---
title: "Why Yonghui Superstores Can't Become China's Walmart"
description: "Many hope China can have its own Walmart, especially shareholders of Yonghui Superstores. However, due to factors like population density, complex retail environment, high land costs, and brand building time, it's difficult for China to produce a super retail brand, and Yonghui is unlikely to become a small Walmart. Perhaps China doesn't need a Walmart, as diverse competition may be acceptable."
author: "崔大白"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2020-12-29"
language: "en"
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# Why Yonghui Superstores Can't Become China's Walmart

> Many hope China can have its own Walmart, especially shareholders of Yonghui Superstores. However, due to factors like population density, complex retail environment, high land costs, and brand building time, it's difficult for China to produce a super retail brand, and Yonghui is unlikely to become a small Walmart. Perhaps China doesn't need a Walmart, as diverse competition may be acceptable.

**Click to read the original article for details**
Many people hope China can have its own Walmart, and shareholders of Yonghui Superstores especially hope their invested company can become the next Walmart.
Who is Walmart? It is a retail enterprise that has ranked first on the Fortune Global 500 for seven consecutive years. Founded by Sam Walton in 1962, it now has 8,500 stores covering 15 countries and is the world's largest private employer.
China's huge population base has nurtured a vast retail market, providing fertile soil for the rapid development of supermarkets. This raises the question: Why can't China produce a "Walmart"? Will a "Walmart" emerge in the future? Can Yonghui become a small Walmart?
**-01- Will China Have a "Walmart"?**
In 1996, Walmart entered China and opened its first store in Shenzhen, then began its expansion across the country. However, Walmart has failed to replicate its overseas success in China, closing 80 stores in four years and experiencing frequent executive departures...
If the real Walmart can't survive in China, is it possible for a domestic retail super brand to emerge? It's difficult, mainly for these reasons:
**1. Population density determines business format characteristics**
The concept of retail is broad, and there are many supermarket formats, such as small shops, convenience stores, and large supermarkets. Looking at retail development across countries, the scale of retail formats seems inversely proportional to population density.
For example, the sparsely populated United States developed large supermarkets like Walmart, while densely populated Japan developed small chain convenience stores like 7-Eleven.
China's population density falls between these two countries, so you can see large supermarkets like Yonghui and RT-Mart, as well as convenience stores like Hongqi and Bingobox, all developing well. But it's hard for any single format to dominate absolutely.
In the future, as the population continues to grow and the pace of life accelerates, the density of first- and second-tier cities will increase, making chain stores more popular than large supermarkets.
**2. The domestic retail environment is complex and ever-changing**
Retail today is not what it was ten or twenty years ago. From the rise of online e-commerce to new retail and community group buying models, the diversification of retail has greatly impacted traditional offline hypermarkets. If offline supermarkets miss a step, they may lose everything.
China's e-commerce is developing rapidly, and models like community group buying are very "Chinese characteristics." As a foreign enterprise, Walmart reacts slower to domestic changes than local companies.
Local offline hypermarkets also find it hard to grow quickly in this volatile environment. Like Yonghui's late online entry and failed mini stores, when you're still immersed in your traditional model, others have already upgraded; when you think you've taken a forward step, the direction may already be wrong...
**3. High domestic land prices make expansion difficult**
Walmart rose to prominence through rapid expansion. Indeed, expansion is crucial for offline supermarkets; only by continuously opening stores can they cover a broader consumer base.
But Walmart's strategy was "rural encirclement of cities," opening many hypermarkets in suburbs, leveraging low rents to further reduce product prices. This model works in the U.S. but is unrealistic in China—who would drive far to the suburbs to save a few yuan?
Domestic offline supermarkets need to choose core areas with high foot traffic for expansion, which inevitably raises rental costs and hinders expansion.
**4. Super brands also need time to build**
When consumers buy offline, they consider not only price but also the supermarket's brand, as big brands often guarantee better product quality.
Brands take time to build. Walmart was founded in the 1960s, over half a century ago, while China's leading supermarkets have developed for less than 20 years.
Perhaps the time for brand value accumulation is insufficient; we can only hope so.
**-02- Yonghui Hardly Becomes Walmart**
Yonghui is arguably the worst performer among the "Value 50." It is expected to be "China's Walmart" because it is the largest domestic supermarket brand. However, even if people want a white swan, they can't pin all hopes on the only white duck in the pond.
China's supermarket market is fragmented; the top three players hold only 8% market share, far below the U.S.'s 44%. This environment determines that even the "leader" doesn't have a strong position. So from the start, it's hard for Yonghui to stand out...
Moreover, with the development of online e-commerce and new retail models, offline supermarkets are no longer in a golden period of rapid growth. According to iFinD data from Hithink RoyalFlush, even Walmart's revenue growth has significantly slowed over the past decade.
Unlike Walmart, a large portion of Yonghui's product mix is fresh produce. Fresh produce is both an advantage against e-commerce and a disadvantage hindering expansion.
Expanding to new regions requires first establishing fresh supply chains, and expanding inland faces increased transportation costs.
Furthermore, Yonghui is currently mired in expansion failures, with its stock price performing poorly for most of the year.
**-03- Perhaps We Don't Need a Walmart**
In summary, given the current domestic retail environment, it's difficult for a super retail brand to emerge, and Yonghui is unlikely to become the Walmart we envision.
Perhaps we don't need the next Walmart. After all, different business soils nurture different models and formats, and diversified competition isn't necessarily bad.
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