Wuhan, historically a commercial hub, has four state-owned listed supermarket companies: E Wushang, Zhongbai Group, Wuhan Zhongshang, and Hanshang Group. Their dominance, undervaluation, and dispersed shareholding have repeatedly made them targets for private capital, including Intime, Xinguang, Yonghui, and Greenland.

Wuhan, with its advantage of being a hub for nine provinces, has been a commercial center since ancient times, as the saying goes, "Goods come alive in Wuhan." Consequently, in the supermarket industry alone, Wuhan has produced four state-owned listed companies: E Wushang, Zhongbai Group, Wuhan Zhongshang, and Hanshang Group, all of which are financially strong. This cluster is second only to Beijing and Shanghai, making Wuhan the undisputed leader in central China, far ahead of neighboring Zhengzhou, Changsha, and Hefei.

It is precisely because of their unshakable leading position locally, coupled with long-term undervaluation and dispersed shareholding, that these Wuhan state-owned supermarkets have repeatedly become "prey" for private capital tycoons. The Intime Group launched two "attacks" on E Wushang in 2006 and 2011; in 2011, Xinguang Holdings first raised its stake in Zhongbai Group, becoming the largest single shareholder in 2012; starting in 2012, Hubei's richest man, Yan Zhi, repeatedly raised stakes in Hanshang Group; and just as Xinguang was retreating, in 2013, Yonghui Superstores joined the "contest" for Zhongbai Group.

All these events pointed to 2017: earlier, Wuhan state-owned assets and the Yonghui system each increased their stakes in Zhongbai; later, on the Hanshang front, Zhuoyi's Yan Zhi briefly led Hanyang state-owned assets by 113 shares. In 2016, Greenland Financial Holding entered Wuhan Zhongshang, approaching the disclosure threshold, and has remained dormant since, leaving observers wondering about Greenland's intentions.

The Four Kings of Wuhan Supermarkets

Many might not expect that the "First Stock of Chinese Commerce" was not born in Beijing, Shanghai, Guangzhou, or Shenzhen, but in Wuhan. E Wushang was established in 1959, then one of China's top ten department stores, and listed on the Shenzhen Stock Exchange in 1992. As one of the top three chain department store companies in China, E Wushang's Wuhan International Plaza is among China's top ten shopping malls.

Despite the overall downturn in the retail industry in recent years and varying degrees of performance decline among Wuhan peers, E Wushang has still demonstrated strong profitability: in 2016, the company's revenue was 17.690 billion yuan, and its net profit of 992 million yuan ranked second in the industry, second only to Yonghui Superstores.

For Wuhan, one E Wushang is not enough. In 1989, the Wuhan State-owned Assets Supervision and Administration Commission established Zhongbai Group based on the Wuhan Central Department Store Building, and Wuhan Zhongshang based on the Wuhan Zhongnan Commercial Building. Although the Hanyang District State-owned Assets Supervision and Administration Commission established Hanshang Group a year later than the other two, it listed a year earlier. In 1996, Hanshang Group listed on the Shanghai Stock Exchange, and the following year, Zhongbai Group and Wuhan Zhongshang listed on the Shenzhen Stock Exchange.

Among these four supermarket kings, E Wushang and Zhongbai Group are larger, with annual revenues exceeding 10 billion yuan. E Wushang focuses on department store business, while Zhongbai focuses on supermarket business. Wuhan Zhongshang and Hanshang Group are smaller; the former focuses on department stores with supermarkets as a supplement, while the latter only has department store business.

To facilitate asset management, in 2008, the Wuhan State-owned Assets Supervision and Administration Commission established Wuhan Commercial Union (Group) Co., Ltd. (hereinafter referred to as "Wushang Union"), and the equity of E Wushang, Zhongbai Group, and Wuhan Zhongshang was transferred to Wushang Union.

Wuhan state-owned assets have been promoting the merger and reorganization of the three major commercial groups. Initially, they planned to merge the three giants following the approach of Bailian Group; later, they changed to merging Zhongbai Group and Wuhan Zhongshang to strengthen both department store and supermarket businesses, but neither succeeded.

State-owned assets control several commercial giants, creating Wuhan's "unique" commercial environment: it is difficult for outside supermarkets to gain a foothold in Wuhan, and Wuhan's supermarket giants also find it hard to expand beyond Hubei. Intime Department Store and Yonghui Superstores, which have "deep ties" with Wuhan supermarkets, are both national commercial giants. Intime failed to take control of E Wushang and later acquired one of its supermarkets to enter the Hubei market. Yonghui has expanded to 17 provinces and cities nationwide but has not yet entered Hubei.

