Aeon denies exiting China, but is closing stores in the north after eight years of losses exceeding 700 million yuan, as its Japanese model struggles and it accelerates expansion in the south.
Recently, rumors circulating on social media claiming that "Aeon is about to fully withdraw from the Chinese market" and that "the Japanese retail giant is contracting, with Wumart taking over everything" have drawn public attention. Aeon's official channels responded quickly, denying the rumors of a "complete exit from China," while Wumart also clarified that it had not received any notice about taking over the Tianjin stores.
But this public relations response cannot hide the objective reality of this long-established Japanese retail enterprise undergoing large-scale adjustments across the North China market.
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According to Aeon's official announcement, three supermarkets in Tianjin—Teda, Zhongbei, and Jinnan—along with one supermarket in Yanjiao, Hebei, will officially cease operations on March 23, 2026.
Combined with the closure of its last store in Beijing (the Fengtai store) in May 2025, Aeon has in effect completed its business restructuring in the Beijing market and implemented a substantial strategic contraction in the Tianjin and Hebei regions.
This is by no means a dignified "transformation," nor is it a smooth transition without cost.
Aeon's losses did not happen suddenly but have been accumulating steadily. In 2018, losses appeared for the first time, totaling HK$59.8 million that year. Over the following seven years, this figure continued to grow, with cumulative losses exceeding HK$700 million by 2024, and expanding by another 78.65% in the interim results of 2025.
Aeon's China operations have now faced operational difficulties for eight years. A HK$375 million loan from its parent company is keeping the business afloat, and this funding must be repaid by February 28, 2026.
These numbers did not materialize overnight—they are the result of a continuous eight-year losing streak.
The JUSCO era has come to an end
Go back to 1996. At that time, China's retail market was still dominated by traditional department stores and wet markets. Aeon opened its first JUSCO store in Tianhe City in Guangzhou, using an integrated "supermarket + department store" retail model to precisely and forcefully fill the gap in the domestic market for high-quality supermarkets.
That was the golden age of rapid expansion for foreign retailers in China. Leveraging its strong "Japanese brand" appeal, Aeon quickly established a presence across three core regions—North China, South China, and Shandong—through three store formats: general merchandise supermarkets, food supermarkets, and Aeon Mall shopping centers.
However, the most dangerous trap in the business world is often the unconscious replication of past success formulas. Aeon's years of struggling to adapt in China essentially reflect the adjustment costs of a severe "path dependency" on its Japanese domestic model.
In Japan, the large-format general merchandise supermarket model relied on an extremely stable middle-class consumer base and relatively low rental costs to build a solid profit loop. Around 2010, Aeon China's executives reportedly believed at internal meetings that simply replicating the Japanese standard would lead Chinese consumers—like Japanese housewives—to drive to large stores once a week for bulk shopping.
But what they failed to account for was that rental costs in China's first- and second-tier cities quickly exceeded 20% of revenue, employee turnover was five times higher than in Japan, and family structures underwent dramatic changes within a decade. None of the underlying assumptions held up.
Copying that blueprint wholesale into China became a key factor constraining per-store productivity.
Aeon's general merchandise supermarket stores typically exceed 10,000 square meters, with SKU counts of more than 30,000, covering fresh produce, groceries, apparel, home goods, and other full-line categories. Facing the rapidly escalating rental and labor costs in China's first- and second-tier cities, this asset-heavy model carries high costs and suffers from squeezed profit margins.
More critically, there is a mismatch between the product assortment and local supply-demand dynamics. Aeon, adhering to its Japanese product selection logic, has consistently maintained imported SKUs at over 30% of its supermarket assortment, with prices generally higher than comparable local products.
In the fresh and prepared food categories—the decisive factor in whether a supermarket succeeds or fails—Aeon has long emphasized Japanese-style cold foods, rice balls, and sushi, creating a consumption gap with Chinese consumers' deeply ingrained preference for hot, cooked food. This has directly led to a cycle of slow-moving inventory and stock accumulation.
At the same time, immense business inertia left Aeon slow to respond to the digital wave. It wasn't until 2019 that Aeon launched its "Aeon Home Delivery" platform, which had limited coverage, while livestream commerce and community operations remained chronically underdeveloped.
When Hema achieved 50% of orders through its integrated online-offline model, and when Walmart leveraged JD Daojia to complete a nationwide instant delivery network, Aeon's lack of online capability directly caused a significant loss of high-frequency, essential-demand customers.
