---
title: "The Warning Significance of Hunan New Yijia Supermarket's Bankruptcy"
description: "On June 16, the Changsha Intermediate People's Court issued an announcement regarding the bankruptcy liquidation case of Hunan New Yijia Commercial Investment Co., Ltd., selecting an administrator through competitive means. At its peak, New Yijia Supermarket operated 112 hypermarkets with annual sales of 17.4 billion yuan, and was one of the top 20 commercial enterprises cultivated by the Ministry of Commerce. Of course, the Hunan company is only a subsidiary of New Yijia; its parent company, Shenzhen-based New Yijia Supermarket Co., Ltd., has not declared bankruptcy and is reportedly in talks for acquisition, so its future remains uncertain; but even if it were to declare bankruptcy now, compared to the average lifespan of 7-8 years for Chinese group companies, New Yijia would not be considered a 'short-lived' enterprise."
author: "老笑"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2017-07-03"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/the-warning-significance-of-hunan-new-yijia-supermarket-s-bankruptcy-ce5cc618/"
markdown: "https://xinjignxiao.com/en/articles/the-warning-significance-of-hunan-new-yijia-supermarket-s-bankruptcy-ce5cc618.md"
original_source: "https://mp.weixin.qq.com/s/_hLvVh4YiEEuIpr4rxYSbA"
translation: "https://xinjignxiao.com/zh/articles/%E6%B9%96%E5%8D%97%E6%96%B0%E4%B8%80%E4%BD%B3%E8%B6%85%E5%B8%82%E7%A0%B4%E4%BA%A7%E7%9A%84%E8%AD%A6%E7%A4%BA%E6%84%8F%E4%B9%89-ce5cc618.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/the-warning-significance-of-hunan-new-yijia-supermarket-s-bankruptcy-ce5cc618/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# The Warning Significance of Hunan New Yijia Supermarket's Bankruptcy

> On June 16, the Changsha Intermediate People's Court issued an announcement regarding the bankruptcy liquidation case of Hunan New Yijia Commercial Investment Co., Ltd., selecting an administrator through competitive means. At its peak, New Yijia Supermarket operated 112 hypermarkets with annual sales of 17.4 billion yuan, and was one of the top 20 commercial enterprises cultivated by the Ministry of Commerce. Of course, the Hunan company is only a subsidiary of New Yijia; its parent company, Shenzhen-based New Yijia Supermarket Co., Ltd., has not declared bankruptcy and is reportedly in talks for acquisition, so its future remains uncertain; but even if it were to declare bankruptcy now, compared to the average lifespan of 7-8 years for Chinese group companies, New Yijia would not be considered a 'short-lived' enterprise.

**On June 16, the Changsha Intermediate People's Court issued an announcement regarding the bankruptcy liquidation case of Hunan New Yijia Commercial Investment Co., Ltd., selecting an administrator through competitive means.**
**At its peak, New Yijia Supermarket operated 112 hypermarkets with annual sales of 17.4 billion yuan, and was one of the top 20 commercial enterprises cultivated by the Ministry of Commerce.**
**Of course, the Hunan company is only a subsidiary of New Yijia; its parent company, Shenzhen-based New Yijia Supermarket Co., Ltd., has not declared bankruptcy and is reportedly in talks for acquisition, so its future remains uncertain; but even if it were to declare bankruptcy now, compared to the average lifespan of 7-8 years for Chinese group companies, New Yijia would not be considered a 'short-lived' enterprise.**
**From its heyday to its黯然 exit, New Yijia's fate is still lamentable.**
Some commentators have said that Hunan New Yijia's bankruptcy is the 'first domino' to fall for supermarket hypermarkets. Lao Xiao does not agree with this view. Although there will certainly be more hypermarket closures, to paraphrase Ma Yun: 'It's not that hypermarkets are failing, but that your hypermarket is failing.' As long as companies like Walmart, Carrefour, Metro, and Bubugao, which primarily operate hypermarkets, are still growing and developing, declaring that hypermarkets are 'heading to the end' is premature.
**The warning significance of New Yijia lies not in this.**
From the case of New Yijia's rise and fall, retail peers should draw a deeper lesson: enhancing the urgency of transformation, accelerating the implementation of refined management, ensuring a healthy capital chain, and ensuring safe and steady development are more practically significant.
**I. Transformation Cannot Be Delayed**
In fact, New Yijia did not 'die suddenly' but suffered from 'illnesses' and gradually declined.
In other words, New Yijia's decline was a continuous process of 'boiling a frog in warm water,' and it actually had opportunities for self-rescue and rebirth.
Unfortunately, New Yijia repeatedly missed opportunities for transformation.
The watershed for New Yijia's decline was in 2012, roughly coinciding with the 'winter' of China's retail industry. This was a warning signal from the market, but not specifically targeted at New Yijia alone.
As the market changed abruptly, many companies made adaptive adjustments to embrace the 'winter' with a proactive attitude.
For example, Walmart actively closed underperforming stores, laid off staff, and implemented labor reforms to control costs, while also renovating old stores, developing Sam's Club, actively exploring online business and omni-channel operations, and trying to curb decline to maintain stability and growth.