Among the four giants, only Zhongbai Group has expanded westward to Chongqing, but the stores it closed in recent years due to performance decline are also mostly concentrated in Chongqing.

The biggest impact of state-owned control has been on personnel appointments. In 2015, Zhongbai Group introduced a professional manager team, the first time for a state-owned commercial enterprise in Wuhan. Previously, senior executives of state-owned commercial enterprises in Wuhan were mostly promoted internally or appointed within the system. To this day, the other three companies still follow this practice.

State-Owned Assets vs. a Group of Private Capital Tycoons

It is precisely because this market is so difficult to enter that capital tycoons mostly hunt Wuhan's state-owned supermarkets with strategic intentions.

In 2004, E Wushang, Zhongbai, and Zhongshang planned to merge, and the Intime system was introduced to Wuhan as a strategic investor. Later, this plan fell through, and the Intime system, which "never leaves empty-handed," began raising its stake in E Wushang in 2005 and in 2006 unilaterally proposed convening a shareholders' meeting, throwing out the "Wuguang Rent Increase Proposal" to challenge Wuhan state-owned assets.

This round ended with the Intime system giving up the fight for the largest shareholder position and acquiring Century Zhongshang to enter the Wuhan market.

In 2011, the Intime system once again sparked a dispute over the actual controller of E Wushang, but was blocked by several "ambushes" pre-arranged by Wuhan state-owned assets.

It was in this year that Zhou Xiaoguang, the richest man in Yiwu and also a Zhejiang businessman, began raising stakes in Zhongbai Group through Xinguang Holdings, becoming the largest single shareholder in 2012.

In the same year, Zhuoyi Holdings, under Hubei's richest man Yan Zhi, began raising stakes in Hanshang Group.

What female richest man Zhou Xiaoguang did not expect was that Xinguang Holdings once became the largest single shareholder of Zhongbai Group but encountered the same embarrassment as the Intime system.

There is also an episode worth mentioning in the control dispute between Xinguang Holdings and Zhongbai Group. In October 2013, private equity tycoon Cui Jun "forced" the Zhongbai board with an open letter. Cui Jun's usual tactics did not work, but they attracted Yonghui Superstores.

At the end of that year, the Yonghui system began raising stakes in Zhongbai Group, and Xinguang Holdings gradually retreated. The Yonghui system gradually increased its stake, holding 20% of Zhongbai Group by the end of 2014.

In the second half of 2016, Greenland Financial Holding quietly entered Wuhan Zhongshang, just one step away from the disclosure threshold.

All the clues were laid, waiting to be ignited in 2017.

In July 2017, Yonghui Superstores again raised its stake in Zhongbai Group to 25%, and stated that it did not rule out further increases in the next twelve months. On the other side, Wuhan state-owned assets increased their stake in Zhongbai Group to 32%.

Yan Zhi and Zhuoyi have been increasing their stakes in Hanshang Group over the years, holding a combined 25% as of December 30, 2016, and increased to 30% in September 2017, surpassing Hanyang state-owned assets by 113 shares. Subsequently, Hanyang state-owned assets announced they would increase their stake by 5%.

If one were to write the history of Wuhan's supermarkets, the capital market wars among the four giants over the past decade or more would need to be written in detail. These are battles without gunpowder, invisible to ordinary people.

During the years Yonghui Superstores kept "swallowing" Zhongbai Group, it successively accepted investments from Asian retail giant Dairy Farm International and JD.com, so it was well-armed.

Intime started from the Century store and gradually completed its layout in Wuhan and even Hubei Province. The Intime system has not made much noise regarding E Wushang in recent years but still holds 15% of its shares. With Alibaba's strategic investment, a man named Jack Ma stands behind Intime Commercial.

Zhuoyi Holdings' Yan Zhi has the title of Hubei's richest man, and his strength needs no elaboration.

Greenland Financial Holding has always had listing plans and also owns commercial assets, so its lurking in Wuhan Zhongshang naturally invites speculation.

The battle for supermarkets in Wuhan is far from over, and no one can guess the ending. But one thing is certain: the opponents' appetites are growing, and their strength is increasing.

Source: Zebra Consumption (ID: banmaxiaofei)

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