The transfer of Hongqi Chain's actual control has finally been settled. As expected, Shangtou Investment, under Sichuan state-owned capital, acquired 6.91% of shares from the Cao Shiru family and 10% from Yonghui Superstores, becoming the new owner of this southwestern supermarket giant. Earlier this year, Wang Tian, founder of Better Life, lost control of the listed company after introducing state-owned capital to bail out due to an unresolved liquidity crisis. Due to poor management, Renrenle was unable to extricate itself from difficulties and had to transfer control of the listed company to Xi'an state-owned capital. Even earlier, Yonghui Superstores, once at its peak, attracted giants like Dairy Farm International, Tencent, and JD.com, causing founder Zhang XuanSong to lose control. In recent years, he has continued to reduce his stake, with his shareholding percentage repeatedly decreasing. At this point, the private chain supermarket giants have all changed camps. The first-generation founders mostly chose to retire while ahead. Only Wumart, Jiajiayue, and Meiyijia remain steadfast, waiting for the next trend. The Beginning Many may not know that supermarkets, an "old-looking" format, entered the Chinese market only 30 years ago. In 1990, in Humen Town, Dongguan, Guangdong, near Hong Kong and Macau, China's first chain supermarket, Meijia Supermarket, was born, opening the curtain on domestic chain operations. In the north, the emerging chain supermarket format sprouted in a more unexpected way. In 1994, Zhang Wenzhong, a postdoctoral fellow in systems engineering from Stanford University who had worked in central institutions, returned to Beijing to start a business, launching his proprietary MIS system and POS machines—management and cashier systems. This was a key turning point from traditional grocery stores to modern supermarkets. However, this advanced technology was initially unwanted. To promote his system, Zhang Wenzhong founded the first Wumart supermarket in Beijing, inadvertently entering the retail industry. In those years, chain supermarkets gradually took root in major cities, with dazzling goods, self-service shopping, and quality service, refreshing consumers and gradually forming a market atmosphere. By 1995, China's chain supermarket industry experienced a major wave. Foreign supermarket giants rushed into the Chinese market; domestic private chain supermarkets began to sprout in the same year. Early that year, Carrefour, after years of preparation, opened its first store in China in Beijing. This forced Walmart to accelerate its entry into the Chinese market, setting up in Shenzhen the following year. In the same year, Li Binlan, later known as the "Iron Lady," left Vanguard's predecessor Wanjia Chain and founded New 1 Jia in Shenzhen—a new Wanjia. Wang Peihuan, head of Weihai Sugar and Wine Station, also opened the first Weihai Sugar and Wine Station Supermarket—which was renamed "Jiajiayue" (603708.SH) only in 2001 when it expanded beyond Weihai. Zhang Xuansong, a young Fujian man who didn't finish high school, after years of struggling at the bottom, entered the retail business through beer agency and, around the same time, opened the predecessor of Yonghui Superstores (601933.SH), the "Gule Weili" supermarket. "Serial entrepreneur" Wang Tian, after graduating from Xiangtan Commercial School, entered the food industry and was promoted to business section chief at a state-owned enterprise at age 24. At that time, he noticed that the supermarket format, which was developing rapidly in coastal cities, was still untouched in Xiangtan. He decisively resigned, pooled 50,000 yuan with his wife, and opened the first Better Life (002251.SZ), also the first self-service supermarket in Hunan. In the following years, the entrepreneurial atmosphere for chain supermarkets continued. In 1996, He Jinming resigned as general manager of Shenzhen Metal Exchange and opened the first Renrenle (002336.SZ) supermarket. After staking out Carrefour for 37 days, he found the winning secret: "Their (Carrefour's) promotional strategy changes once a day, so I change mine twice or three times a day." Also in 1996, the state-owned wholesale company under Cao Shiru's responsibility opened its first community supermarket in Chengdu. Four years later, Hongqi Chain (002697.SZ) was restructured, and executive Cao Shiru led the MBO, becoming the actual controller. In 1997, based on the industry pioneer Meijia Supermarket, Ye Zhijian, head of Dongguan Sugar and Wine Group, founded Meiyijia convenience stores. Over the past 30 years, the chain supermarket industry has experienced ups and downs. All the turmoil began with that grand opening at the end of the century. The Rise Chinese chain supermarket brands sprang up like mushrooms, and after a few years of incubation, quickly entered an industry-wide golden age. At that time, China's economy began to take off, residents' consumption capacity improved, and the consumer market became active under the full pull of demand and supply. In 