"Guoda 36524" is the largest convenience store brand in Hebei Province, but its parent company, Hebei Sanluwu Network Technology Group Co., Ltd. (hereinafter referred to as "Hebei 365 Group"), is now in a crisis. This "King of Convenience Stores" in Hebei was once glorious, but now faces problems such as unpaid wages and a funding chain crisis. At this critical moment, Hebei state capital has quietly stepped in.

Unpaid Wage Dispute

According to information obtained by the author, Hebei 365 Group began to fall into an unpaid wage dispute at the end of last year. Many netizens on social platforms such as Xiaohongshu said that December wages were not paid in full, and January and February wages have been in arrears. Online images show that in response to the wage arrears issue, a suspected response from Hebei 365 Group stated, "The company's headquarters bank account is subject to fund quota supervision, requiring special funds for specific purposes and approval in batches." "The headquarters is making every effort to solve the cash flow bottleneck and has reported everyone's feelings to the headquarters. December wages will be settled after the headquarters receives all payments." Regarding the January payment issue, a suspected response from Hebei 365 Group said that wages would be delayed again, and it was difficult to predict when they would be settled. "The main reason is that the superior leaders have not given a specific timetable. The wage issue is definitely a major problem that needs to be solved by the leaders." Recently, the author verified with multiple insiders of Hebei 365 Group that the wage arrears information is true. Multiple insiders said that 365 Group indeed encountered a funding chain problem. "It's not just that employees at Guoda 36524 haven't been paid; many people in the group are still owed wages." According to business registration information, as of the end of 2022, Hebei 365 Group had 1,690 employees. On May 15, the author called Hebei 365 Group's official contact number as a consumer. When asked whether the company had encountered funding chain or employee wage arrears issues, the other party did not give a direct answer and instead asked, "If you encounter a problem, can you solve it?" Then hung up hastily. Multiple suppliers of Hebei 365 Group said that the funding chain problem has always existed. When asked whether payments were timely, one supplier said, "It mainly depends on the (cooperative) relationship." When discussing the funding chain issue, multiple respondents pointed to blind diversified expansion. "It is mainly dragged down by the real estate business. Engaging in finance, real estate, and investment all require money. The retail industry is not a fast-money business," said one respondent.

State Capital Enters

Multiple insiders revealed that "state capital has already 'cooperated' with Hebei 365 Group, holding 51% of the shares, with 365 Group holding the remaining equity."

The author exclusively learned that on April 12, 2024, a state-controlled enterprise, Hebei Jiaotou Commercial Technology Co., Ltd., was established in Zhengding County, Shijiazhuang, with the involvement of Hebei 365 Group and state capital. In the equity structure, Hebei Province Lufa Industrial Group Co., Ltd. holds 51%, and Hebei Bingsui Network Technology Co., Ltd. holds 49%.

A shareholding penetration chart shows that Hebei Province Lufa Industrial Group Co., Ltd. (hereinafter referred to as "Hebei Province Lufa Group") is 100% controlled by Hebei Communications Investment Group Co., Ltd., with the actual controller being the Hebei Provincial State-owned Assets Supervision and Administration Commission. Hebei Bingsui Network Technology Co., Ltd. is 98% held by the trade union committee of Hebei Sanluwu Network Technology Group Co., Ltd., with the remaining 2% held by Yu Bo. Information shows that Hebei Bingsui Network Technology Co., Ltd. has 29 branches, and the registered addresses correspond to the store locations of Guoda 36524. On the official website of Hebei Province Lufa Industrial Group Co., Ltd., the author noticed two important pieces of information. On October 9, 2023, Yu Shuzhong personally led a team to Hebei Province Lufa Group for strategic cooperation negotiations. Just 10 days later, the two parties signed a strategic cooperation agreement involving brand cooperation, store expansion, warehousing and logistics, and other fields. After the strategic framework agreement was signed, the two parties would proceed to establish a joint venture to further revitalize the high-quality resources of both enterprises and achieve mutual benefit and win-win results.

