Loss leader

The term “loss leader” (赔本赚吆喝 – péiběn zhuàn yāohè) is a Chinese idiom which literally translates to “losing money to gain attention.” It combines three words: “operating at a loss” (赔本), “earn” (赚), and “to hawk or shout” (吆喝). The last word, the term “吆喝” (yāohe), refers to the traditional practice of vendors promoting their goods in bustling marketplaces to attract customers.

This method dates back to ancient times in China, often involving rhythmic or poetic chants, creating a lively atmosphere in the markets. Interestingly, the character “喝” in “吆喝” is the same character as in the verb “to drink” in Chinese (喝 hē). However, in this context, it's pronounced with a neutral tone and means shouting or calling out, and is not related.

In modern business language, the phrase describes promotional tactics where companies offer products at a loss to draw in customers and enhance brand awareness, the strategy of incurring short-term losses to achieve long-term visibility and brand recognition.

The trick is now used with great success by one of China's biggest tea store brands. As summer temperatures rise across China, Goodme (古茗茶饮) has stirred significant buzz on social media with its latest offering: a 1 yuan (approximately $0.14) iced water, aptly named the “1 Yuan Ice Cup” (一元冰杯).

Founded in 2010 in a small town in Zhejiang Province by entrepreneur Wang Yun’an (王云安), Goodme has rapidly expanded its footprint. As of late 2024, it had nearly 10,000 stores nationwide, making it China's largest mass-market fresh tea brand in the 10–20 yuan price range, and the second-largest across all price tiers, second only to Mixue Bingcheng (蜜雪冰城).

Initially focusing on lower-tier cities, Goodme has successfully penetrated higher-tier markets, including Shanghai and Hangzhou, while maintaining a strong presence in second- and third-tier cities. The introduction of the 1 Yuan Ice Cup fits with its lower price strategy, but it's more than a mere seasonal gimmick. Designed as a “traffic-generating product” (引流产品), this 500ml iced water is only available for in-store purchase, to get punters through the door.

Beyond its competitive pricing, the 1 Yuan Ice Cup addresses a common customer hesitation—wanting a cup of water which is not always listed on the menu and offered as a free perk only at some fast food restaurants. By formalizing this simple offering, Goodme not only meets customer needs but also enhances the in-store experience.

The product has resonated with China's price-sensitive youth, who appreciate the DIY aspect of customizing their drinks, and enjoy sharing their creations on social media. This viral appeal has transformed a basic, low-cost drink into an effective marketing tool, driving footfall and brand awareness.For Goodme (古茗), the introduction of a 1 yuan ice cup as a strategy effectively entices customers into their stores, increasing the likelihood of additional purchases. In the intensely competitive milk tea market, this has turned a simple, low-cost item into a powerful marketing tool, like a “loss leader” in western business language.

Andrew Methven is the author and publisher of the Chinese learning platform RealTime Mandarin. This text was originally published in an adapted form in Methven's language column “Chinese Phrase of the Week” on the Sinica platform of author and podcaster Kaiser Kuo.