Why China’s supermarket giants copy 13-store chain

Yonghui posted $201M losses while a Henan retailer with just 13 stores generated $110M profit. Now every major chain from Walmart to RT-Mart is studying its blueprint.

• Pangdonglai generated $2.34B revenue, $110M profit from 13 stores while Yonghui lost $201M nationwide

• Revamped Yonghui stores saw 10x sales jumps; 100 locations transformed by mid-2025

• 30% gross margins and zero slotting fees create moat listed competitors struggle to replicate

• Scalability questions persist as model requires founder-driven culture, fourth-tier economics

China’s supermarket sector faces unprecedented pressure. Foreign giants like Carrefour have shuttered operations while domestic chains post consecutive years of losses.

E-commerce platforms and membership warehouses like Sam’s Club capture market share with convenience and bulk pricing. Traditional hypermarkets lost ground as consumer preferences shifted and economic slowdown reduced spending.

Against this backdrop, a regional chain operating exclusively in Henan province has become the industry’s unlikely blueprint for survival. Pangdonglai, founded in 1995 in the fourth-tier city of Xuchang, now has executives from across China traveling to study its stores.

The profit paradox driving desperate imitation

The numbers tell a startling story.

Pangdonglai’s 13 stores generated RMB 23.5B ($3.24B) in revenue in 2025, representing 38.71% year-over-year growth, according to sales data published by Pangdonglai Group.

The 2024 revenue reached RMB 17B ($2.34B) with over RMB 800M ($110.2M) in profit, according to Henan’s Provincial Party Committee Publicity Department.

Meanwhile, Yonghui Superstores, China’s second-largest hypermarket chain, reported RMB 67.6B ($9.31B) in revenue but posted a net loss of RMB 1.47B ($201.7M) for the same period.

The per-store economics reveal the gap.

Each Pangdonglai location averages approximately RMB 1.3B ($179M) in annual revenue. Yonghui operates hundreds of stores nationwide yet generates far lower per-location returns.

The regional chain’s gross margins reached 30% in 2020, according to Southern Weekly, compared to Yonghui’s 21%.

The industry context makes Pangdonglai’s performance even more remarkable. The top 100 supermarkets in China posted sales of RMB 900B across 25,200 outlets in 2024, representing growth of just 0.3% year-over-year, according to the China Chain Store & Franchise Association.

Market share for the top 10 retailers declined by 2.4 percentage points as fragmentation accelerated.

Pangdonglai made the CCFA’s top 100 list for the first time in 2024, ranking 31st despite operating fewer stores than virtually every other entrant. While competitors chase scale, the Henan retailer demonstrates that superior unit economics can outperform geographic expansion.

Yonghui’s billion-dollar bet on transformation

Facing three consecutive years of losses, Yonghui made an extraordinary decision in May 2024. The struggling giant partnered with Pangdonglai founder Yu Donglai to completely overhaul its operations. Former Yonghui CEO Li Songfeng stated,

Pangdonglai has insisted on quality, serving employees and customers well, forming a positive cycle of trust. This is a path worth learning from for the retail industry.

The partnership intensified in September 2024 when Miniso acquired a 29.4% stake in Yonghui for RMB 6.3B ($870M), becoming its largest shareholder.

Miniso founder Ye Guofu, who took over as head of Yonghui’s reform committee and acting CEO, has repeatedly stated that “the Pangdonglai model is the only way out for Chinese supermarkets.”

Early results suggest the transformation is working. Yonghui’s revamped store in Zhengzhou reopened in June 2024, attracting nearly 13,000 customers on the first day—five times normal traffic, according to Caixin Global.

The location became a near-mirror image of Pangdonglai, adopting its customer-friendly service standards and stocking DL-branded products. Sales jumped tenfold in subsequent weeks.

The Xi’an Zhongmao store delivered even more dramatic improvements. Daily sales rose from RMB 200K to RMB 1.6M in the first two days after revamping, according to Yonghui, while customer flow increased from 3,000 to over 14,000.