▲Fourth from left is Yu Shuzhong

From the existing information, state capital has indeed taken action to enter, and in the joint venture, Hebei state capital holds 51%, but the existing information cannot indicate that state capital has completed control of Hebei 365 Group. "Hebei state capital should mainly be to help Hebei 365 Group relieve difficulties. After all, as a representative legendary private enterprise in Hebei, Hebei obviously does not want 365 Group to have any mishaps, especially since the two sides can also synergize in business. Hebei state capital should not seek complete control of the entire group unless the situation becomes more critical," said an industry insider close to Hebei 365 Group.

From the external environment, the retail industry is facing various adverse factors such as weak consumption, intensified competition, rising fixed costs, and the impact of community group buying. This is a common dilemma faced by the entire physical retail industry, and many retail enterprises have also experienced tight operating liquidity. The retail industry is related to the national economy and people's livelihoods. When private retail enterprises encounter operational difficulties, it has become a common practice for state capital to step in to help. From Xi'an state capital taking over Renrenle, Sichuan state capital taking over Hongqi Chain, Xiangtan state capital taking over Bubugao, and Red Star Macalline and Easyhome transferring important equity to local state capital, it can be seen that in the current complex macroeconomic environment, private capital often needs to seek liquidity support, and state capital actions also reflect social responsibility. Generally speaking, there are three purposes for state capital to invest in private enterprises: first, to support the operation of private enterprises; second, to expand business areas and strengthen their own strength; third, to diversify investments and achieve asset preservation and appreciation. From a common perspective, these private retail enterprises are often regional leaders, with large scale and influence locally, and strong supply chain and channel capabilities. At last year's strategic signing ceremony, Hebei state capital also stated that Hebei 365 Group is a well-known enterprise in the province, with strong market competitiveness in brand, channels, logistics, and other fields, highly compatible with the industrial development model of the province's Lufa Group, and the two sides have huge cooperation potential and broad space. This time, Hebei state capital's support for Hebei 365 Group is more of a support for private retail enterprises. But it also shows that Hebei 365 Group has reached a crisis. Of course, Hebei 365 Group's asset advantages and development prospects are also important reasons for Hebei state capital to act.

Zhou Yong, director of the Lianshang Senior Advisory Group, said that in the current economic downturn, regional leading enterprises should adopt a contraction strategy, concentrate resources on developing local business, and strive to increase market share and service levels in advantageous regions as much as possible. This is a wise strategic choice. "These retail enterprises with funding chain problems, if they want to completely turn around, must reform and reposition themselves, introduce professional talents who understand the industry's ups and downs, prescribe the right medicine, and leverage the recovery of consumption to stop the decline and stabilize," said Wang Guoping, a member of the Lianshang Senior Advisory Group.

