On September 23, a surprise announcement came from Yonghui Superstores: its shareholders Dairy Farm Company, Jingdong Century Trade, and Suqian Hanbang, a JD.com affiliate, have sold their 29.4% stake in Yonghui to Guangdong Juncai International. The twist? Juncai’s controlling shareholder is none other than Miniso, the budget lifestyle chain known for bright, sleek stores full of impulse buys.
That evening, Miniso’s CFO, Zhang Jingjing, addressed investors, noting that the RMB 6.27 billion (USD 877.8 million) deal is expected to close in the first half of 2025. Zhang clarified that while Miniso will become Yonghui’s largest shareholder, it won’t control the board, meaning Yonghui will not be consolidated into Miniso’s financial statements.
Miniso’s CEO, Ye Guofu, has long admired the Chinese supermarket chain Pangdonglai, which he sees as a model for transforming China’s retail sector. He hopes to bring Pangdonglai’s business model beyond its Xuchang base and redefine Chinese retail. Ye recounted visiting a remodeled Yonghui store in Zhengzhou on July 30, where Pangdonglai’s influence had turned it into a bustling success. He found himself imagining owning the store.
Despite Ye’s optimism, the market’s reaction was less enthusiastic, with Miniso’s stock prices falling in both the US and Hong Kong after the announcement.
Founded in 2001, Yonghui was once China’s retail leader. At its height, the company expanded from its southern China roots to become a national chain, despite China’s complex geography and logistical challenges.
Yonghui went public on the A-shares market in 2010, earning the title of China’s first retail chain specializing in fresh produce. Before group buying became popular, Yonghui pioneered a model that emphasized the fresh produce section to differentiate itself from competitors and boost its attractiveness to consumers. Investors like JD.com were impressed, leading it to acquire a 10% stake in 2015 for RMB 4.31 billion (USD 603.4 million). Tencent followed suit in 2017, paying RMB 8.81 (USD 1.2) per share.
However, as new competitors like Freshippo (Hema Fresh) quickly rose, Yonghui struggled to keep pace. The company experimented with formats such as Yonghui Mini and the premium Super Species stores, but these initiatives stalled during the pandemic.
By 2021, Yonghui recorded its first-ever loss since going public. From 2021–2023, the company accumulated more than RMB 8 billion (USD 1.1 billion) in losses. In the first half of 2024, Yonghui’s revenue fell by 10.11% to RMB 37.78 billion (USD 5.3 billion), while net profit dropped 26.34% year-on-year to RMB 275 million (USD 38.5 million).
To curb its losses, Yonghui closed 136 stores in the first eight months of 2024. Its Super Species brand has been reduced to just four stores, down from 80 at its peak. Amid these struggles, JD.com has steadily reduced its stake in the company.
Yet, despite the market’s uncertainty, Ye sees this moment as an opportunity. During Miniso’s 2024 investor day, he outlined two future paths for retail: low-cost and specialty. Ye placed Miniso in the latter category, likening it to Sam’s Club and Costco. While Ye has long admired Costco’s membership model, he now believes Pangdonglai offers something even better, focusing on product quality, customer experience, and employee satisfaction—qualities he compares to those of Trader Joe’s.
Under Pangdonglai’s guidance, Yonghui has remodeled two Zhengzhou stores, doubling their daily revenue and turning a profit. Plans are underway to remodel stores in ten more cities, including Beijing, Hefei, Hangzhou, Shenzhen, and Shenyang. In Beijing, Yonghui’s first self-remodeled store at Xirondo Plaza in Shijingshan is set to reopen on October 19.
Ye predicts that these structural changes, led by retailers like Pangdonglai, will reshape China’s supermarket industry, providing Yonghui with enormous potential for growth. But how will Miniso benefit from its stake in Yonghui, and how will the two brands collaborate?
According to Zhao Lingyi, chief analyst at Shenwan Hongyuan, Miniso and Yonghui have synergies in supply chain and distribution channels that could enhance both companies’ competitiveness. Retail expert Wang Guoping added that Miniso’s national supply chain network is on par with Pangdonglai’s. As Miniso’s overseas business grows steadily, the company is eyeing larger domestic opportunities. Selling products through Yonghui and collaborating on larger stores may be a promising move for Miniso.
Ye stressed that Miniso could leverage Yonghui’s strengths to secure prime retail locations and better rental terms, while Zhang reaffirmed Miniso’s five-year plan to open 900–1,100 stores annually from 2024–2028, aiming to surpass 10,000 stores by 2027.
Ye also urged investors to trust his judgment, reminding them of his track record in retail.
For now, the full potential of this partnership remains to be seen.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Xie Yunzi for 36Kr.