This article is written by Jessica Miao, Founder of United Media Solution (UMS), reflecting on her recent visit to Pangdonglai in Xuchang, Henan.
Lessons from China’s Pangdonglai on Trust Before Scale
Pangdonglai is one of the most unusual retail businesses in China.
With just 14 stores across two cities, the company generated RMB 10.7 billion ($1.5 billion) in revenue in 2023, RMB 16.96 billion ($2.4 billion) in 2024, and RMB 23.5 billion ($3.3 billion) in 2025.
Even individual products can reach remarkable scale. One of Pangdonglai’s signature products — a mooncake known as the “Dayue Mooncake” — generates over RMB 200 million($28 million) in annual sales.
Dayue Mooncake
For a business rooted in a tier-4 Chinese city and operating within a very focused geographic footprint, this level of scale is extraordinary.
Over the past two days, I had the opportunity to visit Pangdonglai (胖东来) in Xuchang, Henan. Before the trip, one question kept coming to mind: “How can a regional supermarket attract over 300,000 visitors in a single day?”
Crowds at Pangdonglai’s Angel City store — Afternoon of March 10, 2026.
But after walking through the stores — including Angel City and Times Plaza in Xuchang — I began to realise something important:
Today’s Pangdonglai is not just a retailer; it is a destination.
It is a business built on “Freedom and Love,” with trust at its core.
Exterior view of Pangdonglai.
A Culture Built on “Freedom and Love”
One of the most distinctive aspects of Pangdonglai is its cultural foundation.
The company openly describes its business philosophy using two words:
Freedom and Love.
Evolution of Pangdonglai’s business philosophy:
1995 – Exchange sincerity for sincerity
2002 – Create wealth, promote civility, share happiness
2006 – Fairness, freedom, joy, and care for others
2019 – Freedom & Love
In practice, this means creating an environment where employees feel respected, trusted, and able to take pride in their work. Rather than treating employees simply as operational labour, Pangdonglai places strong emphasis on dignity, wellbeing, and shared purpose.
This philosophy is reflected in everyday operations. For example, each Tuesday is a day off. This holiday arrangement is widely known to the public, and Pangdonglai employees are proud of it. A staff member explained that even on Tuesdays during the Spring Festival or National Holiday — when there are usually huge crowds — the stores remain closed.
At Pangdonglai, they have also introduced a framework known internally as the ‘The Ten Standards of a Fulfilled Individual’, which includes:
- A Free Spirit
- An Independent Character
- A Passionate Career
- Professional Competence
- Creative Achievements
- Nature Immersed Leisure
- A Healthy Body and Mind
- Peaceful and Undisturbed Sleep
- A Mutually Understanding Soulmate
- The Capacity to Inspire and Ignite Hope in Others
These ideas may sound philosophical, but they shape how the organisation thinks about work, leadership, and long-term development.
Discipline Behind the Warmth
What makes Pangdonglai particularly interesting is that the human warmth sits on top of very strong operational discipline.
Every department operates with detailed written procedures and operational standards — from cleaning protocols to bakery operations to prepared-food merchandising.
Thoughtful details inside the store (left to right): Reading glasses / magnifying glasses, self-service ice station, pet waiting area.
Even the physical environment reflects this mindset. Despite extremely heavy foot traffic, we were all surprised at how clean and tidy the area is. Some parts of the shopping complexes have not undergone major renovations for nearly 20 years, yet the spaces remain orderly and well maintained through meticulous daily care.
The culture may feel warm and human — but it is supported by systematic operational management, discipline, and principles.
Trust is Built One Product at a Time
In marketing, one of the four Ps is product, and Pangdonglai has built strong brand credibility through consistent product trust.
Customers place strong confidence in Pangdonglai’s product sourcing capabilities and transparent supply chain management.
One widely discussed practice is the transparent pricing, where product labels openly display cost and profit margins.
Another example is quality control. The company has long emphasised strict product standards and rapid responses whenever issues arise.
Examples of Pangdonglai’s product displays and listings.
Customer feedback is also highly encouraged. Customers of Pangdonglai are invited to leave feedback or complaints and contact the business directly. When I walked past the checkout counter, there was a large sign on the wall displaying managers’ photos, names, and phone numbers. It read:
“Feel free to register any comments or complaints, and we will solve your problems immediately.”
Store transparency and customer service practices (left to right):
Top left – Public notice of random pesticide residue testing
Bottom left – 50% refund if dissatisfied with the movie experience
Right – “Today I am on duty” board
Radical Transparency
Another striking aspect of Pangdonglai is its openness to the outside world.
Visitors are welcome to walk through the stores, observe operations, and learn about the company’s business model and philosophy. Unlike many retail chains where photography is restricted, Pangdonglai openly encourages visitors to take photos of shelves, products, and store displays.
The idea is simple: by allowing people to document and share what they see, the company invites feedback from customers, visitors, and even competitors.
In a retail industry where operational details are often closely guarded, Pangdonglai has chosen the opposite approach — openness as a way to continuously improve.
Employee Ownership and Profit Sharing
On March 8, 2026, Pangdonglai announced a new step in its employee incentive system.
According to founder Yu Donglai, the company has been sharing profits with employees since 2000, a practice that has helped employees feel respected and trusted within the organisation.
Under the newly announced plan, approximately RMB 4 billion in company assets will become part of the company’s capital base and shared across the organisation.
Going forward, Pangdonglai plans to distribute profits under a 50/50 long-term structure:
- 50% distributed as bonuses to the team
- 50% distributed as shareholder returns
The underlying idea is simple: when people feel secure and respected, they are more willing to grow together with the organisation.
The intention is also to align employees closely with the long-term development of the business, strengthening a culture in which employees see themselves not only as workers, but as partners in the company’s future.
Lessons That Stayed With Me
During the visit, several phrases shared by the company left a strong impression:
- For founders: When the founder’s mindset changes, the company transforms.
- For business leaders: Businesses should operate with long-termism. This means a systematic operational model, efficient supply chain management, clear SOPs for customer service, and strong product management principles.
- When people’s livelihoods are secure, they can grow with the company and build its culture together.
- Exchange sincerity for sincerity.
These ideas may sound conceptual, but they reflect a deeper philosophy of “永续经营” — building a business that can endure over the long term.
What moved me most during this visit was Pangdonglai’s deliberate restraint in expansion. In most global retail businesses, success is quickly followed by rapid geographic growth. Pangdonglai has taken a different path. Instead of expanding aggressively across China, it has chosen to deepen trust within a smaller region, focusing on efficient supply chains, operational excellence, employee wellbeing, and customer credibility. The philosophy seems simple: Scale is the result of trust.
“Walk on Faith” — a book written by Pangdonglai’s founder, Yu Donglai.
Saying is Easier Than Doing
Retail today is often discussed in terms of scale, expansion, and traffic growth.
Pangdonglai seems to follow a different path.
Instead of expanding rapidly across China, it has focused on deepening trust within a focused region for development.
In a retail world increasingly driven by scale and speed, Pangdonglai offers a different perspective: Sometimes the most powerful strategy in business is simply earning trust — and working on it patiently, consistently, and over time.
And perhaps that is why people keep coming back.
Below is a photo I took on a Wednesday morning at one of Pangdonglai’s Jewellery Stores.
Crowds at Pangdonglai’s jewellery store in Times Plaza — morning of March 11, 2026.
