Tencent Holdings has agreed to purchase a stake in one of China’s largest supermarket chains, Yonghui Superstores, in the latest move to step up the war with Alibaba Group Holding in the “new retail” battleground of online-offline shopping…Full Article: South China Morning Post Dec 2017

Key Points

  • As of December 2017, YH Super Species (est. in January 2017) had 17 stores located across six Chinese cities.
  • On 11 December 2017, Yonghui Superstores (SHA:601933) announced that Tencent Holdings (HKG:0700) would purchase a 5% stake in Yonghui for CNY 4.2 billion (~USD 636 million). At the same time, Tencent would increase its stake in Yonghui Yunchuang Technology (subsidiary of Yonghui) to 15%.

ChinaAg Comments

  • In July 2017, Yonghui Superstores stated it hoped to open up 50 YH Super Species stores (small 500 sq. meter supermarkets) in Fuzhou in Fujian province in 2017. Super Species stores will cater to middle class consumers and will offer samples of salmon, prime beef, and wine to shoppers. As of July 2017, Yonghui Superstores had just under 500 retail stores in operation.
  • In May 2017, Yonghui Superstores launched its YH Life brand store in Shanghai. YH Life is a convenience store that sells cigarettes, ice cream, readymade meals, and fresh food products.
  • In January 2017, Yonghui Superstores announced it would join with USA’s Bain Capital (private equity) to purchase USA’s Daymon Worldwide (retail consulting). Yonghui Superstores would acquire a 40% stake for USD 165 million, while Bain Capital would acquire the remaining 60% stake.
  • In August 2015, JD.com purchased a 10% stake in Yonghui Superstores for CNY 4.3 billion (~USD 662 million).
  • In April 2015, Yonghui Superstores launched its YH Member Experience brand store in Shanghai. As of mid-2017, more than 30 YH Member Experience stores have been opened.
  • In February 2015, Dairy Farm International (SGX:D01) formally acquired 20% of Yonghui Superstores (SHA:601933) after a CNY 5.7 billion yuan (~USD912 million) purchase of shares.
  • As of early 2015, Yonghui managed 460 supermarkets across 17 provinces and municipalities (including Beijing, Shanghai, Chongqing, Zhejiang and Guizhou) making it China’s fifth largest hypermarket chain.
  • In October 2014, Yonghui Superstores and Zhongbai Holdings Group (SHE:000759) signed a cooperation agreement. Zhongbai Holdings Group operates supermarkets and convenience stores.
  • In August 2014, Kweichow Moutai (SHA:600519) announced forming a joint venture with Yonghui Superstores and Shenzhen Guomaoyuan Commerce and Trade Co Ltd. Through the JV, Moutai would sell its liquor in Yonghui supermarkets. The profit breakdown would be 60% for Moutai and 20% each for Yonghui and Shenzhen Guomaoyuan. During the same month, Dairy Farm International (SGX:D01) signed an agreement to acquire a 19.99% stake in Yonghui Superstores (SHA:601933).
  • In March 2014, Tencent Holdings (internet and tech investment company) purchased a 15% stake in JD.com.
  • Founded in 2001 and headquartered in Fuzhou, Fujian Province, Yonghui Superstores (SHA:601933) operates 460 medium-sized supermarkets all over China (as of 2015). Its retail chains include Yonghui Superstores (flagship), Bravo YH (est. 2012, smaller-sized premium product chain), Yonghui Life (est. in 2015, O2O, convenience store), and YH Super Species (est. in 2017, fresh food and restaurant stalls). Yonghui Superstores has seen healthy growth which the company attributes to their focus on fresh products, which occupies 40-50% of a single store’s floor space. The company was listed on the Shanghai Stock Exchange in 2010.
  • Founded in 1998 and headquartered in Shenzhen, Guangdong Province, Tencent Holdings (HKG:0700) is an internet focused service company whose digital product line includes QQ (instant messaging service), WeChat (Weixin instant messaging service), and other web-based services such as video games, microblogs, search engines, web browsers, and e-commerce. In June 2004, Tencent Holdings was listed on the Hong Kong Stock Exchange.

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