Similarly, Carrefour strengthened 'centralization,' enhanced centralized procurement, built distribution centers, launched e-commerce, piloted convenience store 'small business,' and initiated the largest transformation in its 20 years in China to address the crisis.
Another example is Hunan Bubugao, which pushed for store upgrades and iterations, developed hypermarket 2.0 and 3.0, vigorously developed catering and fresh food, built 'moats,' and used cross-border e-commerce as a breakthrough to develop online business, advancing the digitalization of members, products, and stores. Yonghui Superstores also underwent upgrades from red-label stores to green-label stores to 'premium supermarkets,' and incubated new formats like Super Species and Yonghui Preferred, advancing along a path of specialization and differentiation.
Facing drastic market changes, almost all companies made corresponding strategic adjustments based on their own situations, actively seeking change and breaking through the ice. Despite the severe situation, retail enterprises' efforts to open up, cooperate, embrace change, innovate boldly, and experiment have never ceased. In the bleak market, there is an undercurrent of vitality and positive energy.
In contrast, for New Yijia, apart from store closures and disputes with suppliers, there is almost no news about its transformation or innovation, nor any reports on its operational innovation, store innovation, format integration, or scenario creation. It seems to me that New Yijia was merely passively waiting for the market to recover, sinking step by step in silence.
New Yijia certainly made efforts to reverse the decline and emerge from the crisis, but perhaps it was too late or the measures were ineffective, ultimately leading to failure.
Unless there is a major decision-making error or a sudden safety accident, companies generally do not 'die suddenly'; there is always some time and space for adjustment. If a company seizes this window period and makes adaptive adjustments, it may emerge from the crisis; if it misses the opportunity, it may die in the crisis.
In recent years, the vast majority of retail enterprises faced difficulties such as reduced customer traffic, declining sales, and falling profits. Most survived through transformation, adjustment, and innovation. Although it may be too early to say they have emerged from the crisis, survival is victory and brings opportunities.
**As someone said, 'Running a business is like running a marathon.' Falling behind temporarily does not necessarily lead to failure, but one must remain highly vigilant and strive to catch up; otherwise, falling further behind may lead to losing the chance to catch up or even being eliminated. This catching up requires creating new highlights, new attractions, new selling points, and new growth points in each period and stage through transformation and innovation, maintaining a relay between old and new, and dynamic breakthroughs. Once there is a gap or a break in succession, it may be a precursor to crisis.**
**The best time for enterprise transformation is during the heyday, but the vast majority of enterprises fail to see the 'prosperity crisis,' even giants like Kodak and Nokia are no exception; the next best time is when the crisis has just arrived. The later it is, the smaller the window of opportunity, and the higher the cost and price of transformation.**
This is like the fall of the Qing Dynasty, which was not actually due to the Xinhai Revolution but to the 'heavenly kingdom' mentality and the choice of seclusion during the Qianlong era. Imagine if Emperor Qianlong had seen the trend of the Industrial Revolution, recognized the backwardness of the Qing Dynasty, and implemented new policies and reforms, there might not have been the humiliating modern history. Missing that period, the Jiaqing, Daoguang, Xianfeng, and Tongzhi eras still had opportunities, but they were more difficult and required reformers with great talent and iron-fisted measures to succeed. By the Guangxu era, with foreign powers encircling, deep-rooted problems, and numerous loopholes, even if the Hundred Days' Reform had not been suppressed, it would have been difficult to achieve a revival.
Therefore, I believe the first lesson from New Yijia is: transform early; the earlier you transform, the more proactive you are; the longer you delay, the more passive you become.
Among the currently surviving retail enterprises, a considerable number are not operating with high quality. Some have seen performance rebound and growth resume, but it is not yet stable or consolidated. They need further transformation and innovation, truly establish a consumer-centric orientation, focus on quality consumption, characteristic consumption, personalized consumption, service consumption, experiential consumption, and lifestyle consumption, and work on cross-border operations, direct sourcing and self-operation, format combination, scenario creation, and dual-line integration, moving towards 'new retail' with omni-channel operations, data-driven, technology-supported, ultra-fast delivery, and home services.
If you don't adjust today, don't transform tomorrow, can't get up today, can't rise tomorrow, over time, even if you want to adjust, transform, or change, you may not have the opportunity.
**II. Management Over Expansion**
Some commentators believe that New Yijia's failure was due to management, which is a sharp and penetrating observation.
In recent years, with the sudden change in the market environment, many supermarkets saw a sharp decline in performance, and more critically, a cliff-like drop in profits, with some directly falling into systemic losses.
The root cause is that these enterprises' management was too extensive, only suitable for the past extensive expansion. In the context of the retail 'flying pig,' opening stores could make money, and continuous growth masked management problems. Many enterprises either did not realize this or did not have the time and energy to improve management.
But when the crisis came, the model of expanding territory and opening stores frantically became unsustainable. Performance growth hit bottlenecks, competition intensified, and costs such as rent and labor continued to rise. Under multiple pressures, the original management model could no longer work.