The Legendary King of Convenience Stores in Hebei

Northern cities have always been considered a "desert" for convenience stores, due to factors such as weather and consumption habits. Most northern cities are often not the first choice for convenience stores, but this is not the case. If Tiankelong, Baolongcang, etc. were the enlightenment of Shijiazhuang's supermarket industry, then Guoda 36524 is the pioneer of Hebei's convenience store market. Similar to supermarkets, China's convenience store industry also had "foreign monks first chanting scriptures." In the early 1990s, foreign convenience store brands such as 7-ELEVEn and FamilyMart began to enter the Chinese market, especially opening stores in big cities like Beijing and Shanghai, introducing the new retail format of convenience stores. At this stage, convenience stores were mainly concentrated in first-tier cities, with a small number, but they played an initial demonstration and educational role for the domestic retail market. With the rapid economic development, local convenience store brands began to emerge, laying out in major domestic cities, learning and borrowing from the business models of foreign convenience stores. Guoda 36524 is also one of the early representative brands. In 1993, Yu Shuzhong was assigned to Shijiazhuang state-owned enterprise Guoda Group after graduating from university. In 1994, Guoda Group cooperated with Taiwan's Wei Chuan Company, known as "North Wei Chuan, South Uni-President," to establish Wei Chuan Guoda Co., Ltd., producing bread, pork floss, dried meat, etc., and Yu Shuzhong also went to the food company. In September 1994, Wei Chuan Guoda opened its first bread direct-sale store called "Los Angeles Qiji" (Los Angeles), with a store area of 40 square meters. Within less than a year, "Los Angeles Qiji" opened more than 30 stores. By 1997, Wei Chuan suggested that Guoda open convenience stores together, believing that the mainland market was vast and convenience stores were like money printers. Based on research, they suggested directly converting 12 of the bread specialty stores into convenience stores. That year, the first Guoda 36524 store opened on Guang'an Street in Shijiazhuang, with the sign still reading "Anbin Convenience Store." The current chairman of Hebei 365 Group, Yu Shuzhong, was the store manager of this store. In December 1996, Guoda registered and established Anbin Supermarket Co., Ltd., and the name Anbin came from the United States. It is understood that in 1988, Wei Chuan cooperated with American ARCO to introduce "ampm" convenience stores to Taiwan, calling them Anbin Supermarket. Later, due to intellectual property issues and inspired by the name 7-ELEVEn (open from 7 a.m. to 11 p.m.), Yu Shuzhong changed Anbin to "36524" in 1999, meaning open 365 days a year, 24 hours a day. A series of achievements of Hebei 365 Group naturally cannot be separated from Yu Shuzhong. But the company's early days were arduous and difficult. It is reported that the initial funds were invested by the food factory jointly funded by Wei Chuan and Guoda Group. The planned investment was 3.5 million yuan, but only 1 million yuan was actually in place. In the first three years of the new century, due to factors such as company restructuring, internal personnel had difficulties in management and cultural integration. During the crisis, Yu Shuzhong turned the tide, and in July 2003, he was elected general manager with a 100% vote rate. Due to historical reasons, until 2013, around the dispute over store property rights, Guoda Group also took Yu Shuzhong to court, ultimately ending with Guoda Group losing. In 2003, Guoda 36524 opened its first 24-hour convenience store, and in the same year, most stores achieved 24-hour operation. This is definitely pioneering in the history of local convenience store development in China. Guoda 36524 has always taken 7-ELEVEn as a model. As early as 2009, it gradually opened services such as gas fee collection, electricity fee collection, phone recharge, electric vehicle and mobile phone charging, package collection, and scenic spot ticket agency. At a very early stage, Guoda 36524 launched simple meals and fresh food businesses, benchmarking against 7-ELEVEn. Also in 2009, Guoda 36524's market share had reached over 85%, firmly sitting in Shijiazhuang. Competitors such as Tianyuan and Haorizi convenience stores lagged far behind in store opening speed, and some have now disappeared from view. At that time, Yu Shuzhong said in an exclusive interview with the author: "From the perspective of Shijiazhuang's business ecosystem, the biggest crisis for Guoda Chain is that there is no opponent, and it is too highbrow. It's like running; without the stimulation of an opponent, you can't run fast." At the same time, Guoda 36524 laid out its online presence early. As early as 2000, Guoda 36524 pioneered the "four networks in parallel" business model of store marketing network, telephone network, Internet, and human resources network in the country; in 2004, it used the B2C model, relying on the enterprise's reputation, brand, and own conditions to build a same-city shopping platform - Aigou Mall. In March 2014, JD.com announced strategic cooperation with tens of thousands of convenience stores in 15 cities, including Guoda 36524, and Shijiazhuang also appeared in the layout area. In terms of own products, Guoda 36524 has cultivated a large number of mature private brands such as "Xianshiwei," "Yuedong Guopin," "Pengpai Chengshi," "Meishi Coffee," "Xianhuo Zhuyi," "Zhanguo Zhongshan Wine," etc., some of which are already household names in the local market. In fact, convenience and service are the characteristics of Guoda 36524. On Dianping, most local consumers' views are that "Guoda 36524 has complete goods, clean and tidy stores, and a comfortable shopping environment," "It is convenient for office workers, mainly 24-hour operation, open 365 days a year, very warm." As of August 2022, Hebei 365 Group had more than 1,900 "Guoda 36524" urban convenience stores in the Beijing-Tianjin-Hebei region, with more than 10 million online platform members; opened more than 100 "365 Junrong" military-civilian integration supermarkets; opened 7 "365" life supermarkets in Shijiazhuang; and more than 14,000 "Hao Xiangqin 365" rural e-commerce service stations (franchise stores), covering one-third of Hebei Province's villages, making it the modern circulation enterprise with the most physical service outlets in the Beijing-Tianjin-Hebei region.

