I decided to invest. Why? First, having lived abroad, I understood the scale and magnitude of the pet industry in developed countries. China’s pet industry was just emerging, holding enormous potential. Second, there was the founder’s caliber. Mr. Peng is a highly trustworthy individual with strong entrepreneurial spirit. Although he began his career as a veterinarian, he possesses broad entrepreneurial thinking and vision—a rare combination that is particularly crucial in a professional services industry. Third, Ruipeng had already established its management team. The core members had been collaborating for many years, and the company had cultivated a unique corporate culture characterized by strong cohesion and appeal. I was deeply impressed and inspired by Ruipeng’s corporate culture during our initial meeting. Fourth, Ruipeng’s chain business model had taken shape. A standardized operational framework had been established, covering everything from site selection and service standards to internal financial controls—another critical factor for chain enterprises. Based on these factors, I felt confident in making the investment decision: a highly promising industry combined with an outstanding entrepreneur and team was sufficient justification.

2. In recent years, the pet industry has experienced rapid growth driven by capital investment. How do you view the impact of capital involvement on the pet industry?

Liu Zhifeng:Driven by capital, the pet industry has experienced rapid growth in recent years, at a pace that has actually exceeded my expectations. When we first invested, Ruipeng was very low-key, hoping that capital attention would not arrive too quickly, allowing us a few years of quiet development. However, this proved unavoidable, as capital soon turned its focus to this sector, with firms like Hillhouse and Goldman Sachs beginning to invest and establish their presence. Following the influx of capital, the entire industry accelerated rapidly; companies began aggressively expanding their market share, propelling the sector into an era of consolidation and M&A, and quickly giving rise to several major giants. Secondly, the industry has seen significant upgrades across equipment, technology, and talent. Capital infusion has accelerated the maturation of this sector. This reflects a distinct characteristic of China: industries that often take decades to mature in the West can reach maturity in just a few years or a decade in China. Additionally, this process has driven up asset prices and labor costs. Fortunately, however, the leaders in the pet healthcare industry are highly principled and committed to responsible, long-term healthy development. Figures like Mr. Peng and Mr. Liu Lang have consistently emphasized building a healthy ecosystem for pet healthcare to ensure sustainable industry growth. As reported in the media, before the Spring Festival, Ruipeng Group announced its merger with the pet care division under Hillhouse, marking a crucial step toward healthy industry development by avoiding cutthroat competition, strengthening leading enterprises, and fostering a robust ecosystem. Therefore, overall, the involvement of capital has brought more benefits than drawbacks. We are now in an era where capital cannot be ignored; it can rapidly aggregate resources. If companies fail to properly acknowledge and leverage the capital market, they risk being eliminated in the competitive landscape. Thus, for entrepreneurs, correctly understanding and effectively utilizing capital is a critical capability.

3. As the earliest investor in Ruipeng Pet, you have accompanied the company through its continuous growth and development, witnessing it become a star project in the capital market. Could you share your reflections on this journey? How do you view the relationship between investors and enterprises?

Liu Zhifeng:It has been over five years since I first became involved, and I have accompanied the company throughout its development. I have always adhered to an investment philosophy of being a “companion to outstanding enterprises and entrepreneurs.” I firmly believe that the relationship between investors and enterprises is not one of gaming or zero-sum competition, but rather one of mutual achievement. Investors help and empower enterprises through financial and intellectual capital, while enterprises deliver investment returns to investors through their own growth and value appreciation. Thus, it is a complementary process of mutual achievement and value creation. Investors must create value for enterprises and provide assistance to the best of their abilities. Therefore, I have consistently upheld an investment strategy of “few but selective” investments. While the number of investments is limited, I maintain close engagement with portfolio companies after investing, ensuring sufficient time to assist them. This support ranges from sharing capital market expertise and providing external benchmarks for entrepreneurs, to serving as a lubricant for team building. Throughout this journey, I have indeed worked closely with management teams. Consequently, investors and entrepreneurs must establish a cooperative relationship based on mutual trust and complementarity. It is essential to define one’s role clearly: capital serves the real economy, and the real economy and entrepreneurs are the foundation. Roles must be clearly defined without overstepping boundaries, fostering mutual trust and mutual success.

4. As an outstanding senior investor, you seem to identify and invest in a high-growth star project every few years. Could you briefly introduce your investment track record? How have you achieved this?

