---
title: "Xingsheng Youxuan: Breaking Out of the Amazon"
description: "On December 22, the State Administration for Market Regulation and the Ministry of Commerce jointly issued the 'Nine No's' for community group buying, targeting monopolistic and unfair competition practices by internet giants. History shows that only regulation can ensure healthy development, and at the policy level, the state has 'clarified the direction, dispelled the fog, and cleared the obstacles' for this new retail format."
author: "陈海超  何年"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2020-12-26"
language: "en"
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---

# Xingsheng Youxuan: Breaking Out of the Amazon

> On December 22, the State Administration for Market Regulation and the Ministry of Commerce jointly issued the 'Nine No's' for community group buying, targeting monopolistic and unfair competition practices by internet giants. History shows that only regulation can ensure healthy development, and at the policy level, the state has 'clarified the direction, dispelled the fog, and cleared the obstacles' for this new retail format.

**On December 22, the State Administration for Market Regulation and the Ministry of Commerce jointly issued the 'Nine No's' for community group buying, targeting monopolistic and unfair competition practices by internet giants. History shows that only regulation can ensure healthy development, and at the policy level, the state has 'clarified the direction, dispelled the fog, and cleared the obstacles' for this new retail format.**

**-01-**
**Six Major Factions Besiege Bright Summit; JD.com Rushes in with Guns and Artillery**

In Changsha, the white-and-red signs of Furong Xingsheng convenience stores are scattered across every corner of this entertainment city. As the founder of Xingsheng, Yue Lihua and his team, who pride themselves on being born for retail, have taken on Bubugao and fought against Kuailehui.

Three years ago, they probably never dreamed that these retailers, who started in the Gaoqiao wholesale market, would one day have the chance to confront internet giants like Meituan, Pinduoduo, and Didi head-on.

2020 was undoubtedly the highlight moment for Xingsheng Youxuan. As the saying goes, those standing at the forefront are the flying pigs; those stepping into trends are heroes. Xingsheng Youxuan could no longer keep a low profile and was suddenly thrust into the spotlight.

In Changsha, the cosmic center of community group buying, six major factions besieged Bright Summit, while in the other 14 provincial markets (Guangxi, Guangdong, Fujian, Jiangsu, Shandong, Hebei, Henan, Hubei, Anhui, Jiangxi, Guizhou, Sichuan, Chongqing, Shaanxi), it was no less intense, with various heroes engaging in close combat and fierce battles.

Besides old rivals like Alibaba's Shihui Tuan and Tencent's Tongcheng Life, there was also the resilient pioneer Zhihua Zhiguo, and internet giants Meituan, Duoduo, and Didi, dozens of times larger, all targeting Xingsheng Youxuan. On the bright side, being targeted by them is also an acknowledgment of its position in the industry.

**Whether Xingsheng can withstand the ravages and bombardment of internet giants is a matter of debate, but the core question is: Does Xingsheng have enough ammunition?**

Just when they were feeling sleepy, someone brought a pillow. The arms dealer who provided timely assistance to Xingsheng Youxuan was not Principal Ma (Xingsheng founder Yue Lihua is a 6th-term student of Hupan University), but Ma's long-time rival, Liu Qiangdong.

**Recently, JD.com announced a strategic investment of $700 million in Hunan Xingsheng Youxuan E-commerce Co., Ltd.** JD.com stated that through this investment, the two parties will cooperate closely in data, technology, warehousing, and short-chain logistics, better rooting in lower-tier markets, serving rural areas, and revitalizing local economies.

Xiao Yue (Yue Lihua, born in '73) embracing Liu Qiangdong (born in '74) is unexpected but reasonable, because behind them stands a common woman—investment queen Xu Xin of Today Capital—and a common man—Tencent's Ma Huateng.

It is said in the industry that for community group buying, look to Changsha; for Changsha group buying, look to Xingsheng. Changsha is now at the forefront of community group buying, and Xingsheng Youxuan is the Bright Summit at the center of the storm.

By December 2020, Xingsheng Youxuan's monthly GMV peaked at 4 billion yuan, still far ahead. At this point, investors in Xingsheng Youxuan include Xu Xin, Xu Xiaoping, Zhu Xiaohu, Ma Huateng, KKR, and Liu Qiangdong, a star-studded lineup.

**-02-**
**Xingsheng's Five Major Advantages**

**1. Business Model: Doing Retail the Internet Way**

**If Meituan, Didi, and Duoduo are doing internet the retail way, Xingsheng Youxuan is doing retail the internet way.**

The logic is fundamentally different: the first priority of retail is fulfillment, while the core of the internet is traffic; retail values quality, while the internet values quantity. Therefore, in three years, Xingsheng Youxuan's territory is not as large as the area that Meituan, Didi, and Duoduo have covered in three months.

