On the evening of 23 September, lifestyle retail giant MINISO made an announcement at the Hong Kong Stock Exchange (HKEX) that it had acquired 29.4% of the shares from the supermarket chain Yonghui (YH) Superstores Co for 6.3 billion RMB (895.79 million USD), becoming its largest shareholder. The shares were acquired from DFI Retail Group (21.1%) and JD.com (8.3%). MINISO later confirmed that the deal will be finalised in 2025, and it will not be controlling the supermarket chain.
The market, however, reacted to the acquisition with perplexion and scepticism. An hour after the announcement, as New York started trading, MINISO’s shares dropped 18%, plummeting a whopping 28.1% in Hong Kong the next day. MINISO founder and CEO Ye Guofu responded with a WeChat Moment post: “It’s right that you don’t understand this, if everyone understands it, I wouldn’t have the chance to do it”.
Pundits believe that Yonghui has been planning on selling its shares for some time. Founded in 2001, the supermarket chain experienced a crisis during the pandemic. Since 2021, it made losses for three years consecutively. This is when Pangdonglai entered the picture.
Pangdonglai is another supermarket chain, mostly based in Henan province. It is known for its great service, good work-life balance for employees and viral products. This May, Yonghui’s founder Zhang Xuansong and its CEO Li Songfeng went to Xuchang, Henan to visit Yu Donglai, the president of the Pangdonglai supermarket chain. Yonghui subsequently transformed two of its Henan branches based on Pangdonglai’s business model, raised frontline staff’s pay and incorporated Pangdonglai products, with direction from the other chain. The transformation caused one of the branches to grow 820% in sales to 1.08 million RMB (153,592 USD) per day and nearly 10 times in foot traffic.
The Pangdonglai DNA that is left in Yonghui is the reason MINISO decided to invest in the supermarket chain. Ye Guofu visited the Henan Yonghui branches first in late July and then in August and found that both stores see huge foot traffic, even at 2 pm when it’s normally quieter in supermarkets. Ye believes that the Pangdonglai model is superior to the business models of Costco, Sam’s Club and Trader Joe’s. It is worth watching closely whether MINISO and the Pangdonglai-ified Yonghui can defy market expectations and succeed.
