---
title: "Xingsheng Youxuan Withdraws from More Cities, Community Group Buying Star Suffers Setback"
description: "Recently, Xingsheng Youxuan, a leading community group buying platform, suddenly announced the closure of its markets in Henan, Shandong, Sichuan, and Chongqing, with all stations and stores in these regions receiving urgent notices to close and clear inventory. This move has sparked industry discussion. As one of the earliest entrants in the community group buying sector, Xingsheng Youxuan was once seen as synonymous with the industry, praised for its stable business model and robust warehousing and logistics. The withdrawal raises questions about its strategic shifts and the future of the industry amid a capital winter."
author: "刘少德"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-11-18"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/Ri-G7lry57ewi0jzntTFbg"
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# Xingsheng Youxuan Withdraws from More Cities, Community Group Buying Star Suffers Setback

> Recently, Xingsheng Youxuan, a leading community group buying platform, suddenly announced the closure of its markets in Henan, Shandong, Sichuan, and Chongqing, with all stations and stores in these regions receiving urgent notices to close and clear inventory. This move has sparked industry discussion. As one of the earliest entrants in the community group buying sector, Xingsheng Youxuan was once seen as synonymous with the industry, praised for its stable business model and robust warehousing and logistics. The withdrawal raises questions about its strategic shifts and the future of the industry amid a capital winter.

Recently, Xingsheng Youxuan, a leading community group buying platform, suddenly announced the closure of its markets in Henan, Shandong, Sichuan, and Chongqing. All Xingsheng stations and operating stores in these regions received urgent notices: "All stations in the four provinces will be officially closed from today, and inventory clearance is to be prepared." The news has sparked heated industry discussion. As one of the earliest community group buying platforms, Xingsheng Youxuan was once considered the epitome of the entire industry. With its steady business model and solid warehousing and logistics system, the Xingsheng model has been highly regarded, even attracting internet giants like Alibaba, Meituan, and Pinduoduo to emulate it. What strategic changes does this withdrawal signify? Considering Meituan Youxuan's earlier exits from Gansu, Qinghai, Ningxia, Xinjiang, and Beijing, what changes will the community group buying industry face? Under the capital winter, how will the industry evolve?

**01**
**The Rise: Building High and Feasting Guests**
When discussing community group buying, Xingsheng Youxuan is an unavoidable platform. However, from its inception, Xingsheng Youxuan did not define itself as community group buying but as community e-commerce. Literally, community is the foundation, while e-commerce is just a means of connection.
Rooted in the community convenience store brand Furong Xingsheng, which has tens of thousands of stores, Xingsheng Youxuan's foundation is solid.
With store reach extending to townships, absolute bargaining power over upstream suppliers in Hunan, and a deeply ingrained brand image, Xingsheng Youxuan was ahead of other community group buying platforms from the very beginning.
Similarly, from its birth, Xingsheng Youxuan carried a different mission than other community e-commerce platforms: revitalize stores, empower upstream, and change consumer lifestyles.
As a 2C e-commerce platform, Xingsheng Youxuan placed two of its three missions on upstream suppliers and stores, which may reveal its difference from other platforms. With favorable timing (a capital window with few rivals), location (based in Hunan), and people (a founding team with strong retail genes), rapid growth was inevitable. After receiving investments from GSR Ventures, ZhenFund, Capital Today, KKR, Tencent, Sequoia, JD.com, and others, Xingsheng Youxuan solidified its moat in Hunan and attracted countless entrepreneurs to the community group buying track, with total investment reaching tens of billions of yuan. According to incomplete statistics from New Distribution, at its peak, there were no fewer than 300 community group buying platforms nationwide, showing intense competition. Despite many competitors, no real threat had emerged for Xingsheng at that time, at least until the second half of 2020.