The math doesn't work in the North
Facing years of losses, Aeon's recent moves show clear regional differentiation: significantly closing stores in the North China market while densely planting new stores in the South and Central China markets. Exiting North China is not a matter of unwillingness to defend the territory—the numbers simply don't add up.
The supermarket sector in the North has long been a fiercely competitive battleground. At the top end, membership warehouse clubs like Sam's Club, Costco, and Fudi have firmly captured the mid-to-high-end consumer market with curated SKUs and strong value. At the lower end, platforms like Hema and Qixian offering "30-minute delivery" instant fulfillment, along with a dense network of community fresh produce stores, have siphoned off local residents' high-frequency daily purchases entirely.
In a market crowded with formidable competitors and where consumer tiers have already been finely segmented, Aeon's traditional large-format general merchandise supermarkets—with heavily homogenized products and no advantages in price or convenience—find themselves in an awkward position. The cost of stubbornly remaining in the North China market is sustained losses that drag down the cash flow of the entire China business.
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Notably, the Yanjiao store in Hebei that Aeon is about to close has been confirmed to be taken over by local retail giant Wumart. The mature commercial catchment area cultivated by a foreign supermarket over many years has ultimately become growth space for domestic retail. Meanwhile, the earlier-closed Beijing Fengtai store has yet to find a confirmed buyer.
Rather than sustain endless losses, cutting losses in time is the wiser move. From 2022 through March 2026, Aeon has closed nearly eight large-format general merchandise supermarkets in North China, while in the same period it has opened or planned dozens of small-format stores in the South.
This is not simply a "retreat from the North and advance to the South"—it is a strategy of replacing loss-making businesses with new ones.
Guangdong, as Aeon's earliest and most established stronghold, currently still operates 45 stores, making it the most stable and densely populated region in mainland China. To put it in numbers: in just the first half of 2025, Aeon Guangdong opened five new food supermarkets in Guangzhou, Foshan, and Shenzhen at once, with plans for three more new stores in the second half of the year—an accelerated pace of expansion. Deepening density in its most familiar territory carries far lower trial-and-error costs than breaking new ground in the North.
In Central China, Wuhan and Changsha have become strategic strongholds for Aeon's new growth. Compared with coastal first-tier cities, property and investment costs here are relatively controllable, and demand for family-oriented experiential consumption is rising—a soil highly compatible with the Aeon Mall business model. Wuhan already has four Aeon Malls, and the Changsha Xiangjiang New Area store opened in November 2025.
Cut off the chronically unprofitable and inefficient stores in the North, and channel the saved capital and energy into the food supermarket network in the Greater Bay Area and experiential shopping centers in Central China.
That is the most direct financial logic behind Aeon's "retreat from the North, advance to the South": everything for survival, everything to protect profit margins.
The Tianhe City renovation
Closing stores is about stopping the bleeding, but for a company to survive long-term, it must develop new self-sustaining capabilities. Whether its capital reserves are sufficient depends entirely on the outcome of this round of business model restructuring.
Outside observers often cite Aeon's recent store renovations as a successful example of a giant's pivot, but this is overly optimistic thinking. The much-discussed renovation of the Guangzhou Tianhe City store, repeatedly referenced across the industry, is a deeply symbolic and profound adjustment. After three months of closure, the aging store's floor area was decisively reduced by two-thirds, completely transforming it from a traditional "big and comprehensive" format into an AEON STYLE format focused on food. To rebuild the offline experience, the Tianhe City store added new technical positions such as bartenders, florists, and professional fruit cutters, and even brought in Cantonese delicacies like A Po Beef Offal.
But this kind of buzz is often limited in scope. Under the cruel rules of retail, the success of a showpiece never equals success at scale. This flagship model, with its high investment and high-experience configurations, imposes extremely demanding requirements on foot traffic and average transaction value, making it impossible to replicate broadly as a universal standard.
Aeon's true "mass production" experiment—the real stress test of its operational capability—is only just beginning to unfold in the community retail segment.
According to its plans, Aeon is launching a new curated community supermarket format in regions such as Hubei, strictly limiting store size to under 1,000 square meters, focusing on high-frequency daily essentials within a 3-kilometer living circle, and supporting it with home delivery within 3 kilometers and a 7-day no-reason return policy. Compressing and reengineering a supply chain originally built to serve stores of over 10,000 square meters, and then squeezing it into a few hundred square meters of community street-front space, is undeniably an extremely difficult adjustment.