**However, after the new three groups entered, an interesting phenomenon emerged in the community group buying track: GMV calculations shifted from past sales figures to daily order volume and monthly order volume breakthroughs.** This phenomenon actually relies more on bestsellers at low prices to create a 'brushing' effect, a common tactic used by internet giants to quickly show results by burning capital.

But Xingsheng is more steady and methodical. In 2020, Xingsheng Youxuan's target GMV was 40 billion yuan, and according to internal sources, achieving this goal is not a problem. The confidence comes from Xingsheng's consistent practice of controlling volume and pace, avoiding blind order brushing for short-term performance.

Xingsheng is accumulating its momentum, for example, using technology or methods at special time points, or launching more bestsellers, or distributing KPIs to suppliers, or placing the entire task on partners, ready to scale up and increase speed at any time. **In contrast, the new three groups are launching bestsellers daily, and their audiences have become numb.**

Insightful observers point out that the greater significance of community group buying may be to promote the formation of a 'new infrastructure' for the supply chain, which should have at least the following characteristics:

> A. Form a closed-loop network in the region (city or county);
>
> B. Form a distributed logical structure across the entire domain;
>
> C. Achieve universal sharing and collaboration;
>
> D. Achieve certainty, thereby making standardization simple and easy, which is of great significance in the IoT and digital intelligence era;
>
> E. Achieve a flexible supply chain.

**2. Team DNA: Retail is a Heavy Operations Industry**

It is not hard to see that Xingsheng Youxuan's senior management team is mainly composed of the original Furong Xingsheng team, a founding team from Yiyang. After verifying the authenticity of the above information, the authoritative answer is that the names are correct, but the numbers are nonsense.

**The business Hunan army has distinct regional characteristics. It is also because of the influence of community group buying represented by Xingsheng Youxuan that Changsha has voiced its ambition to become China's fourth e-commerce city after Hangzhou, Shenzhen, and Beijing.** The classic Hunan personality traits include 'enduring hardship, being tough, patient, and fearless,' 'building strong camps and fighting to the death,' 'daring to be first,' and 'independent, stubborn, resilient, and hardworking.' Unlike all other teams, Xingsheng Youxuan, from office to warehouse, is full of Hunan characteristics, which is rare among other allies.

**3. Fission: Low-Cost, High-Efficiency Method for Developing Team Leaders**

**One often hears people in the industry say that Xingsheng's team development is an 'insurance selling' tactic. To avoid ambiguity and misunderstanding, this business has been packaged by Xingsheng Youxuan into a third-party service company called 'Shoude.'**

This is because Xingsheng Youxuan uses an insurance industry approach to develop teams. In simple terms, for store expansion, they recruit a large number of people who work hard without a base salary. While others hire 10 BDs (team leader development business) with a monthly base salary of 10,000 yuan, costing 100,000 yuan, Xingsheng Youxuan settles directly with commission.

According to the latest internal data from Xingsheng Youxuan, it has entered 15 provincial markets, with 400,000 stores expanded, and 15,000 stores going online every week.

**4. Same-City Warehousing and Distribution: Nearly 20 Years of B2B Experience**

**The self-built logistics system is one of Xingsheng Youxuan's core competitiveness.** It is precisely because logistics is self-owned that Xingsheng Youxuan has more control over product quality, delivery timeliness, and accuracy, giving it an edge in user experience. Through shared warehouses, central warehouses, and grid stations, products can be matched from factories to pickup stores within 12 hours.

Xingsheng Youxuan's huge market is in second-, third-, fourth-, fifth-, and sixth-tier cities. Without a strong logistics system to connect counties and townships, how could it keep up with the massive order volume? Recognizing the importance of logistics from the start, it took over a decade to gradually build a logistics system, laying the foundation for Xingsheng Youxuan's growth.

As a pioneer in same-city community group buying e-commerce retail, Xingsheng Youxuan has paid a significant tuition fee on its exploration path but has also reaped the corresponding first-mover advantages.

**In the short term, competition is about team leaders; in the medium term, it's about the supply chain; in the long term, it's about warehousing and distribution.** Under the collective siege of the new three internet giants, Xingsheng Youxuan has maintained its own pace, even with a sense of 'let them be strong, the breeze blows over the hills.'

This pattern stems from the past 20 years of building its own same-city delivery methods during the B2B Furong Xingsheng era, and it has cultivated a well-trained logistics team, even forming a complete logistics talent training system.

