Thursday, February 20, 2025
I’ve long heard about the success story of the Chinese retail store, 胖东来 (Pàng Dōng Lái), and have tried to pinpoint what makes it unique.
We’re all familiar with financially successful companies, both retail and wholesale, such as Amazon, Walmart, or Costco. These stores share some common traits: outstanding customer service, high-quality products, a great in-store experience, a loyal customer base, and razor-thin profit margins like Walmart.
There’s a Chinese saying: "为富不仁，为仁不富" (wèi fù bù rén, wèi rén bù fù), meaning "To become rich, you can’t be benevolent; to be benevolent, you can’t become rich." The idea is that wealth and kindness don’t go hand in hand. In order to accumulate wealth, you must exploit your employees; sharing profits or being kind means making less money.
Take Andrew Carnegie for example, the ultra-wealthy steel magnate, who notoriously paid his workers poorly, treated them unfairly, imposed long working hours, and faced violent strikes as a result.
Another example is Walmart. While it’s famous for its massive wealth, it also faces a staggering 70% employee turnover rate due to low wages, poor benefits, and subpar working conditions. As a result, Walmart has to spend heavily on training new hires each year.
However, Yu Donglai, the founder of Pang Donglai, decided to take a different path from those who extract profits from 'the sweat and blood of their employees,' even if some later donate those profits to charity. He questioned, "What’s the point of making so much money if those who work for you don’t benefit from it?"
At Pang Donglai, employees are given high salaries, excellent benefits, and generous vacation days. Because of this, people are eager to work for and stay with the company.
Yu’s profit-sharing model is simple but effective: when everyone has money to earn, people will have money to spend and be happy to go to work, creating a virtuous cycle in the commercial ecosystem.
In a world where the mantra "profit over people" often dominates, businesses like Pàng Dōng Lái offer a refreshing reminder that success doesn’t have to come at the expense of employees. Yu Donglai’s approach proves that profitability and benevolence can coexist—by treating employees well and sharing the wealth, a company can create not only a loyal workforce but also a sustainable business model.
In the long run, fostering a mutually beneficial relationship with employees can lead to happy and productive workforce and a thriving ecosystem, paving the way for lasting success of a company.