**02**
**The Fall: High Rise, Hard Fall**
The turning point came in the second half of 2020. In July 2020, Meituan announced the establishment of its Youxuan business unit, officially entering the community group buying track. In August of the same year, Pinduoduo's Duoduo Maicai quietly launched and quickly covered more than 30 cities across 13 provinces, including Hubei, Jiangxi, Shaanxi, and Chongqing. At the end of the year, Didi's CEO stated there would be no cap on investment in Chengxin Youxuan... The sudden entry of giants and rapid market expansion created a sense of industry panic. This panic forced Xingsheng Youxuan to follow the giants' footsteps, expanding away from its home base. Unbeknownst to them, the illusion created by capital, or perhaps a lack of clear self-positioning, was slowly dragging Xingsheng into a new quagmire.
Under fierce competition, 1-cent salt, 1-cent oranges, and 1-cent eggs became common on major platforms. When giants believed that unlimited investment would yield unlimited returns, a "one-paper ban" from the state suddenly paused this disorderly competition. At the end of 2020, the State Administration for Market Regulation pointed out "nine must-nots," including no below-cost dumping and no unfair competition. In March 2021, the administration fined four platforms—Chengxin Youxuan, Duoduo Maicai, Meituan Youxuan, and Shihuituan—1.5 million yuan each.
If policy slowed the industry's growth, capital factors directly brought it into winter. Capital can help an industry or company develop, but it can also destroy them. On July 6, 2021, Tongcheng Life announced a rename to Micheng Life, but the resulting creditor run led to its bankruptcy that very night. In August of the same year, Shihuituan drastically contracted, reducing its operations from over 20 provinces to just five cities, and finally closed all business in March this year. Also in March, Chengxin Youxuan was reported to have shut down all operations... The same happened to Meituan. According to Meituan's 2021 financial report, Meituan's net loss in 2021 was 23.538 billion yuan, with Meituan Youxuan alone losing over 20 billion. In 2022, Meituan Youxuan lost 9 billion in the first quarter alone. Under huge losses, Meituan began layoffs in February, and two months later, Meituan Youxuan started withdrawing from Gansu, Qinghai, Ningxia, Xinjiang, and Beijing.
When the nest is overturned, no egg remains intact. The entire industry is contracting strategically, and Xingsheng Youxuan cannot be an exception. In fact, this is not the first contraction for Xingsheng. As early as August this year, Xingsheng Youxuan had already withdrawn from Shanxi, Jiangsu, Zhejiang, Hebei, and Anhui. After this latest contraction, Xingsheng Youxuan retains only a few provinces nationwide, including Hunan, Hubei, and Guangdong. Compared to the peak of 18 provinces, Xingsheng's market has shrunk by more than three-quarters.

**03**
**Reflections After Blind Expansion**
Returning to the withdrawal itself, why would Xingsheng Youxuan, often called the "top student" of the industry, strategically contract? What industry changes do the repeated contractions of leading platforms signify?

**1. Objective reasons: Economic downturn and capital cooling**
Objectively, the economic downturn and the cooling of community group buying in the capital market are important reasons for the successive contractions of platforms like Meituan Youxuan and Xingsheng Youxuan. If financial capital represented by giants had not entered the track, Xingsheng Youxuan might still be entrenched in Hunan, building high walls, storing grain, and biding its time, continuously strengthening its warehousing, supply chain, and service moats, and could still have become a regional power. Driven by capital, Xingsheng Youxuan had to expand regionally for objective or subjective reasons. With a larger market, competitiveness in regional markets inevitably weakened, and with competition from other platforms, losses became inevitable without continuous capital replenishment.

**2. Subjective reasons: Insufficient business moats and process improvements**
Undeniably, Xingsheng Youxuan built a solid competitive moat in Hunan through its five-level warehousing system, supply chain advantages, and offline store network, which is why it maintained a strong competitive edge in Hunan despite fierce competition from giants. However, in other markets, Xingsheng did not replicate these advantages. Take the supply chain: there's an old saying in the FMCG industry: "Tonnage determines status." This applies to community group buying as well. The larger the market scale and sales volume, the greater the bargaining power over upstream manufacturers. According to industry insiders, internet-based platforms like Meituan Youxuan, Duoduo Maicai, and Taocaicai have a centralized procurement ratio as high as 20%, which naturally attracts many FMCG companies to develop exclusive products and channel marketing strategies for them. In contrast, Xingsheng Youxuan's supply chain relies mainly on local suppliers, and although it cooperates directly with some brand owners, its bargaining power is weaker compared to Meituan Youxuan, Duoduo Maicai, and Taocaicai. Additionally, internal management and process standardization have further limited Xingsheng's development.

**3. Root cause: Unclear self-positioning and insufficient strategic resolve**
Undoubtedly, compared to internet giants like Alibaba, Meituan, and Pinduoduo, Xingsheng Youxuan has insufficient reserves in capital, talent, and political-business relations. If the former are like elephants, the latter is as weak as an ant. Although the real world is survival of the fittest, both ants and elephants have space and opportunities to survive; the fear is when ants try to compete with elephants for food. "When giants came in with capital, Xingsheng Youxuan was forced onto the same development path as the giants—frenzied expansion and market grabbing. The direct consequence was that Xingsheng's first-mover advantage was weakened by the giants. Hand-to-hand combat with internet companies that have nearly unlimited supplies is unimaginably difficult. If Xingsheng Youxuan had positioned itself as a regional platform from the start—'Let him be strong, let the breeze brush the mountain ridge'—and taken a completely different development path from the giants, the competitive landscape would have been different," Derui, co-founder of Maichun E-commerce, told the author.
Returning to the market contraction itself, **when winter comes, lock the door, accumulate strength, and build a definite core competitiveness amidst uncertainty—this can also be a good market strategy.** After all, as long as you stay at the table, the game is far from over.


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