From self-built central warehouses to socialized distribution stations, evolving to self-built central warehouses and self-built grid warehouses, this is Xingsheng Youxuan's deep insight and self-iteration in same-city delivery. The new three internet giants are still in the dark about overall logistics and distribution, not even finding the door.

**5. Corporate Philosophy: Soft Power is Hard Core**

From Furong Xingsheng's corporate culture of 'sincerity, humility, clarity, and strength' to Xingsheng Youxuan's advocacy of 'Believe & Help,' Xingsheng's soul figure Yue Lihua has consistently built cultural soft power in his second venture. In the eyes of so-called internet elites, this may seem like chicken soup, but most Xingsheng people take it seriously and regard it as nirvana.

'Revitalize stores, empower upstream, change user lifestyles. Xingsheng Youxuan aims to be a warm e-commerce platform.' These are Xingsheng Youxuan's values and mission. In fact, these two sentences also describe the entire industry track.

**Revitalize stores.**

For the 6.8 million retail small stores scattered across urban and rural areas, since the birth of Taobao in 2003, search-based e-commerce like Tmall, JD.com, and Vipshop have slashed the left arm of physical stores. Social platforms like WeChat business, Yunji, Zebra, and Beidian have slashed the right arm, and the double blades have nearly cut off traffic to offline stores, with 'for lease' signs everywhere.

Based on maximizing the value of store members (users), community group buying platforms give each small store an online store without any additional cost, like Iron Man, bringing a breath of fresh air to physical stores that have been depressed for years.

**Empower upstream.**

In 1997, Walmart opened its first store in Shenzhen, China, and KA hypermarkets officially came to the Chinese people. The situation of 'everyone is good, then it's really good' did not last long. The dragon-slaying youth soon turned into a dragon, so brand manufacturers joke, 'Doing KA is seeking death, not doing KA is waiting for death; either way, you have to die.'

Of course, years later, this game repeated itself, but the protagonists changed from Walmart, RT-Mart, and Carrefour to Tmall, JD.com, and Vipshop, with the same familiar taste and formula.

Community group buying is currently friendly to brands, charging no brand fees, barcode fees, anniversary fees, or other exorbitant taxes, and the settlement cycle from three days to half a month makes suppliers generally happy. Everyone understands that the settlement cycle is proportional to the markup rate, and ultimately, consumers benefit.

Of course, some say that in the future, community group buying will also turn from a youth into a dragon, but the time has not come. Industrial goods going to the countryside and agricultural products entering the city, making a big matchmaking business, is exactly the power of Xingsheng Youxuan as a platform.

**Change user lifestyles.**

The post-90s generation has now reached the age of 30. They are natives of the internet, a generation that grew up 'fighting little monsters.' Consumption and entertainment are no longer the same word. They are willing to waste time on beautiful things, and saving time on purchasing goods has become a major source of comprehensive time utilization.

Thus, family consumption centered on fresh produce has become the main consumption scenario for community group buying. They use fragmented time to place orders through mini-programs, choosing the products they need. The platform's daily product structure is different, keeping it fresh.

Accumulating big data and cultivating user habits is what any industry leader should do. It is clear that Xingsheng Youxuan is leading by example. In the melee between the new three groups and the old three groups, it is actually accelerating and strengthening market cultivation, and the timely correction of national policies is making the entire track healthier.

**Team leaders as touchpoints, glowing bodies of warmth.**

Team leaders connect the platform and users. **The relationship between team leaders and users is semi-acquaintance. This relational traffic, combined with the platform's tool traffic and product content traffic, converges into a force that strongly builds the community group buying traffic pool.** Only with stickiness is there warmth. In the social relationship between team leaders and users, cognition is formed, and product transactions are a natural result. This aligns with Dr. Shi Wei's advocated logic of 'relationship, cognition, transaction' as a trinity.

**-03-**
**Xingsheng Youxuan's Five Major Disadvantages**

**Understanding Xingsheng Youxuan means understanding the community group buying track.** In 1990, when 17-year-old Yue Lihua opened his first wholesale department, he probably never imagined that this small business would grow into Hunan's largest convenience store chain brand, Furong Xingsheng, and even less that Furong Xingsheng would incubate Xingsheng Youxuan, a leader in the community group buying industry.

**1. Being the Leader: High Places Are Cold**

Although Yue Lihua is now placed on par with Wang Xing, Huang Zheng, Cheng Wei, and even Liu Qiangdong, **Xingsheng Youxuan is after all a grassroots venture and has never solved institutional problems, especially the lack of a middle platform.** The most direct manifestation is in vigilance: they always felt they were already the industry leader, and only when the giants entered did they become alert, taking action too late.

