---
title: "6000 Mom-and-Pop Stores Franchised: Both Retailer and Distributor, the Practice of Chicheng Supply Chain"
description: "Chicheng, a low-profile company, operates 6,243 franchised convenience stores under the brands Zuolin Youshe and Shenghuo Yizhan, ranking 7th in CCFA's 2024 Top 100. It acts as both a retailer and a distributor, supplying over 400 brands and 9,000 SKUs to its stores, with annual sales exceeding 1.2 billion yuan. The company's success hinges on a 'market lowest comprehensive price' strategy and a growth flywheel that attracts more franchisees."
author: "袁来"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2025-08-13"
categories: "Dealer Operations, Retail Formats"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/J_ksl_2-h-5s3560Amc35g"
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citation: "袁来. “6000 Mom-and-Pop Stores Franchised: Both Retailer and Distributor, the Practice of Chicheng Supply Chain.” New Distribution, 2025-08-13. https://xinjignxiao.com/en/articles/6000-mom-and-pop-stores-franchised-both-retailer-and-distributor-the-pra-2e48a02c/"
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---

# 6000 Mom-and-Pop Stores Franchised: Both Retailer and Distributor, the Practice of Chicheng Supply Chain

> Chicheng, a low-profile company, operates 6,243 franchised convenience stores under the brands Zuolin Youshe and Shenghuo Yizhan, ranking 7th in CCFA's 2024 Top 100. It acts as both a retailer and a distributor, supplying over 400 brands and 9,000 SKUs to its stores, with annual sales exceeding 1.2 billion yuan. The company's success hinges on a 'market lowest comprehensive price' strategy and a growth flywheel that attracts more franchisees.

