---
title: "Beijing Linjia Convenience Store's Capital Chain Breaks, Stores Close One After Another, the Convenience Store Most Like 7-Eleven Falls in Just 3 Years!"
description: "Linjia Convenience, once hailed as the most 7-Eleven-like convenience store, announced on August 1 that it would cease operations due to its sole investor being investigated by Shanghai police, leading to frozen accounts and unpaid debts. The company's failure highlights the challenges of the convenience store industry in China, where high costs and low single-store sales make profitability difficult."
author: "李又寻欢"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2018-08-04"
language: "en"
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# Beijing Linjia Convenience Store's Capital Chain Breaks, Stores Close One After Another, the Convenience Store Most Like 7-Eleven Falls in Just 3 Years!

> Linjia Convenience, once hailed as the most 7-Eleven-like convenience store, announced on August 1 that it would cease operations due to its sole investor being investigated by Shanghai police, leading to frozen accounts and unpaid debts. The company's failure highlights the challenges of the convenience store industry in China, where high costs and low single-store sales make profitability difficult.

Click to read the original text for details
(1)
Once hailed as the most 7-Eleven-like convenience store, Linjia Convenience has come to such an end after 3 years. On August 1, Linjia (Beijing) Trading Co., Ltd. issued a notice to suppliers stating that the company would cease all headquarters operations from August 1 and gradually close its stores.
The notice, seen by Spirit Beast, stated that the reason for reaching this point was "because the company's sole investor is under investigation by Shanghai police, resulting in the freezing of the company's bank accounts. As the company is in the development stage and has not yet achieved real profitability, it still needs investor capital to operate, and relying solely on store sales revenue is insufficient to cover expenses. Moreover, some suppliers have filed lawsuits against the company, leading to property preservation measures, and the funds in the company's accounts have been frozen, leaving no disposable funds."
Linjia Convenience also stated in the notice that since it cannot contact the legal representative and shareholders, suppliers' debt claims against Linjia can only be pursued through legal proceedings.
**This means that Linjia Convenience has essentially publicly declared bankruptcy. Moreover, the management team is not prepared to handle subsequent debts and cooperation disputes—this should be considered an irresponsible situation, right?**
In hindsight, this convenience store enterprise, which once stirred a wave in the Beijing market, has left in such a manner, which is truly lamentable. This also demonstrates from another angle the point that Spirit Beast has always emphasized: convenience stores are a long-term business and are not a format that can achieve profitability in the short term.
As Tao Ye, general manager of Haoneighbor, the convenience store brand with the most stores in Beijing, once pointed out: convenience stores are fundamentally different from hypermarkets and cannot simply rely on selling goods to bring significant growth. **Convenience stores are the most difficult industry in retail. Convenience stores are not a trend; they are a doorway. The scary thing is that when you open the door, you don't know if it's a green meadow or a cliff ahead.**
(2)
It is indeed absurd that a convenience store brand with some market recognition cannot even contact its legal representative and shareholders.
According to public information, in July 2015, Wang Zi, a senior executive at 7-Eleven Beijing, led nearly 30 management staff to resign collectively and founded the Linjia Convenience Store brand. At that time, business registration data showed that Linjia Convenience was established by Linjia (Beijing) Trading Co., Ltd., registered in Xicheng District, Beijing in April 2015 with a registered capital of 100 million yuan, with Wang Zi, who had left 7-Eleven, serving as both chairman and general manager.
Linjia quickly opened more than 60 stores within a year, and the industry consensus was that Linjia Convenience had a strong Japanese style in site selection, display, management, and product structure. At that time, Linjia Convenience stated that it would open 200 stores in Beijing within the next year and then expand to most first-tier cities in China. However, in October 2016, Wang Zi led some employees to leave Linjia and joined another emerging convenience store brand, Bianlifeng.
Linjia (Beijing) Trading Co., Ltd. began frequently changing business registration matters from October 2016. On November 9, 2016, the shareholders changed from the original Wang Zi, Tian Chong, and Yang Wei to Jia Weiping and Wang Zhaohua. On May 19, 2017, the shareholders of Linjia changed again from Jia Weiping and Wang Zhaohua to Han Lei, Jia Weiping, and Jinyun (Shenzhen) Equity Investment Co., Ltd.
After Wang Zi left, Linjia's business was affected but still maintained a development trend. Currently, it has 168 stores in the Beijing market.
