---
title: "Hunan's Hidden Tycoon: Running 20,000 Small Stores, Serving the Poor, Earning Billions Annually"
description: "Yue Lihua, a Hunan businessman, built a chain of convenience stores targeting low-income areas, which evolved into Xingsheng Youxuan, a community group-buying platform that reached a valuation of $4 billion. Despite being backed by Tencent, he became a student at Alibaba's Hupan University, highlighting the intense competition in China's community e-commerce sector."
author: "是三公子"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2020-11-08"
language: "en"
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---

# Hunan's Hidden Tycoon: Running 20,000 Small Stores, Serving the Poor, Earning Billions Annually

> Yue Lihua, a Hunan businessman, built a chain of convenience stores targeting low-income areas, which evolved into Xingsheng Youxuan, a community group-buying platform that reached a valuation of $4 billion. Despite being backed by Tencent, he became a student at Alibaba's Hupan University, highlighting the intense competition in China's community e-commerce sector.

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On May 30, the opening ceremony for the sixth cohort of Hupan University was held in Hangzhou, where Jack Ma pinned the school badge on 49 new students. Among them were well-known figures like Wang Xiaochuan of Sogou and Ma Dong of Miwei Media, as well as rising business stars from the past couple of years.
One such star is Hunan native Yue Lihua.
His community fresh food group-buying platform, Xingsheng Youxuan, has grown rapidly in the last two years, showing signs of becoming a unicorn, and this allowed him to become one of Ma's "students." In reality, his business empire belongs to the Tencent camp, and due to multiple investments from Tencent and other investors, his "paper wealth" has soared, earning him the title of "Hunan's biggest hidden tycoon."
No one would have imagined that this "hidden tycoon" was born out of "part-time vegetable selling," making the competition between Tencent-backed Xingsheng Youxuan and Alibaba-invested Shihuituan even more dramatic. On a larger scale, beyond Alibaba and Tencent, internet giants like Pinduoduo, JD.com, and Meituan have all joined the melee of community group-buying, sharpening their swords.
**Under the coercion of capital, where will this "hidden tycoon" of vegetable selling go?**
**-01-**
That year, Yue Lihua brought his wife and children from the countryside to the county town of Nanxian. They had to make a new living there.
Before this, Yue Lihua had just experienced an investment failure. He and his brother invested the money they had earned from wholesale business in the countryside into a linen factory, but within a year, not only did the investment go down the drain, but they also owed 50,000 to 60,000 yuan in debt.
In the 1990s, this was a huge debt. Now, the family came to the county town with the primary goal of earning money to pay off the debt.
Yue Lihua eventually picked up the small business his parents had once run: a small convenience store.
He learned customer-attraction tricks from wholesale boss Ou Jianmin, such as planning holiday events or placing a pool table outside the door.
The store's business gradually improved.
Soon, Yue Lihua owned a tricycle. He used it for purchasing and transporting goods, and on ordinary days, he would set up small stools and a rain cover to ferry passengers around town. That year, the family's income exceeded 120,000 yuan, allowing them to clear all debts and upgrade the store.
In 1998, the middle and lower reaches of the Yangtze River experienced a once-in-a-century flood, and the shores of Dongting Lake in Hunan became a disaster area. Friends and relatives from the countryside who had suffered, upon hearing that Yue Lihua had opened a store in the county, came to seek refuge. Some of them decided to follow Yue Lihua in opening small stores in the county town. Later, his brother Yue Dehua and close friend Chai Jin also joined the camp.
**With Yue Lihua as the "leader," a gang specializing in small stores was formally established in Nanxian.**
That year's flood submerged towns and farmland, but it had almost no impact on the changes and evolution of the commercial world in big cities: the internet era was dawning.
**-02-**
1998 is known as the first year of internet giants. In November, Ma Huateng founded Tencent in Shenzhen, and Jack Ma officially registered Alibaba at the end of the year.
Two years later, Baidu, founded by Robin Li, would also emerge in Beijing.
They successively started businesses that connected everything through the internet: **connections between people, between people and goods, and between people and information.** Soon, a new era would arrive where mentioning the internet would bring to mind BAT.
Ma Huateng took a few years to make QQ the top social communication software. In 2006, QQ had over 20 million concurrent users. That year, Tencent's stock price rose from a few yuan at IPO to over 20 yuan, making it the most valuable internet company in China.
