Over the past two years, the capital market has primarily evaluated Pagoda (02411) through the lens of its store network. The active reduction of store count, efforts to restore confidence in its franchise model, and the iterative restructuring of the single-store profit framework formed the first layer of understanding for this Chinese fruit retail chain leader. However, in the strategic blueprint of founder Yu Huiyong, stores represent only the starting point of Pagoda's growth trajectory. What truly requires market re-evaluation is the company's transformation from "China's premier fruit specialty chain brand" towards a set of more deeply integrated industrial long-term ambitions: becoming a globally leading fruit industry eco-tech company, a globally leading platform for incubating fruit and vegetable processed category brands, and a globally integrated, full-format fruit supply chain service platform.

This set of strategic positions is not a manufactured concept, but a systematic distillation of a 25-year development path. Yu Huiyong stated in an exclusive interview that Pagoda must now answer the fundamental question of "what it truly is," as the company has long moved beyond the boundaries of a single store brand. It has entered a new phase where supply chain capabilities, agricultural technology, information technology, category brands, and full-format services work in synergy. "Its development wasn't designed from the start; it has evolved to this point. We are simply summarizing and refining it, and this refinement is crucial. In the past, it was an unconscious refinement; now it has become a conscious strategy that can guide the entire organization."

From a fundamental business perspective, Pagoda's recovery signals are becoming clear. In the second half of 2025, store expansion returned to track, with over 4,000 offline outlets nationwide. The company achieved a slight profit for the period, marking a substantial turnaround in its profit fundamentals. The continuous rollout of its To B business, category brand incubation, and digital tools provides core clues for the capital market to reassess the company's value. Yet, merely defining these changes as a "second growth curve" following store stabilization would significantly underestimate the depth and long-term weight of this strategy.

Strategic Elevation: Targeting a Globally Leading Fruit Industry Eco-Tech Company

In the market's established perception, Pagoda's most prominent label has always been "high-quality fruit retail chain." However, at the 25-year milestone, this definition no longer covers the company's expanded business boundaries. "The Pagoda store is indeed our most important business currently, but understanding Pagoda solely as a store brand is now limiting," Yu Huiyong explained. "We recently reviewed this issue and concluded that for the next 20 years, Pagoda must have a clearer strategic expression." For the future's core positioning, Yu Huiyong's first answer is "a globally leading fruit industry eco-tech company." This positioning has three core dimensions: the fruit industry is the foundation, meaning Pagoda will never stray from its core fruit business, and will even extend towards broader fruit and vegetable agriculture; the ecosystem is the organizational paradigm, meaning the company will not operate a closed, self-owned system; and technology is the underlying support, meaning it will use information technology and agricultural technology to reconstruct the efficiency foundations of the traditional fruit industry.

"The Pagoda Group's mission is to become a global leader. From the bottom of my heart, when I founded Pagoda, my goal was to be number one in the world. I only start a business if the goal is to be the global leader. Hence, the first statement: become a globally leading fruit industry eco-tech company." The core pain point of the fruit industry has never been a lack of demand, but the uncertainty throughout the entire chain from field to consumer. As a fresh, ready-to-eat category, "every minute from harvest to customer consumption is a race against the product's life." This determines that Pagoda's challenge is never just a single-point retail problem, but a holistic issue spanning variety selection, production materials, planting technology, post-harvest preservation, warehouse and distribution fulfillment, terminal sales, and consumer experience. This is the core connotation of the word "ecosystem." Yu Huiyong doesn't talk about the ecosystem abstractly; he provides two clear criteria for judgment: first, efficient coordination even without kinship ties; second, the ability to connect information across the entire chain. Facing the long-standing pain points of the agricultural and fresh supply chain – vague standards, opaque information, and fragmented production and sales – Pagoda's solution is to first deeply consolidate key ecological positions within the industry chain, then achieve overall synergy through unified standards, information systems, and benefit mechanisms.