Layout by Liu Zhen
**Dear readers, I am Yuan Lai from New Distribution.**
Two weeks ago, I visited a small county town, Jiangshan, a county-level city under Quzhou, Zhejiang Province. In this county-level city with a population of only 450,000, there is a retail convenience store enterprise (with two brands: Zuolin Youshe and Shenghuo Yizhan) that has over 500 franchised stores in Jiangshan alone, spread across various streets.
Of course, not only in Jiangshan, but also in Quzhou, Jinhua, Hangzhou, Ningbo in Zhejiang, as well as Nanchang and Shangrao in Jiangxi, and Suzhou in Jiangsu, you can see franchised stores of Zuolin Youshe and Shenghuo Yizhan.
According to official introduction, as of the end of July 2025, the Zuolin Youshe brand has 4,590 stores, and the Shenghuo Yizhan brand has 1,653 stores, totaling 6,243 stores under Chicheng Co., Ltd. In the "2024 China Convenience Store TOP100" released by CCFA on April 30 this year, it ranked 7th.
This is an extremely low-profile company.
The "Zuolin Youshe" brand was founded in 2003, and the "Shenghuo Yizhan" brand in 2007. It was only this year that the two brands were included in the CCFA list, having never appeared before.
Last week, I had an in-depth exchange with Mr. Zhu Jun, General Manager of Chicheng Co., Ltd. and founder of Zuolin Youshe and Shenghuo Yizhan convenience stores. Fortunately, this was the first time Mr. Zhu publicly elaborated on the franchise logic behind Chicheng's convenience stores.
△Yuan Lai (left), Chief Content Officer of New Distribution, and Zhu Jun (right), General Manager of Chicheng Co., Ltd.
I think this case is worth your in-depth reading because it is not a simple chain retailer, but a typical representative of the integration of supply and retail.
Let me first state the core conclusion: As the title suggests, Chicheng looks like a chain convenience store enterprise, but the actual business model behind it is an out-and-out super large distributor. It distributes and represents 400+ brands, with over 9,000 SKUs, annual sales exceeding 1.2 billion yuan, providing one-stop full-category supply chain services to more than 6,000 Zuolin Youshe and Shenghuo Yizhan stores.
**Both a retailer and a distributor**
Upon meeting Mr. Zhu, I immediately asked my first question.
"Is Chicheng a retailer or a distributor? From an external perspective, with unified store signage, clean and tidy interiors, and uniformed staff, it should be a standard chain retail enterprise. But from the NEEQ (National Equities Exchange and Quotations) listing financial reports, it looks like a super large distributor, with core revenue coming from supplying goods to downstream franchise stores."
Mr. Zhu did not rush to answer, but first shared Chicheng's development history, which has gone through three stages.
The first stage, before 2005, was a "standard" chain convenience store retailer. At that time, there were over 70 directly operated stores in Jiangshan, completely self-operated.
With over 70 directly operated stores, operational costs were high in terms of management, personnel, and other aspects. Mr. Zhu recalled that during an external study trip, he saw Japanese convenience stores, where 96% were franchisees. This made him realize that to grow the convenience store business into a long-term career, it was necessary to adopt a franchise model.
From 2005 onwards, it entered the second development stage: low-cost franchise model, profiting from wholesale supply.
The positioning at that time was to transform mom-and-pop stores into convenience stores with unified signage, with better environment, decoration, and lighting than neighboring mom-and-pop stores, but with less investment than 7-Eleven, Lawson, and FamilyMart, following a "cost-performance" path.
At this point, Chicheng shifted from a retailer to a distributor. It signed distribution contracts with various first- and second-tier brands, becoming a full-category distributor, providing one-stop supply to franchised mom-and-pop stores. Currently, the average annual purchase amount per store is about 200,000 yuan. As supply chain capabilities continue to strengthen, franchise stores are gradually approaching 100% purchase from Chicheng.
In May 2022, Chicheng's stores exceeded 4,000; in December 2023, they exceeded 5,000.
Now, with over 6,000 franchised stores of Zuolin Youshe and Shenghuo Yizhan, it has entered the third stage: combining distribution and retail to continuously improve store operating capabilities.
Mr. Zhu told me that Chicheng now has over 800 franchised stores in Hangzhou, basically establishing a firm foothold. While strengthening its wholesale and trading capabilities, it is also continuously improving store image, category management, and incentive mechanisms. At the same time, it fully empowers store operations, such as store + cloud duty, store + smart cabinets, store + delivery, store + express, etc.
These are Chicheng's three development stages.
Strictly speaking, Chicheng is both a retailer and a distributor.
Of course, just looking at Chicheng's three development stages is not enough. From direct-operated chain convenience stores to open franchising, this path is generally the same across the country's franchise models, nothing novel.
I don't think this is the core logic that supports Chicheng's journey to today, with over 6,000 franchised stores.
**Why join Zuolin Youshe and Shenghuo Yizhan?**
My second question to Mr. Zhu was, "When you first opened franchising for Zuolin Youshe in 2005, why were mom-and-pop stores in a county town willing to change their signage?"
Mr. Zhu recalled that the core reasons for small stores to join Zuolin Youshe were two:
First, Zuolin Youshe already had a certain influence in Jiangshan (40 stores in Jiangshan, 30 in Quzhou), and business was good, but this was not the most core factor.
Second, what mom-and-pop stores care most about is operating costs: one is the store construction cost. From the day the franchise model was determined, Chicheng only charged a franchise fee of 5,000 yuan and a deposit of 5,000 yuan, with no other fees, so the store construction cost was almost the same as if they opened a store themselves. The second is the purchase price of goods, which is the most concerning for small stores. Therefore, in 2005, Chicheng proposed the commitment of "market comprehensive lowest price."
What is the market comprehensive lowest price? Simply put, two points: First, ensure that the purchase price of goods for stores is the lowest among neighboring stores; Second, unified purchase price.
Let me first explain "unified purchase price." Store owners have their own circles. Chicheng will not give lower purchase prices to stores with good business and large purchase volumes, or higher prices to stores with poor business and low purchase volumes. The unified purchase price treats all stores equally, regardless of size or new or old, in the same market.
