Recently, Chinese-Canadian writer Sheng Xue made a public revelation that the founder of the retail giant Panggalai in Henan, Yu Donglai, distributed 4 billion in assets to employees, as a measure of self-protection after the Zhengzhou city government’s request for the funds for the construction of a square was rejected. Sheng Xue disclosed that Yu Donglai had written a will, anticipating that he “might be framed or even killed.” This incident reflects the harsh reality of systematic exploitation faced by private entrepreneurs under the continued deterioration of local government finances in China.
In March of this year, the founder of Panggalai, Yu Donglai, announced a highly publicized asset distribution plan: distributing 40 billion RMB in asset profits proportionally to 718 management personnel and 8913 frontline employees, with each average employee receiving about 200,000 RMB, sparking heated discussions on the Chinese internet.
According to a report by Jiemian News, on March 11, in response to the 40 billion asset profit distribution plan, Panggalai founder Yu Donglai once again posted a lengthy statement on social media: “This is the real situation, stop guessing!”
Yu Donglai recently discussed the 40 billion asset distribution and his business philosophy over the past 30 years on social media: starting with a debt of 300,000 RMB in 1995, to distributing nearly half of the company’s total assets to employees, and allocating seven to eight percent of profits to benefit the team each year. He believes that the real secret to making a company successful is not control, but allowing employees to see a future and feel respected.
The opening of Panggalai’s first store in Zhengzhou was initially scheduled for before the New Year of 2026, but was postponed to “May Day.” On March 13 this year, Yu Donglai announced once again that the opening date had been adjusted to October. The repeated delays in the opening plan are widely seen as a confirmation of the continued standoff between the two parties.
In response to the events mentioned above, Chinese-Canadian writer Sheng Xue, on March 18, revealed detailed information behind Yu Donglai’s asset distribution, citing sources from mainland China on X platform.
According to Sheng Xue’s citation, the Zhengzhou city government requested Yu Donglai to donate the funds for the construction of the Zhengzhou city center square. Having been in business for many years, Yu Donglai is well versed in the corrupt operations of officials at all levels, and ultimately chose to distribute the funds directly to employees to completely block the government’s hand from reaching out.
Sheng Xue pointed out specifically that what Yu Donglai wrote was a “will,” not a “testament” for disposing of assets – a detail that is particularly chilling. According to her disclosure, Yu Donglai has assessed his own dangerous situation, stating that he “might be framed or even killed.”
Sheng Xue also revealed that the “3.15 Evening Gala” this year targeted Panggalai for product quality issues, serving as a precursor to official action – “first tarnish your reputation.”
In fact, on the eve of the broadcast of the “3.15 Evening Gala” by CCTV, a mainland evaluation blogger released a video, stating that artificial pigment lutein was detected in free-range selenium-rich eggs purchased from Panggalai in Xuchang, with suspected excessive levels.
According to reports by media such as Dahe News, the next day, the Xuchang Market Supervision and Administration Bureau officially launched an investigation into the “Panggalai eggs exceeding artificial pigment content,” which rose to the top of the hot search rankings.
Panggalai later responded, stating that the blogger had applied the wrong standard, as the current national fresh egg food safety standard does not set a residual limit for lutein and that if the investigation finds any issues, they will take responsibility; if no issues are found, they will protect their rights according to the law.
This series of events correspond closely, causing widespread public outcry. Renowned commentator Li Chengpeng, living overseas, bluntly stated on X platform: “Every Chinese entrepreneur’s rise is intricately tied to the party-state… Yu Donglai scattering his family fortune to resist the authorities’ greed might not have a good outcome.”
He mentioned the experiences of Ma Yun, Yu Minhong, Sun Dawu, and Xu Jiayin, warning domestic entrepreneurs: “Leave while you still can, quickly.”
Sheng Xue also cited the case of Beijing agricultural entrepreneur Sun Dawu as a cautionary tale – Sun Dawu, boasting of running a school independently and refusing loans, was ultimately arrested and imprisoned on charges of “illegally absorbing public deposits,” with his enterprise placed under forced trusteeship.
She warned that if Yu Donglai cannot leave the country or if the situation does not take a turn, “the outcome could be very disastrous.”
Since around 2021, Yu Donglai has begun implementing unconventional management practices such as employee bonuses, shortened work hours, and establishing “unhappy leave,” being hailed as a benchmark in the Chinese retail industry, attracting visits for learning from figures like Ma Yun and Lei Jun. In February this year, he announced his retirement after the new year and transition to a company consultant role.
Previously, netizens interpreted the 40 billion distribution plan as a “testament,” and Sheng Xue’s revelations now confirmed this pessimistic assessment.
Yu Donglai has previously publicly stated: “I knew the result twenty years ago.” He issued a blunt warning to other entrepreneurs: “If you don’t share the money, you’ll still end up dead in the future.”
It is worth noting that since 2020, the Chinese authorities have been carrying out rectifications on internet companies under the banners of “national security” and “anti-monopoly,” with companies like Tencent and Alibaba being summoned for talks or facing substantial fines, and the scope of the industry crackdown continuously expanding.
The ongoing rectification of internet companies by the authorities has instilled fear in the market. By 2021, the total market value of Chinese technology companies had evaporated 1.5 trillion dollars. Meanwhile, prominent founders of internet companies like Liu Qiangdong, Zhang Yiming, Huang Zheng, Ma Yun, successively left their top executive positions at their companies.
Previously, the Chinese authorities had mentioned the notion of “common prosperity” publicly dozens of times. In September 2021, after being heavily fined by the authorities for 18.2 billion RMB, the Alibaba Group announced an accumulated injection of 100 billion RMB to support “common prosperity.” Apart from Alibaba, internet companies like Tencent, Meituan, ByteDance, and company founders have “voluntarily” donated in various forms.
According to the Hurun Research Institute website’s list released in 2022, 49 Chinese entrepreneurs had collectively donated 72.8 billion RMB in the past year.
China issues expert and Sydney University professor Feng Chongyi previously told Dajiyuan that the Chinese treasury is currently empty, with the central government lacking funds, so the call for “anti-monopoly” by the CCP is essentially seizing private capital for public use.
Since 2024, several provinces and cities including Chongqing have established so-called “smash pot, sell iron task forces,” pulling personnel from departments such as finance, state assets, taxation, and audit to coordinate the realization of state-owned assets from debts. At the same time, non-tax revenue nationwide (including administrative fees and fines) has markedly increased.
In the backdrop of this systematic financial squeezing, the events involving Yu Donglai have garnered widespread attention at home and abroad. Analysts believe that the government is targeting not just Panggalai, but every private enterprise with money in their accounts.