Introduction

Yu Donglai, the founder of the retail chain Pangdonglai, has decided to close a flagship store that has been operating for 24 years, even though it generates annual profits exceeding 100 million yuan. The decision stems from the landlord's aggressive rent increases, which Yu described as "unimaginable and far beyond fairness."

Rent Hike Triggers Store Closure

On August 9, Yu Donglai disclosed via his personal social media account the reasons behind the impending closure of the Pangdonglai Life Square Store in Xuchang, Henan Province. He revealed that as early as 2015, staff responsible for leasing matters failed to sign unified rental agreements as per company regulations, leading to exorbitant rent hikes for some tenants. "The increases were so severe that they completely deviated from fairness," Yu stated. He emphasized that while the proportion of affected tenants was not large, his core principle is to uphold justice and fairness, regardless of the financial impact. He admitted that the store had long been a source of frustration for him, and he decided not to renew the lease upon its expiration, resulting in the permanent closure of the location.

The store, which opened on January 1, 2002, is Pangdonglai's first large-scale comprehensive shopping mall, spanning four floors with a sales area of approximately 14,800 square meters. It offers a mix of supermarkets, apparel, department stores, dining, and pharmacy services. Yu revealed that the store achieved annual sales of about 2 billion yuan and profits exceeding 100 million yuan. According to data released by Yu on June 22, from June 2025 to June 2026, Pangdonglai's total sales reached 13.955 billion yuan, with the supermarket segment contributing 7.504 billion yuan, or 53.77%. For the Life Square Store specifically, its cumulative sales during this period were 977 million yuan. In 2025, the entire Pangdonglai network generated sales of 23.531 billion yuan, with the Life Square Store contributing 1.799 billion yuan.

A History of Rent Disputes

This closure has revived memories of a similar incident from 11 years ago. Yu Donglai recalled that the Pangdonglai store in Xinxiang, Henan, also faced a significant rent increase when its lease came up for renewal. "The rent jumped directly from over 8 million yuan to 24 million yuan," he said, describing the decision as a "battle between reality and faith." At that time, the store's annual profit was only 6-7 million yuan, but Yu "didn't even think twice" and decided to abandon the location. That store, originally located on Zhongyuan Road, opened in 2005 as Pangdonglai's first expansion beyond Xuchang. It closed in December 2015 following the rent dispute, sparking widespread attention and rumors. With the intervention of the Xinxiang municipal government, the store was relocated to its current address on Renmin Middle Road and reopened in September 2016.

Pangdonglai's Real Estate Strategy

To avoid future rent volatility, Pangdonglai has been increasing its ownership of properties. According to a January 2018 report, in January 2016, Pangdonglai acquired a 38,000-square-meter commercial property in Xinxiang for less than 200 million yuan, which now houses the relocated Xinxiang store. Additionally, the Xuchang Times Square, which opened in April 2009, was Pangdonglai's first self-designed and self-built large-scale shopping mall, covering nearly 31,800 square meters of sales area across multiple floors.

Despite the ongoing downturn in the real estate market, Pangdonglai continues to invest in self-owned properties. Yu Donglai's recently announced three-year plan includes three new stores under construction: the Pangdonglai Zhengzhou East Station Supermarket Project, the Xuchang Science Museum Supermarket Project, and the Xuchang Dream City Project. The Dream City project is the company's largest single investment to date, with construction and renovation costs nearing 6.5 billion yuan. According to the Xuchang Natural Resources and Planning Bureau, two parcels of land for the project were transferred to Pangdonglai in November 2025. The project, with a total floor area of 575,900 square meters, will be a super-large complex encompassing department stores, supermarkets, electronics, jewelry, cinema, dining, tea, arcade, and hotel facilities.

In a 2024 livestream, Yu Donglai stated, "Pangdonglai currently has 2 billion yuan in cash. By the end of 2025, we aim to have about 3 billion yuan before starting construction. We don't plan to take bank loans; it's a very relaxed investment state." In October 2025, he revealed the company had no debt and 4.1 billion yuan in cash. In March, he announced plans to convert 4 billion yuan of company assets into equity for the Dream City project.

Yu Donglai often frames his real estate investments in terms of personal ideals and aspirations. While many retail chains start with leasing to minimize trial costs, building a brand and establishing self-owned properties can provide operational control and lock in long-term costs. However, the real estate sector involves heavy assets, long cycles, and high professional thresholds, and the current market downturn has raised some external concerns about Pangdonglai's foray into property development. Despite this, Yu has hinted at further ambitions. In May, he mentioned that if the Dream City project is successful, Pangdonglai may develop several residential communities to serve as a "model for real estate and property management." According to Yu's March disclosure, the Dream City project is expected to officially open in September 2029.