Liu Zhifeng:I consider myself fortunate and fulfilled. Witnessing the growth of companies I have invested in and supported, seeing them evolve into large corporations with market capitalizations in the tens of billions, is my greatest source of happiness. Take West China Cement as an example. When we first engaged with the company, it was a small cement producer in Pucheng, Shaanxi, with an annual capacity of 1.5 million tons. With our support, the company first listed in London and later transferred its listing to Hong Kong. It has now grown into a major national cement enterprise in China with an annual capacity of 35 million tons. Chaowei Power has captured over 40% of the electric bicycle battery market share; four out of every ten electric bicycles are equipped with Chaowei batteries, and its sales revenue has exceeded RMB 20 billion. Then there is Walvax Biotechnology. At the time of our investment, the company had just obtained its production approval. Today, it has become one of the leading enterprises in the vaccine industry, with a market capitalization approaching RMB 30 billion. Most recently, Ruipeng Pet Healthcare Group has grown into a large-scale pet medical group operating 1,000 pet hospitals, establishing itself as the absolute benchmark and leader in the pet healthcare industry. The entire pet industry has undergone transformative changes in just five years.

All of this gives me a profound sense of fulfillment, not merely due to strong investment returns, but rather from the satisfaction derived from value creation. As an investor, I take great pride in having participated in the growth of so many outstanding companies, witnessing and contributing to the developmental journeys of numerous industries, thereby making my own contribution to society. Therefore, I believe the fundamental reason behind these investment achievements lies in the fact that we live in a remarkable era. We are a fortunate generation, having experienced the full forty years of China’s reform and opening-up, as well as the highest phase of economic development in the country’s history. Against this backdrop, rapid development across all sectors in China has inherently generated abundant opportunities. Thus, first and foremost, we must express our gratitude to this era.Secondly, I believe that for an investor, beyond extensive research and due diligence, intuition and instinct are crucial. This entails a certain sensitivity toward trends and people. In the market, we encounter a vast number of projects; the key to keenly identifying and capturing those high-growth future stars among them lies in two aspects: first, forward-looking judgment and intuition regarding industry trends; and second, the ability to assess individuals and understand human nature—essentially, identifying promising industries and entrepreneurial talent with high potential.Thirdly, one must remain a steadfast creator of value and overcome speculative mindsets. Over the years, I have become increasingly convinced that there are no free lunches. If your intuition warns you that something may go wrong, it likely will. Without value creation, there can be no sustainable returns; any gains achieved otherwise are merely fleeting. Investment is a process of positive feedback. By steadfastly creating value, what ought to happen will inevitably happen, and returns will follow in due time.

5. In the current capital winter, do you consider it the best of times or the worst of times? Are there any investment sectors you are particularly bullish on?

Liu Zhifeng:No condition is absolutely good or bad; crisis lurks within prosperity, while opportunity breeds within adversity. When the economic environment is favorable, bubbles gradually emerge, driving asset prices to absurd levels. The current so-called “capital winter” is not entirely a negative development. It allows investor sentiment to return to rationality, enabling prices to revert to their intrinsic value. Entrepreneurs’ mindsets will also recalibrate, shifting focus back to the fundamentals of the real economy. Therefore, from an investment perspective, the capital winter actually presents valuable opportunities, though seizing them requires considerable courage and patience.Regarding industries, China’s era of extensive,粗放式 (rough-and-ready) growth has come to an end. Overcapacity has emerged across nearly all sectors, meaning traditional industries offer limited opportunities going forward. Future growth will depend on innovation and upgrading—specifically through new technologies, new business models, and fresh ideas, as well as cross-sector integration, convergence, and quality enhancement. These are the trends of the future.In terms of specific sectors, we remain optimistic about healthcare, artificial intelligence, and new energy vehicles. We also hold a positive outlook on the cultural and creative industries. As China’s economy reaches a certain stage of development, material needs have been largely satisfied, leading to an inevitable surge in demand for spiritual and cultural fulfillment. This is a natural progression, and the corresponding expansion of the cultural industry aligns with economic patterns and phenomena already observed in developed countries.

6. The STAR Market is drawing nearer, marking a epoch-making stride for China’s capital market. How do you view the STAR Market, and what recommendations do you have?

Liu Zhifeng:As a key national strategy, the STAR Market reflects China’s current stage of development, where innovation is essential to drive the upgrading and further growth of the Chinese economy. Since innovation cannot thrive without support from capital markets, the STAR Market can play a pivotal role in promoting and demonstrating China’s economic transformation, even fostering new dynamic industries and leading enterprises. Secondly, I believe the registration-based IPO system on the STAR Market will serve as a strong catalyst, propelling the entire capital market toward greater market orientation. Therefore, its significance is profound. While there has been extensive discussion about the STAR Market, I believe that to ensure its success, it is crucial to adhere to market principles, properly balance regulation with market forces, avoid reverting to old practices, and truly leverage innovative mechanisms to build an innovative capital platform for innovative companies.