In Hangzhou, Alibaba under Teacher Ma was thriving. In 2006, Alibaba's Taobao became Asia's largest shopping site, with nearly 9 million people visiting Taobao daily to "shop." Taobao first realized a possibility in China: the internet was not just a tool but would eventually become a basic element of life.
Led by giants, a whirlwind of the internet had swept across China. Portals like Sohu, antivirus software like 360, and local life services like Koubei emerged one after another.
However, Yue Lihua had no mood to care about internet development at that time. He was facing severe challenges.
By then, Yue Lihua was no longer running small stores but large supermarkets, and he had opened several. But with the development of the market economy, large supermarkets like Bubugao, Xinyijia, Walmart, and Carrefour entered Nanxian, severely squeezing the living space of small and medium supermarkets.
Yue Lihua decided to transform again.
He closed all stores over 100 square meters and focused on small stores ranging from 30 to 80 square meters. At that time, the concept of convenience stores did not exist in mainland China. Many believed convenience stores were only suitable for big cities, while in small places, mom-and-pop shops were enough.
But Yue Lihua had run a small store himself and also managed a wholesale store, so he knew the problems of mom-and-pop shops: they had no advantage in the supply chain.
Ou Jianmin proposed the concept of "chain," suggesting merging his own supermarket with those of brother Dehua, Chai Jin, and Yue Lihua to create a chain company with unified distribution and management.
Thus, the "Furong Xingsheng" convenience store chain was born.
Neighbors and locals saw their growing success and were deeply impressed, hoping to join as franchisees to open small supermarkets. It could earn no less than working, and it also avoided family separation, allowing everyone to stay together and accompany their children's growth.
Yue Lihua set site selection standards for franchise stores. Unlike other convenience stores that competed for urban white-collar workers, they targeted low-income groups. So **Furong Xingsheng stores are all located in relatively remote places or urban villages, offering relatively low-end products.**
Due to successful positioning, Furong Xingsheng grew very fast. By 2018, Yue Lihua's stores exceeded 12,000, with over 100 directly operated and the rest franchised.
Furong Xingsheng stores are spread across 16 provinces in China, and its logistics distribution system, Abida Logistics, serves over 400,000 stores, making it a benchmark in China's retail chain industry.
**-03-**
A few years after Yue Lihua started the convenience store franchise model, the second wave of internet entrepreneurship began to rise.
This wave was typified by the rise of group-buying websites. In January 2010, Feng Xiaohai's "Manzuo.com" officially launched, and two months later, Wang Xing founded Meituan. In the following days, group-buying companies emerged like a storm. By August 2011, the number had grown to over 5,000, eventually evolving into the largest commercial melee in internet history, known as the **"Thousand Group-Buying War"** .
Among these camps were group-buying channels launched by portals like Sohu and Sina, group-buying sites from traditional banks and supermarkets, and JD.com, which was suffering heavy losses, also began testing group-buying at the end of that year. But most were small and medium platforms without background.
In the end, Wang Xing's Meituan had the last laugh, winning the war with investments from Alibaba and Tencent. Most of those small and medium platforms fled with users' prepaid card money, leaving a mess behind.
The internet's penetration into traditional retail still touched Yue Lihua. He needed an opportunity, and the accelerated arrival of the mobile internet era gave him hope.
In 2014, he launched Xingsheng Youxuan—an O2O e-commerce platform where consumers placed orders on the app, and convenience stores received orders and delivered to their doors. But this model was eventually abandoned by convenience stores due to limited traffic sources and time-consuming delivery.
It wasn't until the concept of fresh food e-commerce emerged that he found the answer. He **combined the community group-buying model with offline convenience stores, focusing on fresh products that convenience stores didn't sell, allowing store owners to sell to nearby residents through WeChat groups, with residents picking up their orders themselves. This increased store traffic and solved the problems of customer acquisition, inventory, and last-mile delivery.**
In community group-buying, the convenience store owner as the group leader can fully control their customer base, and while earning extra income from group buying, they can also attract customers to the store, triggering secondary consumption.
But the barrier to entry for this business is not high. Any related upstream and downstream resource parties, such as suppliers, brand owners, and channel providers, can quickly enter. Driven by trends and capital, a "thousand group-buying war" in community group-buying is inevitable.
This red ocean war broke out in 2018. In Yue Lihua's base of Changsha, Hunan, many community group-buying brands like Kaola Select, Miss Fresh, Niwonin, and Shihuituan were fighting fiercely.
Fortunately, Xingsheng Youxuan received a Series A investment of tens of millions of dollars led by Capital Today, with Shajiang Ventures and ZhenFund following.