The notice from Linjia Convenience showed that the company has three shareholders: Han Lei, Jia Weiping, and Jinyun (Shenzhen) Equity Investment Co., Ltd., and included the mobile numbers of the two natural-person shareholders—obviously, suppliers cannot be more capable than Linjia itself in contacting them through these numbers.
The Linjia Convenience store under the office building where Spirit Beast is located had its storefront installed and shelves set up, but it never opened. In early July, the landlord posted a notice at the door demanding overdue rent, stating that "rent has never been paid since the lease."
Spirit Beast also learned from informed sources that Linjia Convenience should have known it was unable to continue operations, with average monthly losses of around 5 million yuan recently. When the shareholders had problems and could not inject more funds, "they had to close, but even knowing it was unsustainable, they continued to cooperate with suppliers, which is simply a black sheep."
The capital chain break of Linjia is likely related to the "incident" of Shanlin Finance.
According to a report by Jiemian, Linjia Convenience is affiliated with Linjia (Beijing) Trading Co., Ltd., which was established on May 5, 2015. A review of Linjia's business registration data reveals that Xiang Jian'an, who serves as a supervisor of the company, is also a major shareholder of Beijing Wanzhuo Zhihui Trading Co., Ltd., holding 40% of the shares, while the remaining 60% is held by Gaotong Shengrong Wealth Investment Group Co., Ltd., which is one of the companies invested in by Zhou Boyun, the founder of Shanlin Finance. When Linjia's 100th store opened, senior executives from Shanlin Finance attended the opening ceremony.
It is said that within Shanlin Finance, it is well known that Linjia Convenience is regarded as a brother enterprise. Even when Shanlin Finance employees expanded their client base, they would use the fact that "the boss not only does finance but also invests in real economy like Linjia Convenience stores" to enhance the platform's background.
On April 24, the Shanghai Public Security Bureau's official Weibo account "Police Car Express - Shanghai" released a message that Zhou Boyun, the legal representative of Shanlin Finance, and eight others were arrested on suspicion of illegally absorbing public deposits.
Three months later, Linjia indeed could not hold on.
(3)
Convenience stores are one of the hottest retail formats in the past two years, especially in 2018, with continuous financing news in the convenience store market. For example, Fujian Jianfu Convenience, Wuhan Today Convenience, and Xi'an Meiyitian Convenience each received investments of hundreds of millions of yuan from investment institutions such as Sequoia Capital, General Atlantic, and Chunxiao Capital, with Today's valuation exceeding 3 billion yuan.
From the comparison of international and domestic data, China's convenience store market indeed has huge space: Japan's convenience store market share has surpassed that of supermarkets, roughly 54%:46%, while in China, the ratio of convenience stores to supermarkets is roughly 8%:92%.
But as Tao Ye said, insufficient single-store sales is a headache. According to relevant data, the average daily sales per convenience store in China is about 6,000 yuan, while in Taiwan, China, this indicator is 15,000 yuan, and in Japan, it is as high as 42,000 yuan—such a huge gap is also one of the main reasons why convenience stores find it difficult to be profitable in the Chinese market and why enterprises find it hard to sustain development.
The "2018 China Convenience Store Report" released by CCFA shows that the operating costs of convenience stores are rising rapidly, mainly due to rent and labor, with rent costs rising 18%, water and electricity costs rising 6.9%, and labor costs rising 12%.
Spirit Beast has also previously pointed out that not all cities are suitable for large-scale development of convenience stores. China is vast, with space for convenience store development and cities suitable for convenience stores, but definitely not all cities are suitable. Moreover, the prospects for convenience stores are becoming increasingly uncertain as other business formats continue to innovate and iterate. We still adhere to our previous view (from 2017): convenience stores will definitely not be like shared bikes or ride-hailing apps, which can spread like wildfire purely driven by capital (interestingly, the sharing economy has already become a mess). Capital may ultimately be disappointed in this regard. Those enterprises that want to make a mark in this field with capital may also end up disappointed.
Additionally, P2P is "exploding" at an unprecedented speed. If there are retail enterprises involved in such investments, they must be extremely careful. The ship is already sinking; if you want to continue to survive, please try every means to get ashore.
Of course, life will always surprise us—those convenience store enterprises that persist and work solidly in this field will still have broad market prospects and development opportunities. However, it must be emphasized that regardless of the retail format, when opening a store, in addition to site selection, one must also consider whether rent and operating income match. This is especially true for convenience store formats that are more suitable for high-rent urban core areas and business office districts—"what goes around comes around." Spirit Beast hopes that the fall of Linjia Convenience is just an isolated case.
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