After adopting the Pang Donglai model, Yonghui Superstores are filled with slogans paying homage to Pang Donglai, yet the company still cannot escape its fate of losses.
Yonghui Superstores recently announced that it expects a net loss of 21.4 billion yuan for 2025, marking the fifth consecutive year of losses. The primary reasons for the loss are asset write-offs from store renovations, one-time investments, and losses from business suspension for decoration exceeding 12 billion yuan.
A visit by our team to one of Yonghui's renovated stores revealed that compared to the initial reopening period after renovations, customer foot traffic has declined from its peak. Some customers reported that product prices have become more expensive following the changes. In the dedicated section for Pang Donglai's private label products, there was no sign of the frantic buying or reselling activities mentioned in official notices, with customer traffic remaining normal.
Experts believe that Yonghui's continued losses are not due to the Pang Donglai model being unsuitable, but rather because the company "only copied the superficial aspects, not the core essence." The core of the Pang Donglai model lies in high employee compensation, long-termism, and deep regional focus. Yonghui, however, has only imitated surface-level elements like store decor and service. Compounding this, its vast nationwide network of over ten thousand stores makes precise, detailed replication difficult and costly.
"Prices have gotten more expensive." Our team conducted a field visit to a renovated Yonghui Superstore in a certain region.
It is reported that this particular store completed its renovations in November 2025. According to Yonghui's official introduction, the renovations led to improvements in store layout, product assortment, price and quality, customer service, employee benefits, and employee development.
Before even entering the supermarket, numerous slogans reminiscent of Pang Donglai's style are visible on both sides of the entrance通道, such as "Hope everyone becomes a sun, bravely radiating warmth and energy," and "Let your soul break free from constraints towards light and individuality." Inside the store, such slogans are ubiquitous: "Yonghui Superstores starts from the heart, firmly learning from the Pang Donglai model to follow a quality retail path," and "Most of us are new staff, our skills are still developing, please forgive any shortcomings in our service, we are working hard to improve." According to store staff, after the renovations, Yonghui's products, personnel, and services have all been aligned with Pang Donglai's standards. Our team observed a dedicated recommendation area within the supermarket showcasing Pang Donglai's private label products, including beverages, alcohol, cooking oil, laundry detergent, wet wipes, and other categories. Staff claimed that the prices of products in the Pang Donglai section are the same as those in Pang Donglai supermarkets.
In the Pang Donglai private brand section, Yonghui has also erected a notice stating that all renovated Yonghui stores nationwide have implemented purchase limits on Pang Donglai products to combat reselling. The notice warns that behaviors such as frantic hoarding, profiteering, or reselling at higher prices, which disrupt operations, will be stopped, and individuals involved will be asked to leave. However, during our on-site observation, no such hoarding or reselling activities were occurring in the section, and customer traffic remained normal. A local resident mentioned that on the day this store reopened after renovations in November 2025, there was indeed a surge in customer traffic, with long queues forming. However, this gradually returned to normal levels later. Overall, the store's decoration and product displays have become more upscale and impressive, but the prices of some products have also increased compared to before.
"Copying the form, not the spirit." Information shows that in May 2024, Yonghui Superstores officially embarked on its renovation journey, learning from Pang Donglai's business model.
However, this shift in business model has not provided a short-term rescue for Yonghui. Data indicates that in 2024, Yonghui's revenue was 67.574 billion yuan, a year-on-year decrease of 14.07%; its net loss was 1.465 billion yuan, a year-on-year expansion of 10.26%. Recently, Yonghui announced an expected net loss of 21.4 billion yuan for 2025, compared to a loss of 14.7 billion yuan in the same period last year, indicating a further widening of losses. This means that Yonghui Superstores has been incurring losses for five consecutive years since 2021.
Regarding the anticipated loss for 2025, Yonghui disclosed in its announcement three main reasons: store adjustments, supply chain reforms, and external investments coupled with asset impairment.
In terms of store adjustments, in 2025, Yonghui deeply renovated 315 stores and closed 381 stores that did not align with the company's future strategic positioning. The impact of store renovations on profits primarily includes losses from asset write-offs related to the renovations, loss of operating revenue during business suspension for decoration, and one-time startup costs, with asset write-offs and one-time investments totaling approximately 910 million yuan. Additionally, the estimated loss in gross profit due to store closures for decoration is around 300 million yuan. Meanwhile, closing the 381 stores also resulted in significant losses, mainly comprising asset write-offs, employee severance compensation for optimization, and lease-related breach of contract penalties.
During the supply chain reform process, Yonghui faced short-term pressures including stockouts and declining gross margins, which adversely affected operating revenue. The announcement stated that as the supply chain reforms deepen, these impacts have gradually diminished. Regarding external investments and asset impairment, the fair value of Yonghui's overseas equity investment in Advantage Solutions shares decreased due to a continuous drop in stock price, resulting in a recognized fair value change loss of -236 million yuan during the reporting period.
Lin Xianping, Deputy Secretary-General of the Executive Committee of the China City Expert Think Tank, told our team that Yonghui's projected loss of 21.4 billion yuan after learning from the Pang Donglai model is not due to the model's incompatibility but stems from "copying the form but not the spirit," compounded by the short-term pains of transformation. The main cause of the loss is the over 12 billion yuan in costs from asset write-offs, one-time investments, and losses from business suspension for store renovations, which represent phased costs of strategic adjustment.
He pointed out that the core of the Pang Donglai model is high salaries, long-termism, and deep regional focus. Yonghui has only learned superficial aspects like decoration and service. Furthermore, its massive base of ten thousand stores nationwide makes meticulous replication highly challenging and costly.
Previously, Yonghui's new CEO and head of the national renovation group, Wang Shoucheng, also admitted, "Yonghui is currently at the level Pang Donglai was ten years ago." Wang Shoucheng stated that, counting from May 6, 2024, Yonghui Superstores aims to cross the survival line within 2 to 3 years, win back customer trust within 3 to 5 years, and become a supermarket that evokes national pride and happiness within 5 to 10 years.
Lin Xianping believes the probability of Yonghui achieving profitability in the short term is low. However, with plans to significantly reduce the scale of renovations and store closures in 2026, if it can solidify a profitable single-store model and address weaknesses in supply chain and talent, a reduction in losses and a return to profitability are foreseeable. Yonghui Superstores needs to leverage its own strengths in fresh produce and localize the Pang Donglai philosophy rather than copying it entirely, in order to break through the current predicament.
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