Regarding the market lowest price for purchased goods, which everyone cares about most, how is it achieved?
The specific method: Let store owners report prices. For example, store owner A might have a friend or relative who is a sales representative for Nongfu Spring, knowing the lowest price, so that price is implemented. Store owner B knows someone from Wahaha, knows the lowest price, so that price is implemented. Through store owners reporting prices, as long as they are true and valid, prices are uniformly adjusted, gradually forming the market's lowest purchase price.
How does that sound? It sounds simple, doesn't it? But actually implementing it requires high costs. Mr. Zhu shared with me that when they decided to take this path, from 2005 to 2015, they lost money for 11 consecutive years.
He remembers vividly that in one of the early years, the gross margin was only 1.42%. This meant that selling 10,000 yuan of goods would lose at least 800-900 yuan, while the operating cost at that time was at least 10%.
From the initial 1.42% gross margin to sustainable profitability today, the journey has been tough.
After deciding to open franchising in 2005, Chicheng began to cooperate with manufacturers and become a distributor. But even as a distributor, it could not establish price competitiveness. The key strategy to form true price competitiveness was: "choose one of two."
In 2008, Chicheng's stores only sold Mengniu. They applied to Mengniu to become the second distributor in Jiangshan, but Mengniu refused due to the existing distributor in Jiangshan. Subsequently, Chicheng started exclusive cooperation with Yili. It was because of the cooperation with Yili that Mr. Zhu began to truly think: Is it possible to reach strategic cooperation with a leading brand in a category to obtain better trade terms?
In 2014, the trademark dispute between Wanglaoji and JDB made Chicheng formally establish the "choose one of two" strategy, forming strategic partnerships with one brand. Then came Kangshifu and Uni-President...
Because of the clear market comprehensive lowest price, the purchase cost for franchise stores decreased, and store profitability improved. Because of high store profitability, naturally, more stores joined. Because the number of franchise stores continued to increase, the trade terms given by strategic brand partners became better, and the market comprehensive lowest price could be better achieved...
In addition to the market comprehensive lowest price, on the other end, Chicheng continuously empowers franchise stores by introducing cloud duty, smart cabinets, delivery, neighborhood e-commerce platform "Luobo Baicai," and other diversified revenue projects, continuously improving the operational level of front-end stores.
It is with this combination of measures, after nearly 20 years of accumulation and refinement, that today's Chicheng has been achieved.
I borrowed the growth flywheel concept from e-commerce giant Amazon and drew a growth flywheel for Chicheng to help you understand the franchise logic behind it.
**From a county town to multi-level markets**
Finally, the third question: "Where is Chicheng's next development direction?"
Mr. Zhu did not answer directly, but shared Chicheng's development achievements at three levels.
The first level: From starting the business in 1997 to 2025, 28 years. Chicheng has verified success from a county town to multi-level markets.
Starting from Jiangshan, to Quzhou, Jinhua, and then Hangzhou. Now Hangzhou has over 800 stores. Entering Ningbo in October 2022, it has already reached over 300 stores in more than two years. From low-tier cities to high-tier cities, and then to cross-province cities, Chicheng's franchise model has been fully validated, feasible, and replicable.
The second level: Three years ago, Chicheng's franchise store profile was small and poor stores, not allowing large and good stores to join. The reason at that time was simple: small and poor stores were not willing to be served by local distributors, and store owners paid more attention to product purchase costs, so they were more willing to join.
Large and good stores, on the other hand, had good business and were unwilling to change their image, and local distributors also paid more attention to these stores.
But in the past year or two, Chicheng has begun to open franchising to large and good stores. On the one hand, Chicheng has established a relatively leading price advantage in the product supply chain; on the other hand, whether it is Zuolin Youshe or Shenghuo Yizhan, to take root locally, they must have good and large stores to set a benchmark effect.
In summary, whether it is large and good stores or small and poor stores, Chicheng can do well.
The third level: From single distribution to comprehensive empowerment of store operations, as just mentioned, such as "store + cloud duty," "store + smart cabinets," "store + delivery," "store + express," etc.
Mr. Zhu emphasized that Chicheng has two business bottom lines: First, not to be distracted; even when doing cloud duty, smart cabinets, and other projects, it is from the perspective of small stores to empower them. Second, not to be greedy; Chicheng's own profit level is not allowed to exceed 2%. The low-cost structure brought by scale advantages must eventually be fed back to franchise stores, allowing stores to have profits and be willing to continue following Chicheng.
The above is the key content of my exchange with Mr. Zhu. I have always believed that when we see the staged success of a company today, we must interpret and gain insights. We must not only look at the current success strategies, but also go back to the starting point, look at the process and path before success, and see what key decisions were made along the way.
Here I summarize two key decisions:
First: From distributor supply to becoming a distributor themselves, and then to strategic brand partners, building the back-end supply chain as the core capability to drive store franchising;
Second: The key strategy of market comprehensive lowest price. Based on the core operational pain points of mom-and-pop stores, through cost reduction, continuously improve store profitability, thereby attracting more stores to join.
I hope Mr. Zhu's sharing can inspire you.


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## Citation metadata

- Publisher: New Distribution
- Author: 袁来
- Published: 2025-08-13
- Canonical: https://xinjignxiao.com/en/articles/6000-mom-and-pop-stores-franchised-both-retailer-and-distributor-the-pra-2e48a02c/
- Original source: https://mp.weixin.qq.com/s/J_ksl_2-h-5s3560Amc35g

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