ZhenFund, a follower, believed at the time that **the essence of community e-commerce is to acquire customers at low cost through stores and then complete the last-mile service loop.** Compared to other projects, Xingsheng Youxuan has convenience stores as its foundation, which is more stable than most community group-buying projects that use BMWs as group leaders.
**-04-**
The mention of the last mile reminds me of the bike-sharing craze around 2016.
At that time, Mobike and ofo developed rapidly, collecting nearly 10 billion yuan in deposits a year, but most of the deposits were misappropriated. This cash-absorbing ability was favored by capital, with funding rounds every three to four months on average. Mobike and ofo raised over 31 billion yuan in two to three years.
But in the end, they couldn't escape the clutches of capital oligarchs. Mobike was reborn after being acquired, and its founder, Ms. Hu, recently became embroiled in rumors of "cashing out 2 billion yuan and leaving." ofo went in the opposite direction: its founder, Mr. Dai, couldn't stand what he considered "humiliation" during acquisition negotiations, leading to ofo's bankruptcy, leaving tens of millions of users' deposits and billions in debt.
History tends to repeat itself, and capital's pursuit of hot money often plays out again. The same applies to the new trend of community group-buying.
According to a monitoring database called "Dianshubao," there were 16 financing events in community e-commerce in 2019, totaling 7.99 billion yuan. Platforms with over 100 million yuan in financing included Suning Xiaodian and Tongcheng Life, and Yue Lihua's Xingsheng Youxuan was also among them.
In mid-2019, Xingsheng Youxuan completed two consecutive financing rounds, with a post-investment valuation of $1 billion. In 2019, its GMV exceeded 10 billion yuan, a year-on-year increase of 1250%. Xingsheng Youxuan had expanded from Hunan to 13 provinces and municipalities across Central, East, South, Southwest, and North China.
But in the same year, fresh food e-commerce also experienced an "industry winter," with community group-buying platforms like "Miaoshenghuo," "Songshu Pinpin," and "Dailuobo" facing store closures and capital chain breaks. It seemed the window for community group-buying was closing for entrepreneurs.
**-05-**
After the pandemic eased in 2020, I returned to Shenzhen from my hometown. In the days that followed, the entrance of my residential community was lined with stalls promoting the Dingdong Maicai app, and city dwellers commonly used apps to buy groceries.
The pandemic also caused another surge in community group-buying, leading to a new round of explosion. In the first few months of 2020, Liancai.com and Tongcheng Life successively obtained financing. Media statistics show that nearly 2 billion yuan flowed into community group-buying in the first half of this year.
In July, Southern Metropolis Daily and Huxiu reported that Xingsheng Youxuan had completed a Series C financing of $800 million led by KKR and Tencent, with Sequoia Capital China and Tianyi Capital following, at a post-investment valuation of $4 billion.
From then on, Yue Lihua's fame grew. In many self-media accounts, he was portrayed as "Hunan's biggest hidden tycoon" and a hero who "earns billions a year by serving the poor."
With the industry reshuffling, Xingsheng Youxuan rode the wave with capital support. In the 2019 Community Group-Buying TOP 100 list, Xingsheng Youxuan appeared ten times consecutively. In Hunan's internet circle, Xingsheng Youxuan has been called a unicorn.
But that doesn't mean he doesn't fear competition. Shihuituan, founded in June 2018, now covers over 100 cities and 100,000 communities, providing fresh ingredients to nearly 20 million urban households. It has received two rounds of investment from Alibaba.
In the second half of 2020, more unicorns came to nibble away: On July 7, 2020, Meituan launched Meituan Youxuan under its "Youxuan Business Unit"; on July 28, Ele.me launched "Community Purchase"; in August, Didi's "Orange Heart Youxuan" went live; on September 1, Pinduoduo's "Duoduo Maicai" officially launched...
Third-party data shows that the total scale of community group-buying in the Chinese market could reach 80 billion yuan, while the current market share held by major platforms is only 4 billion yuan. From this perspective, the battle among various heroes has just begun.
**This is a war without gunpowder, and it's too early to sing praises for the victor. With the lessons of the group-buying war and the bike-sharing debacle, no one knows who will win in the community group-buying arena.**
But it's foreseeable that under the coercion of oligarchic capital, some will just be passing through, selling "vegetables" for a while.
Source: San Gongzi's Office (ID: sgzdsws) Author: San Gongzi


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