"What is an ecosystem? My definition requires two things: first, can all parts (of the chain) coordinate efficiently without blood ties, and second, can information be connected across the entire chain? I chose the ecosystem model because, in this industry, to build a great company, the benefit mechanism must achieve overall synergy, and the profit situation must be healthy." Technology is the fundamental bedrock enabling this ecosystem to function. Yu Huiyong breaks technology down into two pillars: information technology and agricultural technology. The former solves issues of chain operations, demand forecasting, store diagnostics, standardized management, and whole-chain coordination efficiency. The latter is rooted in variety selection, production materials, planting techniques, post-harvest preservation, and the transition to ecological agriculture. According to public information, Pagoda has already implemented a new generation of AI cashier systems, smart ordering systems, store profitability diagnostic systems, and a fruit knowledge large model. The smart ordering system now covers over 3,000 stores, and the AI store diagnostic system provides over 200,000 precise data diagnoses annually.

"The two technologies I use to crack the overall puzzle are information technology and agricultural technology. Since starting the business, we have invested significantly in information technology; for agricultural technology, our main focus is there. Because good fruit is grown, Pagoda must be a leader in the applied research, development, and promotion of agricultural technology." AI is not a narrative concept for the capital market; it is the underlying tool for realizing the "fruit industry eco-tech company." Its goal is not to replace stores, but to transform the experience accumulated from stores, supply chains, and agriculture into a system capability that can be called upon, replicated, and outputted.

Stores as the Foundation: The Frontline Validation Ground for Ecosystem Capabilities

Strategic elevation does not mean the weakening of the store's value. On the contrary, in Yu Huiyong's system, the store remains Pagoda's most critical foundation and the frontline for validating supply chain, quality control, fulfillment costs, and consumer experience. However, the metric for measuring the store's value has changed. In the past, the market measured growth by the speed of store openings; now, the focus should be on the certainty of the model, network density, franchisee profitability, and the cost efficiency of the entire chain. "For the foreseeable future, our current model is the best model for fruit retail. It combines experience with fulfillment cost. Only when the cost of the entire chain is the lowest and optimal, is it the best model." This judgment is rooted in the consumption attributes of fruit. Fruit is not a commodity suitable for bulk, low-frequency purchasing; it is naturally suited for small-batch, high-frequency, proximity consumption. Furthermore, the purchase decision for fruit is highly dependent on visual display, taste trials, and professional explanation, making the neighborhood proximity store's value irreplaceable. Pagoda's community specialty chain model essentially uses high-density outlets to lower fulfillment costs and professional service to enhance the consumer experience.

"Our model is optimal, but the premise is sufficient density. Therefore, it must be a chain with high density. From a fulfillment perspective, Pagoda's fulfillment cost is the lowest in the industry. This model of experience plus fulfillment is difficult to surpass over the long term." In recent years, Pagoda underwent a proactive clearance of underperforming stores. Data shows that from 2024 to 2025, the company actively closed over 1,600 low-efficiency stores, reducing the total store count from a peak of 6,081 to 4,468. In the second half of 2025, the store count increased by a net 82, officially reversing the trend of contraction, with the network covering 22 provinces and over 170 cities. In Yu Huiyong's view, the problems Pagoda faced a few years ago were primarily not market issues or strategic issues, but business model issues. After listing, the original business model required compliance restructuring, and this process of "tearing down and rebuilding" was inevitably painful. Now that this consolidation is complete, a sustainable store opening model with certainty has been formed. "Over the years, we have come to understand that the speed of store openings cannot be as fast as before; we must proceed steadily and solidly. Recently, we have completed the consolidation and launched a deterministic and sustainable store development model." Store expansion is not the end of the strategy, but the first level of validation for the entire ecosystem. As the store model optimizes, franchisee payback periods shorten, and both customer traffic and gross profit steadily increase, the front-end entrance for the "fruit industry eco-tech company" will have sufficient density and credibility.

Category Incubation: Building a Globally Leading Fruit and Vegetable Processed Category Brand Incubation Platform

The second major strategic goal proposed by Yu Huiyong is "a globally leading incubation platform for fruit and vegetable processed category brands." The core of evolving from fruit category brands to fruit and vegetable category brands, and then to an incubation platform for fruit, vegetable, and derivative processed category brands is not simply about expanding SKUs. It is about systematically outputting Pagoda's years of accumulated expertise in planting, quality control, preservation, channel, and capital capabilities to each single-category brand. "I formulated the category strategy in 2016, with the goal of incubating 100 brands over 20 years. This strategy has remained unchanged since its formulation in 2016, and it will be strengthened in the next 10 years." According to the company's roadshow disclosures, Pagoda has already developed 53 distinctive category brands, starting from the source by introducing new varieties and outputting planting and preservation technologies to help partners improve quality and yield, steadily advancing brand marketization. Category brand building has always been a crucial medium-to-long-term strategy for Pagoda, consistently adhering to the philosophy that "good fruit is grown" and focusing on deep cultivation at the source.