Fierce Competition in the Convenience Store Market

In an exclusive interview in May 2009, Yu Shuzhong said that Shijiazhuang's "soil" is special, and retail enterprises generally find it difficult to adapt and survive. Many excellent foreign chain enterprises that came here were at the end of their strength. In fact, the competition in Shijiazhuang's convenience store market has become quite fierce. In addition to foreign brands such as 7-ELEVEn and Lawson, there are also local chain enterprises such as Guoda 36524, Bianlifeng, Meiyijia, and Tangjiu. Lawson entered Shijiazhuang in August 2021 and has laid out more than 30 stores so far. 7-ELEVEn entered Shijiazhuang in July 2022 and has 8 stores so far. It is worth mentioning that Lawson uses a franchise model in Hebei, signing a strategic cooperation with Jindian Commercial Chain Management Hebei Co., Ltd. in 2020. In less than a year, Lawson successively opened stores in Tangshan, Baoding, Langfang, Qinhuangdao, Cangzhou, and Shijiazhuang. Since then, Lawson's expansion has accelerated, planning to open at least 50 stores by 2025. Tangjiu, a convenience store chain brand headquartered in Taiyuan, entered Shijiazhuang for the first time on March 20, 2024. It is also the latest provincial capital city that Tangjiu has entered after Xi'an and Zhengzhou in its national layout. Guoda 36524 stores are the largest convenience store brand in Hebei, with the most stores and the widest distribution. Currently, it has more than 500 stores in Shijiazhuang, and the convenience stores in Shijiazhuang subway stations are exclusively operated by 36524. In response to more and more convenience stores entering the market, the person in charge of Guoda 36524 convenience stores once responded that the Shijiazhuang market is large enough, and the market environment and consumption capacity are getting better and better, allowing enterprises to develop together. They are very confident about this. However, prudently speaking, Guoda 36524's competitors are not just one. Foreign brands such as Lawson and 7-ELEVEn are continuously attacking with their brand influence, operational experience, and product diversity. Local brands such as Bianlifeng, Meiyijia, and Tangjiu should not be underestimated. For example, Tangjiu, with its all-round services, excellent marketing strategies, and rich product and service combinations, has made it difficult for many foreign brands to open the Taiyuan market. This game relationship has forced local brands to accelerate innovation and service upgrades to meet challenges. In a word, competition in the convenience store track has shifted from simple quantity expansion to quality and efficiency improvement, as well as service and experience innovation. Future competition will pay more attention to refined operations, technological innovation, and brand differentiation. For Guoda 36524, the key to breaking the situation lies in continuously focusing on market segmentation and product and service differentiation. Yu Shuzhong once wrote in his book "Footprints": "36524 should provide all aspects of services around the lives of ordinary people, and it is a consistent service 365 days a year, 24 hours a day. Therefore, the 36524 spirit is a spirit of consistent service." And in this troubled time, Guoda 36524 has more situations to break and a longer road to walk.

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