Where to start

Pangdonglai founder Yu Donglai recently revealed in a livestream that the Xuchang Life Plaza store will close this December. The reason is that in 2015, relevant personnel failed to operate according to company regulations, and lease contracts were not signed uniformly, ultimately leading to "individual tenants' rent skyrocketing to unimaginable levels, far beyond fairness." This old store, opened in 2002, generates annual sales of approximately 2 billion yuan and annual profits exceeding 100 million yuan, serving as Pangdonglai's flagship store from its early success. This is not the first time Yu Donglai has chosen to close a store due to rent increases. The same happened with the former Xinxiang "Dapang" store, where upon lease expiration, the landlord directly raised the annual rent from over 8 million yuan to over 24 million yuan. Yu Donglai said, "I didn't think twice and just gave up." Later, Pangdonglai reopened elsewhere in Xinxiang. The logic behind both abandonments is consistent: I can earn less money, but "faith and happiness come first." Many people like to write this as a "idealistic businessman confronting capital" story, but within the market framework of commercial leasing: the property owner has the right to raise rent, and Pangdonglai has the right to abandon the lease and move out. Both sides are exercising their market rights. What is truly worth discussing is that all participants must respect the market and its rules. Only within the rules can there be mutual benefit.

Many condemn the landlord's greed, arguing that the business district was built up by Pangdonglai over 20 years. The customer flow, reputation, surrounding dining, and parking all rely on this store. Why should the landlord raise the price overnight once the store becomes popular? This argument is partially correct, but not entirely. The landlord reassessing the property's value based on market prices is not inherently violating rules. The real issue is: without the well-digger's hoe, where would the high rent's water come from? Treating the merchant's operational profits as the property's natural premium, and converting the manpower, supply chain, and service standards built up by others over years into a bargaining chip for rent increases, fundamentally mistakes cause and effect. This calculation might have been tolerated in the era of "one store supports three generations," when shop space was scarce, e-commerce was emerging, and tenants had no choice. But in 2026's commercial real estate market, this concept no longer works. Vacancy rates are rising, scattered properties are aging, and the landlord's leverage has long loosened. Pangdonglai dared to leave because it correctly bet on another thing: the demystification of location value. Brand credibility has become the primary factor in consumer decision-making, even capable of compensating for a location's inherent shortcomings.

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From this perspective, Pangdonglai's abandonment of the lease is not a loss-leader for publicity but a calculation of three clear accounts. The first is the rule account: when the lease is unfair, renewing for another year means enduring another year of frustration. The second is the hardware account: the old store lacks an underground parking garage and has narrow aisles, failing to meet Pangdonglai's current service standards. The quality baseline is more important than billion-level profits. The third is the strategic account: with 4.1 billion yuan in cash on the books and zero debt, Pangdonglai is investing 6.5 billion yuan in self-built Xuchang Dream City, set for delivery in 2029. Meanwhile, the Zhengzhou East Station and Science and Technology Museum stores are progressing simultaneously. The path from tenant to "landlord" is the escape route. Rather than continuing to dig water for others, it's better to dig your own deep well. So, closing the Xuchang Life Plaza store will make the short-term profit and loss statement look bad, but in the long run, it reclaims pricing power, spatial control, and cultural interpretation rights all into its own hands.

We should see that the "idealistic businessman confronting capital" is just an exception; small and medium-sized merchants don't have this luxury. The vast majority of physical stores lack massive cash flow, have no bargaining chip for self-built properties, and can only accept rent increases upon renewal, passing the cost on to consumers or cutting employee wages. What makes Pangdonglai's move precious is that it proves one thing: when fairness in the leasing relationship is sacrificed, a strong tenant can refuse, and survive better after refusing. "Yonghui Supermarkets" close over 300 stores a year with little attention, but Pangdonglai closing one store draws nationwide concern. This is also why, when Yu Donglai said, "If conditions permit, we will build a residential community," many netizens spontaneously compiled a "Pangdonglai House-Building Wish List." What consumers want is simply the most basic sincerity and reliability.

But the original storefront won't automatically grow another Pangdonglai. On one hand, rent should be anchored to the property's market value, not the tenant's operating profit. On the other hand, location premium is not a unilateral gift. The landlord's right to reassess property value is a market-given right, but the market never pays for emotions. When the lease expires, both sides negotiate based on rules. If they can agree, it's mutual benefit; if not, each goes their own way. This is the normal state of business. After the Xuchang Life Plaza store closes, the small property owners at the original site will cash in, while Pangdonglai gains the freedom of "Dream City." Who loses and who gains doesn't need urgent judgment. As long as both parties make decisions based on rules and their own risk preferences, the market will slowly settle the score.