Yu Huiyong's incubation logic is more like a methodology for industrial organization. He does not seek to bring all brands under one single entity; instead, he advocates for the independent development of category brands, with Pagoda deeply participating as a shareholder, service provider, and priority channel. "I am an incubation platform; I don't need to own it, I just need to be part of it. All category brands should be independent companies that we have a stake in. When a brand reaches a certain scale, it doesn't have to sell exclusively to me. We just need the best priority rights. The more this company earns, the more I earn." This model is entirely different from the light-asset brand incubation common in the consumer goods industry. Pagoda does not incubate traffic brands reliant on marketing; it incubates agricultural product brands that require long-term commitment to variety, planting, production materials, post-harvest processing, and channel validation. In Yu Huiyong's view, deeply cultivating a single category's entire industry chain "can take 10, 50, or even 100 years to achieve," but Pagoda hopes to use a platform-based approach to batch-incubate a group of high-quality category brands over 20 years. "We are a large incubation platform. All work on the industry chain is done to incubate it. We provide varieties, production materials, technology, preservation, sales channels, and capital to build the brand." This also explains the deeper meaning of "fruit and vegetable processed categories" in the strategic positioning. Fresh fruit is the foundation of the industry, but the value of fruits and vegetables extends far beyond fresh consumption. Ready-to-eat fruit cuts, short-shelf-life products, dried fruit, juice, baking ingredients, and even deeper agricultural product processing will open up longer life cycles for category brands. What Pagoda aims to do is extend the philosophy of "good fruit is grown" to "good categories are grown from the entire industry chain."

Open Empowerment: Building a Globally Integrated, Full-Format Fruit Supply Chain Service Platform

The third major strategic goal is "a globally integrated, full-format fruit supply chain service platform." This is also the part most in need of correction in the minds of past investors. Pagoda is not simply shifting from C-end stores to a To B wholesale business. Instead, it aims to open its standards, products, fulfillment, training, and operational capabilities to all business formats that require fruit supply chain capabilities. "Opening the supply chain to empower everyone who needs to sell fruit. Pagoda has long operated a retail-wholesale integration model. Only by combining supply and retail can we achieve maximum synergy." The To B business is already a visible growth curve for Pagoda. In 2024, the company's To B revenue reached 1.26 billion yuan, a year-on-year increase of 21.7%. Currently, the business covers diverse scenarios such as traditional supermarkets, government and corporate clients, providing customized services like afternoon tea, holiday gift boxes, and meeting fruit, with revenue scale maintaining steady growth.

But Yu Huiyong's vision extends far beyond this. The "full-format" he emphasizes covers mom-and-pop stores, snack channels, restaurants, tea shops, employee benefits procurement, government services, supermarkets, and even future emerging instant retail formats. For these formats, fruit is a high-frequency, healthy category, but also a category with high spoilage rates and high professional barriers. What Pagoda wants to export is not a one-time supply of goods, but a complete set of standard systems, product development capabilities, fulfillment services, training systems, and operational coaching. "Pagoda's stores are just one of the entities we serve. Our foundation is standards. In the past, Pagoda's standards were only suitable for Pagoda stores. Today, this set of standards is suitable for everyone selling fruit. Because if you want to do a To B wholesale business, without standards, it's almost impossible to scale." Standards are the key to understanding the supply chain service platform. In the past, Pagoda used unified standards to serve its own stores; in the future, it will use unified standards to serve the entire industry. Specifically, this empowerment system is divided into three layers: first, product empowerment, leveraging differentiated product development capabilities to provide high-margin items; second, supply chain fulfillment empowerment, leveraging the national fresh food distribution and preservation system to provide low-cost fulfillment; third, training and operational empowerment, leveraging years of accumulated industry experience to provide comprehensive guidance from product selection to promotion. "If you sell fruit in China, you cannot fail to understand our training system. Through years of accumulated operational experience, we understand the characteristics of each fruit – how to identify, distinguish, preserve, and promote it. If employees are initially inexperienced, we will send people to coach them." Opening the supply chain will not weaken the competitiveness of its own stores. In Yu Huiyong's logic, scaled opening will further lower the cost of the entire chain, improve the inventory turnover efficiency of suppliers, and ultimately benefit the entire industry and consumers. Pagoda has already built a nationwide distribution center network capable of meeting daily delivery needs. Facing the diversification of retail formats and the expansion of snack channels into fresh produce, the company is comprehensively opening its supply chain capabilities. "In the future, anyone doing fruit business will not be able to bypass Pagoda."