The community retail track is far deeper than it appears. It is already packed with convenience store giants like Meiyijia, local fresh produce brands like Qian Dama that have perfected the "daily sell-through" model, and hard-discount players like Hema that compete on low prices. In this deep-water arena of extreme inventory turnover and downward penetration, Aeon is attempting to differentiate through the experiential appeal of Japanese lifestyle, but it faces a harsh reality: in price wars, it struggles to compete head-on with hard-discount stores; and in localizing the flavors of fresh and prepared foods, its Japanese background makes it difficult to be more grounded than local players.
This exploration of small-format stores is still groping in the dark, not even close to achieving a stable, profitable operating model.
Testing the waters with small formats
But "still exploring" does not mean "already out of the game." If the Chinese retail market is viewed as an arena, foreign hypermarkets have collectively undergone a wave of restructuring. Carrefour's once-glorious China business ended up in a stalled state after being sold to Suning; brands like Lotte and E-Mart pulled back and exited early; and even fellow Japanese retailers Ito-Yokado and FamilyMart have been continuously adjusting their footprints.
Against this backdrop of peers retrenching, Aeon's ability to maintain a pace of opening dozens of new stores each year does demonstrate a rare capacity for survival. But stripping away the illusion of "survivorship bias," Aeon's current position is by no means that of a top student who has already passed the exam.
Facing the brutal iteration of the retail industry, it is more accurately characterized as a "chaser" barely staying in the game. It holds one more breath than those peers who have exited the market, but in front of true leaders, its responses always seem half a beat too slow.
Sam's Club has generated viral social buzz with best-selling items like Swiss rolls, with annual sales exceeding 1 billion yuan; Aeon's Japanese-style rice balls and other prepared foods, by contrast, have failed to generate comparable market traction. It lacks the extreme single-product explosiveness of the top players and the bargaining power of a truly global supply chain, while its organizational responsiveness is less agile than Hema's instant decision-making chain for "30-minute delivery" or Yonghui's aggressively localized "renovated stores."
But looked at from another angle, acknowledging itself as a "chaser" is precisely the beginning of Aeon becoming pragmatic. From sitting high on a pedestal as a "model exporter" to now bowing its head and learning through trial and error as a "co-participant," Aeon has finally come down from its high horse.
It has begun aggressively developing private-label brands to lift gross margins. It has begun closing those large stores that offered only false prosperity, pivoting to small formats that truly test per-square-meter productivity. It is even planning to pilot a brand-new discount store format in Guangzhou and Hong Kong before 2027, aiming to push product prices down another 10% to 15%.
The shift from "big and comprehensive" to "small and beautiful" is by no means as simple as cutting floor area in half—it represents a complete teardown and rebuild of the entire procurement system, data-driven product selection, digital responsiveness, and membership operations logic.
In the collective restructuring wave of foreign retail in China, Aeon's "catching up" is an extremely pragmatic survival strategy, not a commercial disgrace.
A final note
The media frenzy will eventually subside. Aeon has not withdrawn from China, but the era of JUSCO—when a single set of Japanese standard blueprints could easily win in the Chinese market and rake in money with eyes closed—has been permanently sealed away in the archives of business history.
China's retail testing ground has never sympathized with the tears of the weak; it only respects the resilience that follows the cycles of the times.
Aeon's "chase" is not the end of its story. As long as it keeps paying tuition at the table, it still retains the possibility of securing a ticket to the new era. Whether the community stores in the Greater Bay Area can achieve a profitable operating model—Aeon has not yet given its final answer.
On March 23, 2026, the Aeon supermarket in Tianjin Teda will officially close. Whether this veteran company can secure its "entry ticket" for the new cycle—this question, like the "material uncertainty related to going concern" emphasized by its auditors, is now on a countdown.
The answer is no longer hidden in dry financial reports. It lies on the shelves of the next Greater Bay Area community store, and in whether it can precisely sell even one hot rice ball tailored to local tastes to a Chinese consumer before 8 p.m.
Thirty years ago, Aeon believed it had arrived as a mentor bringing mature experience. Thirty years later, it has finally come to understand that in China's harshest retail testing ground, there are no permanent authorities—only examinees who must face challenges at every turn.
This thirty-year lesson in China—the real test is only just beginning.