2000, the chain store top 100 list released by the China Chain Store & Franchise Association was dominated by state-owned enterprises, with Lianhua Supermarket and Nonggongshang Supermarket representing the supermarket sector in the top five, while foreign and private brands began to emerge. Ten years later, the pattern of the top 100 chain stores changed significantly, with the supermarket sector making great strides, resulting in a tripartite situation of state-owned, foreign, and private. Bailian (Lianhua), China Resources Vanguard, RT-Mart, Carrefour, Walmart, Wumart, Zhongbai, New 1 Jia, Trust-Mart, and Yonghui ranked among the top ten supermarkets. Later, with the impact of e-commerce and increased competition and rising costs for hypermarkets, the chain supermarket industry entered its first large-scale elimination and consolidation period. New 1 Jia last appeared in the top ten list in 2013. From 2014 to 2015, it closed 14 stores, and annual sales revenue shrank by 3 billion yuan in two years, finally disappearing from the top 100 list in 2016. In 2017, New 1 Jia initiated bankruptcy liquidation. The collapse of New 1 Jia sparked heated discussion, while Nonggongshang Supermarket quietly disappeared from the retail scene. More brands were merged in the process of big fish eating small fish, and big fish eating big fish, such as Walmart acquiring Trust-Mart, and Tesco being merged by China Resources Vanguard. During this period, most private chain supermarkets, however, started a round of independent growth against the trend, gradually becoming major market players. After Yonghui Superstores went public in 2010, its store count increased nearly 10 times in 10 years. At the same time, it launched large-scale capital operations, buying stakes in Zhongbai Group, partnering with Lianhua Supermarket and Hongqi Chain, and investing in numerous supply chain companies, forming a unique "Yonghui system" in the retail world. Wumart followed a similar path, strengthening its store layout in the northern market, especially Beijing, while also forming a "Wumart system" by controlling Xinhua Department Store, acquiring Metro China, and incubating Dmall. Better Life, Hongqi Chain, and Jiajiayue also achieved significant development during this period. Better Life supermarkets were almost always successful when opened, and founder Wang Tian's pride was evident: "If you catch the trend, making money is actually easy." In the 2020 top 100 chain stores list, Yonghui became the supermarket leader, and Wumart, Better Life, Jiajiayue, and Meiyijia all entered the top ten in the sector, with private brands occupying half of the top ten chain supermarkets. During that period, despite overall challenges in the chain supermarket industry, private supermarkets each had their own specialties. First, they all deeply cultivated their regions. Wumart was mainly in the north, with an unshakable position in Beijing; Meiyijia was mainly in the southern market, only recently making a big push north; Yonghui initially focused on Fujian and Chongqing; Better Life, Jiajiayue, and Hongqi Chain were typical regional supermarkets, deeply deploying in Hunan, Shandong (Yantai-Weihai area), and Sichuan (Chengdu market), respectively. The advantage of regional supermarkets is that through dense store openings in the local market, they can improve operational efficiency, brand influence, and service capabilities, while avoiding the costs and risks of cross-regional operations. Hongqi Chain focuses on 5 minutes to store, 5 minutes to select, 5 minutes to home. Therefore, Chengdu residents' happy life should partly credit Hongqi Chain. Cao Shiru is affectionately called "Aunt Cao" by Chengdu citizens. Second, private chain supermarkets are more flexible. Unlike foreign and state-owned enterprises that prefer the hypermarket model, private supermarkets have a richer variety of store formats, mostly adopting a combination of regional large stores and community small stores, with Hongqi Chain directly positioned as convenience supermarkets. Additionally, during this period, fresh produce became a key point for many private chain supermarkets to maintain growth and high profitability. Among the best, Jiajiayue's fresh produce accounted for over 60%, while the larger Yonghui Superstores stabilized at around 40%, known in the industry as "South has Yonghui, North has Jiajiayue." The Farewell Thirty years east of the river, thirty years west. Even the private chain supermarket giants that were particularly prominent in previous years have begun to exit. In 2019, He Jinming transferred Renrenle's controlling stake to Qujiang Culture, stepping back to become the second largest shareholder, and the actual controller of the listed company changed to the Management Committee of Xi'an Qujiang New District. Why did Xi'an state-owned capital take over? Renrenle started in Shenzhen, later shifted its business focus to Xi'an, and had a large amount of assets in Shaanxi. Xi'an state-owned capital essentially acquired a local