Re-evaluating Value: Three Strategic Curves Reshaping the Valuation Logic

If Pagoda is merely viewed as a fruit retail chain, the capital market's valuation framework will always revolve around store count, same-store sales, foot traffic, average transaction value, and profit margins. However, the three major strategic goals proposed by Yu Huiyong are reshaping the company's value structure. The first curve is the standardized community specialty chain network, which validates core capabilities in brand, density, service, and fulfillment cost. The second curve is the full-format supply chain service platform, outputting supply chain capabilities to the entire industry. The third curve is the fruit industry eco-tech company and category brand incubation, incorporating agricultural technology, information technology, and industrial incubation into a longer-term value landscape. Some investment research institutions have already summarized Pagoda's capital market narrative as "from consolidation to rebirth": the store model has shifted from aggressive expansion to quality recovery, the To B and "fruit +" businesses have opened a second growth curve, and the industry is moving from "big and fragmented" to "the strong getting stronger." However, Yu Huiyong's strategic vision is grander than this short-term capital market framework. He discusses not just the market value recovery of the listed company, but the entire Pagoda ecosystem's industrial space for the next two decades and beyond. "The second curve has already started; it's also a long-term play. The third curve has been laid out for a long time and is about to be activated. This is the accumulation of many years of my work, taking shape since 2003." This means that observing Pagoda cannot be solely based on the annual rate of store expansion. More critical validation indicators include: the continuous improvement of the store model and the enhancement of franchisee profitability; the real optimization of spoilage and turnover brought by AI and digitalization; the progress of the To B business upgrading from simple supply to standard and fulfillment services; the independent growth capability and capitalization potential of category brands; and the long-term barrier thickness formed by agricultural technology and ecological planting.

When Yu Huiyong talks about strategy, he often extends from business to the industry, and then deep into the agricultural foundation. In his view, food safety, reduction of chemical fertilizers and pesticides, ecological agriculture, rural revitalization, and industrial synergy are all integral parts of Pagoda's strategy. This expression of long-termism precisely explains why Pagoda's new positioning cannot be limited to "stores" or a single business label. The company's true direction is to use fruit as an entry point to continuously expand into fruits and vegetables, processed products, supply chain services, and ecological agriculture. "Looking back, although it seems very complex, the main thread has never changed. The direction is ecological products and ecological agriculture good products. My strategy is to develop sales and use that to promote production in reverse."

Conclusion: Redefining Not Just a Label, But Industry Boundaries

The most important answer Yu Huiyong provided in this exclusive interview was not short-term business goals, but the long-term development boundaries and coordinates for Pagoda. Stores remain the foundation, but they are no longer the only answer. The supply chain still serves the stores, but it will serve the fruit needs of the entire industry. Category brands are no longer just items on the shelf, but future independent industrial entities. Technology is no longer just a tool for cost reduction and efficiency improvement, but the underlying infrastructure connecting agriculture, supply chain, stores, and consumers. Pagoda's new strategy is not a marketing ploy of changing a label. It anchors three clear long-term directions: a globally leading fruit industry eco-tech company, a globally leading platform for incubating fruit and vegetable processed category brands, and a globally integrated, full-format fruit supply chain service platform. For the market, the core task ahead is to witness how Pagoda will implement these grand industrial goals step by step, into every store, every supply chain link, every category brand, and every consumer experience.