I Lost ¥5 Million in Two Years. Here Is How I Rebuilt the Company.

In 2019 I formally founded Hunan Nafei and launched our own brand, Lancool, selling on Pinduoduo and Taobao. The first year, sales passed ¥20 million. On paper it looked like a launch most founders would envy. At year-end accounting, we were down more than ¥5 million.

Where the money went

The money disappeared into the standard C-end cost stack: heavy advertising spend, platform commissions, salaries, warehousing. Layer by layer, gross margin fell below half. I was buying volume with cash — and the bigger the volume, the bigger the hole.

Then the second year brought the pandemic and raw material shortages, and the model stopped working entirely. That was the hardest stretch of my career as an entrepreneur. The account was bleeding, the team still had to be paid, and debts were coming due.

The cut that saved us

I did three things, none of them clever, all of them painful.

I cut the team down to a core group. I shut down the cash-burning consumer channel strategy. And I went back to what I was actually good at — B2B. Selling to businesses, on wholesale platforms, to retailers who reorder.

At the same time, one product kept us alive. Our light, breathable period pant in the purple pack — the same line I have written about before — was strong enough to become a top seller in its category on 1688. Live-commerce hosts found it, chose it, and sold it. One customer in Shenyang was taking a truck or two of goods every month. That single product slowly brought the company back, and we repaid the e-commerce debts year by year.

What the ¥5 million bought

Marketing can buy volume for a quarter. It cannot buy survival. The thing that actually saved us was a product we had made ourselves, with enough margin structure and enough real demand behind it.

The lesson I keep from that period is simple, and I say it to any founder chasing growth: in a crisis, do not grab for new opportunities. Cut what does not make money, go back to the thing you do better than anyone, and push it to the limit. The survivors are not the smartest. They are the most durable and the most focused.

Today Nafei is an OEM/ODM manufacturer for sanitary pads and menstrual pants, working with brands and importers across Southeast Asia, the Middle East, and Africa. That pivot — from rented traffic to products other businesses want to reorder — is the reason this company still exists.

Li Genyuan is the founder of Hunan Nafei Biotechnology. He writes from the factory floor about the feminine hygiene trade. More from Founder's Notes.