Stop the "choose one" nonsense—Yonghui and Sam's supply chain feud

Ask AI · Why is Yonghui publicly challenging Sam during its transformation period?

The supply chain competition among supermarkets is moving from behind the scenes to the forefront.

On the afternoon of March 16, Yonghui Supermarket publicly called out Sam through its own brand official account “Quality Yonghui,” urging them not to make suppliers choose between options. This statement quickly trended online.

In the statement, Quality Yonghui mentioned that it has been less than a year since its launch, comparable to a toddler learning to walk, while Sam’s private label MM has already developed and is in its prime. Quality Yonghui and Sam MM should properly constrain their teams’ conduct codes, focus on their own quality construction, and avoid engaging in unfair competition behaviors like “forcing suppliers to choose between options.”

In addition to calling for a ban on “choosing one,” Yonghui also proposed multiple initiatives to promote healthy competition in the industry, including jointly improving product quality and increasing transparency of product formulas.

As of the evening of March 17, neither Sam nor Yonghui had further responded to the matter. Journalists attempted to contact both parties for interviews, but had not received any replies by the time of publication.

What is the “choice” argument about?

In fact, the “Sam MM” mentioned in the open letter refers to Sam’s private label Member’s Mark. The focus of this controversy directly points to the supply chain resources behind the private labels.

Compared to traditional branded products, private labels not only have higher profit margins but are also crucial for retail companies to build product differentiation capabilities. Whoever controls the core suppliers holds the power of product pricing and quality.

This is precisely why Yonghui is anxious. Over the past few years, Yonghui has been trying to shift from a traditional channel model reliant on “channel fees” and “entry fees” to a retail model centered around products. Private labels are a key move in this transformation.

According to media reports, in October last year, Yonghui Supermarket’s Chief Merchandise Officer (CMO) She Xianping stated in a media exchange that Yonghui aims to lock in 200 core strategic partners within three years and create 100 major products worth over 100 million yuan. Quality Yonghui plans to launch over 60 private label products by 2025 and aims to develop 500 private label products in the next five years. “Currently, the team’s capabilities are insufficient to support too many local specialty products, so we will start by focusing on high-traffic basic products to train the team; it is expected that more specialty private label products will appear in Yonghui stores nationwide within three years or even shorter.”

However, the road to transformation is not smooth. On one side is an ambitious plan, and on the other is a continuously deteriorating performance. According to Yonghui Supermarket’s earnings forecast, by 2025, its net profit attributable to shareholders of the listed company is expected to be -2.14 billion yuan, while the net profit attributable to shareholders after deducting non-recurring gains and losses is expected to be -2.94 billion yuan. This also marks Yonghui’s fifth consecutive year of losses.

In contrast, Sam’s Club is showing robust growth in the Chinese market. Among them, the sales proportion of Sam’s private label has increased from 25% in 2023 to over 30% in 2025, becoming an important source of its core competitiveness.

When one party is rapidly advancing and seizing quality production capacity while the other urgently needs quality products to turn around its fortunes, friction at the supply chain level is almost inevitable.

This is not the first “choice” controversy for Sam

“Ultimately, this is about intensified competition and the battle for consumers. To do well in retail, one must put effort into the supply chain. Competition wasn’t as fierce before, but now consumer demands and retailer costs are rising, leading to higher expectations for suppliers, especially a desire for exclusive partnerships with quality suppliers, which results in exclusive disputes,” said veteran retail analyst Shen Jun in an interview with the media.

In fact, this is not the first time Sam has faced public questioning from peers over the “choice” issue. As early as a few years ago, Carrefour and Hema both publicly accused Sam of requiring suppliers to “choose one” and stated they would jointly report Sam to the relevant authorities.

At that time, Sam responded that it had conducted an immediate self-examination but did not find any issues raised by the relevant parties. They also stated that they had not seen any direct or indirect facts provided by the relevant parties indicating that Sam’s Club had the so-called “choice” problem, urging the relevant parties to stop disrupting market order and focus on their own operations to benefit more consumers.

According to publicly available information, Sam did not receive any relevant penalties in this incident.

As the retail industry enters an era of “product power competition,” the covert battle over private labels is bound to escalate. Where will this industry upheaval sparked by an open letter ultimately lead? Journalists will continue to follow this story.

Xiaoxiang Morning Post, Chili Finance reporter Li Xuanzu

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