supermarket. He Jinming was also helpless about transferring the company he founded. Renrenle had long attracted consumers with low prices and promotions. Shoppers were all happy, but the boss was worried. The company's gross margin was consistently at the bottom of the chain supermarket sector, with continuous losses. If no one rescued it, it might have been delisted. Yonghui Superstores, once the "light of Chinese retail," attracted capital giants like Dairy Farm International, Tencent, and JD.com. The founder gave up the position of largest shareholder as early as 2014, and later, the Zhang brothers dissolved their concerted action relationship and gave up actual control. With capital's push, the company, based on the "Yonghui system," became the flag bearer of new retail in the private chain supermarket world, successively launching new retail businesses such as Super Species, Yonghui Life, and Yonghui Home. However, as new retail exploration essentially failed, Yonghui Superstores suffered heavy losses, with business contraction, losses, and market value pressure. Founder Zhang Xuansong continued to reduce his stake, with his personal shareholding now down to 8.72%. Tempted by industry opportunities like e-commerce and new retail, Yonghui Superstores was not the only one to pay tuition. Major private chain supermarkets basically invested, but ultimately only tasted lightly. This period was called by Wang Tian the "lost five years." With poor growth and profitability in traditional business and unsuccessful new business expansion, if external pressure is added, the only path left is exit. At the beginning of 2023, Wang Tian transferred Better Life's controlling stake to Xiangtan Industry Investment, making Xiangtan state-owned capital the actual controller. The reason was that the giant commercial project invested in by Better Life encountered a liquidity crisis due to industry counter-cyclicality and financial policies. Currently, the company is in the process of restructuring. And they are not the only ones in trouble? Foreign giants Carrefour and Metro were sold to Chinese companies; Gaoxin Retail (RT-Mart) was acquired by Alibaba, and its founder Huang Mingduan left the classic saying: When the times abandon you, they don't even say goodbye. Originally, in the silence of the chain supermarket world, Hongqi Chain was among the best. Business continued to develop, performance was stable, and cash flow, debt ratio, and cash reserves were relatively healthy. Even so, the "Iron Lady" Cao Shiru chose to retire while ahead. On December 21, Hongqi Chain announced that actual controller Cao Shiru and her son Cao Zengjun collectively transferred 6.91% of the company's shares to Sichuan Shangtou for 552 million yuan, and waived voting rights for the remaining 20.72% during the waiver period. At the same time, the second largest shareholder Yonghui Superstores also transferred 10% of Hongqi Chain's shares to Sichuan Shangtou Investment. Thus, the controlling shareholder changed to Sichuan Shangtou, and the actual controller changed to the Sichuan State-owned Assets Supervision and Administration Commission. Before this, the Cao Shiru family had already cashed out billions of yuan through previous share transfers and reductions, making them clear big winners. Giving up the company she had nurtured might have no other reason for Cao Shiru than genuine fatigue. In the chain supermarket industry, with the existing business model, even the top student Hongqi Chain faces enormous growth and profitability pressure. In the first three quarters of 2023, the company's operating revenue was 7.641 billion yuan, a year-on-year increase of 0.89%, and net profit attributable to the parent increased 13.99% year-on-year to 407 million yuan (including nearly 100 million yuan in investment income). This performance is quite excellent, but compared to other industries, it is still not easy. As for new business exploration, after new retail turned the page, everyone set their sights on membership supermarkets and instant retail. However, membership supermarkets have high thresholds, requiring strong supply chain and membership operation capabilities, and so far only Costco has succeeded; instant retail faces dimensionality reduction attacks from internet giants like Meituan, Alibaba, JD.com, and even Douyin. Recently, Meituan Maicai was renamed Xiaoxiang Supermarket, which is meaningful and aggressive. At this point, among the private chain supermarket giants, only Wumart and Jiajiayue remain steadfast. Of course, they also have their own pressures. Jiajiayue's growth and profitability myth may not be sustainable; as for Wumart, the listing progress of its two companies, Wumart Technology (Wumart Commercial + Metro China) and Dmall, has not been smooth. For first-generation private chain supermarket founders like Cao Shiru, it may be difficult to wait for the next industry trend, so it might be better to hand over to stronger capital parties and let them lead their "children" through the cycles.