Additionally, the industry believes that except for the relatively stable Hunan market, the other 14 provinces and cities could collapse at any time. If they had not been in a hurry to spread out, but instead built Jiangxi or Hubei into a second or third base, and then expanded nationally, after the system was built, Xingsheng Youxuan's position today would be different.

Regarding the real-life version of the 'Three Heroes vs. Lü Bu' in community group buying, let's look ahead with the historical Battle of Kiev.

The Battle of Kiev was the largest encirclement battle in World War II. Five Soviet armies were annihilated, with 650,000 prisoners taken. The Germans captured 3,500 artillery pieces and 900 tanks. Hitler proudly called it 'the greatest battle in the history of world wars.'

However, this battle cost the Germans their best chance to capture Moscow: the Battle of Kiev lost them two precious months. By the time they launched the Moscow offensive, it was already October. First, autumn rains made the Germans immobile, then severe cold nearly crippled their combat effectiveness. On the Soviet side, these two months provided a valuable opportunity to mobilize Siberian reserves.

The German Moscow offensive thus failed, and the plan to conquer Russia in three to five months collapsed, ending the era of 'blitzkrieg.' Germany was forced into a two-front war, an unchangeable fact. General Halder, former Chief of the German Army General Staff, considered the Battle of Kiev 'the greatest strategic error in the Eastern campaign.' General Rudolf Hofmann later also concluded that the Kiev battle 'deviated from the main direction.'

The lesson for business managers from war history is: being too involved in local battles can lead to losing the overall picture. Handling things with a confrontational mindset, even if you win, often results in a mess.

**'Short-term scorched-earth melee, medium-term regional dominance, long-term circle era'—this is industry observer Li Baolin's insightful and precise analysis of the competitive landscape in the community group buying track.**

**2. Ammunition: Always the First Priority in War**

Before JD.com's investment, Xingsheng Youxuan's five public funding rounds, even if not spent at all, totaled at most $1.04 billion. But Alibaba's latest financial report shows that Alibaba has nearly $6 billion in free cash flow alone.

So, **if the new small giants are each carrying new rifles, Xingsheng is a heavy machine gun, but the embarrassing thing is that this machine gun has extremely limited ammunition.**

**3. The Ultimate Question: Whose Team Leaders, Whose Team?**

**There is a struggle for private domain traffic between the platform and team leaders. Capable and business-savvy team leaders are self-centered in introducing products, treating the platform as just one upstream supply chain.** Team leaders are not formal employees, and there are obstacles in controlling many aspects. The most important thing is how to find a balance of interests between team leaders and the platform.

The future of internet companies must be to weaken team leaders, directing traffic to the parent company's platform to prevent traffic loss. So, will Xingsheng's future be to strengthen team leaders, weaken them, or professionalize them?

**4. The Awakening of Direct-Operated Chain Supermarkets**

New forces have been sniped at, and institutional direct-operated chain supermarkets have awakened from their slumber. They come with professional team leaders, compatible supply chains, and years of accumulated brand reputation as trust signals, along with mature warehousing and distribution.

These chain supermarkets are counter-harvesting community group buying, directly activating traditional offline store public domain traffic, and even starting community group buying without spending an extra penny. Every region has local chain stores, and this warlord-like force is also the strongest opponent to Xingsheng Youxuan's national layout.

**5. Wherever They Go, Every Battle is Tough**

Starting with fresh produce and following up with long-tail products, expanding from local consumption to local life;

From FMCG to durable goods, directing competition toward search e-commerce;

Starting to sell bulk wholesale products, directing fire toward Alibaba's Retail Link and JD.com's New Path FMCG B2B;

Extending from household consumption to restaurant procurement, directing fire toward the restaurant B2B territories of Meicai and Liancai;

Starting to include movie tickets and scenic spot tickets in the product structure, directing fire toward local life platforms like Meituan-Dianping and 58.com.

**This newborn tiger, Xingsheng Youxuan, is starting to fight a pack of wolves—huge pressure!**

**-04-**
**I Think, Therefore I Am**

On November 30, the CEO of Xingsheng Youxuan posted on WeChat Moments, vividly comparing the community group buying e-commerce retail arena to a swamp. This is also the latest insight and judgment on industry competition from Xingsheng Youxuan's first spokesperson.

Of course, not only Xingsheng Youxuan, but breaking out of the Amazon is the only choice for all friendly forces.

Some will break out, some will sink in. Who will it be?

> **Chen Haichao | Chief Consultant, Mai Marketing New Retail Consulting Agency**
>
> **He Nian | Researcher, New Retail & Community Group Buying**

**Add the author's WeChat, note: Name~Company~Position**

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