As mentioned earlier, I believe New Yijia also introduced ideas and measures for transformation, innovation, self-rescue, and self-improvement. But why did the outside world basically not feel it, and in fact, no results were seen? The most likely reason is that management had problems. Even with good strategies and ideas, without strong management, they could not be implemented or executed properly, making them futile.
Retail is a highly competitive, labor-intensive industry with high costs and thin profits. There has long been a saying that 'management produces profits.' The importance of management cannot be overemphasized.
Although convenience stores are currently seen as a 'new trend,' not many are actually profitable. Why? Because convenience stores have small areas and few SKUs, operating them is like doing a Buddhist ritual in a snail shell, with management difficulty significantly higher than other retail formats. The reason Japanese convenience stores like 7-11 can make money is largely due to their mature and comprehensive management system, highly developed information technology, and even weather is included in management, with refined management to the smallest detail.
Yonghui Superstores started with fresh food, and fresh food management has become its core competitiveness. Many companies know that fresh food is good, but they struggle to succeed, with some loss rates exceeding 30%, not only failing to make money but losing money. The fundamental reason is inadequate management. Fresh food management is also a very demanding job; without strict process systems and effective incentive mechanisms, and without mobilizing employees to work hard from dawn to dusk, it cannot be done.
Another example is self-operation. Some companies are very successful in direct sourcing, self-operation, and private labels, with high sales proportions and gross margins. But some companies' self-operation gross margins are lower than joint operation, and the fundamental reason is still unprofessional and imprecise management.
Since entering the 'new normal' of retail, traditional giants like Walmart and RT-Mart have shown strong stability, with much less impact than many local enterprises, because their mature management systems have played a stabilizing role.
Therefore, many retail enterprises regard management upgrading as an important part of their transformation, and use management improvement and cost control as important means to deal with the crisis. Many have achieved good results in stopping decline and rebounding.
Of course, cost control is only one aspect. Retail management involves all aspects of the circulation process, essentially revolving around the supply chain, aiming to build a low-cost, high-efficiency, fast-response, and efficient supply chain. Its importance far exceeds store expansion, because expansion must be based on management; otherwise, the more stores opened and the larger the operating area, the more severe the losses may be. Like New Yijia in its later period, having many stores was not an advantage but a burden.
**Therefore, I believe that continuously improving management levels, achieving refined management, and craft-oriented operation is an important lesson from New Yijia for retail peers. Not only must past debts be 'made up,' but new areas such as data and technology must also be addressed and laid out quickly. In future retail management, data and technology are clearly important supports; without informatization and digitalization, true refined management is impossible.**
**III. The Capital Chain Is Extremely Fatal**
The direct cause of New Yijia's bankruptcy was the break in the capital chain. In fact, this is also the 'final kick' before the fall of the vast majority of enterprises.
Capital is the blood of an enterprise, and cash flow is the lifeline of a company. Ensuring capital security and smooth cash flow circulation is always the prerequisite for the steady development of retail enterprises, and also the prerequisite for implementing transformation, upgrading, innovation, and change. Without sufficient funds and stable, reliable cash flow, everything is nonsense!
In this regard, New Yijia has given us a vivid lesson. Due to capital problems, suppliers protested, the employee team was unstable, and the enterprise was precarious. From the exposure of the crisis to the declaration of bankruptcy, it took only about a year. The lesson is profound.
The traffic thinking and explosive product thinking of e-commerce are very bad examples. To increase traffic and scale, they are willing to burn money to attract traffic and lose money to gain fans, only talking about GMV, not net profit, only seeking 'imagination space,' not current returns. This is very harmful to physical retail. The public generally looks down on physical retail, especially 'hard-hit areas' like department stores and supermarkets. Even listed companies generally have low market values. It is almost impossible to rely on 'PPT entrepreneurship' like e-commerce, with rounds of financing. Even bank loans, affected by two US interest rate hikes, will only become more expensive, and even if obtained, the conditions will be harsher than before.
Therefore, the stage of 'cash is king' for physical retail is far from over. We must protect capital security and smooth cash flow like we protect our eyes and hearts. At the very least, we must ensure the normal operation of the enterprise, ensure timely payment of supplier payments and employee wages, and be able to repay short-term bank loans and debts. Only under this premise can we engage in diversified expansion and explore new models and businesses. Otherwise, any problem in any link may lead to a chain reaction, plunging the enterprise into irredeemable disaster.
**Retail is a very demanding industry, requiring careful cultivation, step-by-step progress, and steady advancement. There has never been any retail format that can guarantee profits without risk or overnight wealth. Unfamiliar areas are not necessarily safe or easy. Diversification and cross-border operations should only be in areas highly related to the main business. For completely unfamiliar industries, one must be extremely cautious.**
**In difficult times, survival is the most important thing. Only by surviving can there be a future. To survive, one must protect capital and maintain one's own 'hematopoietic' ability—this is another important lesson from New Yijia's bankruptcy.**
-END-


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671