Endless business closures, through the eyes of a Chinese consumer 👀 | Following the Yuan

Many business models in China were built during the economic upgrade era, betting on a better tomorrow where people would continue to spend lavishly. That is the root of today's problem.

Editor’s note: Often, I find there isn’t enough color and perspectives from Chinese consumers in English — the distinctive details, thoughts and emotions that reflect the complexity of life in China. This is largely a structural issue stemmed from the Great Firewall.

Moreover, I realized that the stories and sentiments I encounter online and IRL don’t always make it to headlines in English.

In addition to my own writing, I want to try something new to fill that gap: To let you hear from Chinese consumers directly on specific topics. This time, I’ve chosen two blog posts from a female consumer on failures of businesses with a pre-paid model. She’s in the import/export beauty industry, originally from Shanghai, is recently divorced and is raising a young child.

She used the term "爆雷" (bào léi) a lot, which means ‘landmine explosion’ when translated directly. The Chinese public learned it en masse in 2018, when thousands of peer-to-peer (P2P) platforms failed. The platform users lost their principal and interest. Post-pandemic, the term has expanded to describe the broader phenomenon of business closures across various industries as consumers face similar issues. It can be used interchangeably with “暴雷”, “跑路 (run away)”, “倒闭 (bankruptcy/closure)” in colloquial Chinese.

You can read both of her original Chinese posts in full here (Aug. 26, 2024) and here (Oct. 23, 2024). Leave your comments below!

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暴雷 bào léi | The waves of business closures I experienced myself...Aug 26

It’s been a day full of bad news.

Ever since my ex-husband and I lost tens of thousands on a [FineYoga (梵音瑜伽)] membership that went bankrupt, I haven’t dared buy any prepaid card over 3,000 yuan. I’m letting my kid’s using up her parkour class package, which cost over 10,000 yuan, fearing they’d go under too.

The national chain studio FineYoga 梵音瑜伽, which was founded in 2002, closed in Feb. 2023. Image: The Paper

While eating breakfast today, Tutu mentioned in the group chat that Will’s (威尔士) went bankrupt. Even until the last minute, they were still selling memberships, including 10- and 30-year super-long memberships. I casually commented, “Back when I was still a student, Will Fitness was for high-end white-collar workers — it was out of reach for most people.” [Editor’s note: she should be referring to the closure of a local Will’s location. There have been constant store closures in Shanghai as well, , which sparks concerns for remaining customers.]

After breakfast, I was supposed to take Azai (her daughter’s nickname) to her art class. But just then, another parent in the group chat was demanding a refund, saying that a large number of teachers had left, making it hard to book a class, and warned that there might be a risk of bankruptcy. Hearing this, I quickly canceled the class.

Azai then asked, “Mom, can I take a roller skating class or a baking class?” I made a bunch of calls, but more than half of the dozen places had shut down. Two or three claimed they were still open, but all their teachers were on “vacation.” I seriously doubted they were just faking it. Anyway, we couldn’t make it to the roller skating class.

I then tried calling around to book a baking DIY class. Some said they had just one teacher, and today was fully booked; others would only open if enough people joined. Since it was raining, no one had signed up, and they wouldn’t hold a class just for us. Finally, a hotel told me they have a not-so-cheap “little chef” experience for sale.

They told us over the phone that each day had a different theme, and that the class would run even with just one or two kids. Today’s class was supposed to be unicorn cakes. Excited, we took a taxi for over an hour and arrived at the hotel all soaked. But to our surprise, the hotel staff gave us a horrified look and said there was no baking class today — unicorn cake was just the theme for this week, with the class held only once a week.

I rolled my eyes in frustration, remembering a large ABC Cooking studio downstairs. I asked about it, only to find out it was already closed. The hotel restaurant staff quietly remarked, “They didn’t just close – they went bankrupt and disappeared. 🤷‍♀️

Founded in Japan in 1985, ABC Cooking Studio entered China in 2010, and closed 12 stores in the market in July 2024.

Everywhere I tried was fully booked or closed, so I had no choice but to call a Western restaurant I’d been visiting for over a decade. I started with, “I’ve been a loyal customer for over 10 years. There’s nowhere for my kid to go over summer break – could you possibly arrange a pizza or cake-making experience class for us?”

Business must be that bad because they agreed right away. 

Relieved, I dropped my kid off. It was around lunchtime, but the restaurant had only one table occupied. The chef was incredibly kind, showing Azai how to make pizza. When we finished, they only charged me 80 RMB for the cooking experience, and the total meal cost just over 200 RMB.

While Azai was playing in the restaurant, I took some meetings at my company and scheduled her next for her to release her energy. There was a kids’ martial arts class downstairs, so I called to sign her up for a trial class. But… they had gone bankrupt as well.

Luckily, the rain had stopped, so I had Aunt Li take Azai out for a bike ride and to play with water guns.

By the time we got home, exhausted, I read the news that IBM was leaving China, dismantling its R&D department which had over 1,000 people. I forwarded it to my girlfriend, and she replied with another news saying all Din Tai Fung branches in Beijing had closed.

Taiwanese restaurant chain Din Tai Fung had closed 14 of its Beijing stores in October 2024, citing licensing issues.

And yet, that’s not even the worst of it.

Aunt Cui told me the kindergarten Azai attended for summer classes might be shutting down, too. Parents are all worried about what will happen to the tuition they’ve already paid.

There’s no end to this year’s wave of closures Oct. 23

I almost signed up for a membership.

Thankfully, I just came across some news.

Everyone in the family knows that Azai loves drawing. She draws at home, while traveling, and before and after class—it’s her favorite thing.

I’ve been searching for an art school that embraces her “scribbles,” one with a philosophy that aligns with ours, teaching her some basic techniques without stifling her spontaneous creativity.

I firmly believe that protecting her imagination is more important than teaching her advanced skills.

Spirit, freedom, courage, and imagination are essential for a girl’s survival in this world.

We’ve checked out several places, both traditional and more Western-style ones, and tried out a few trial classes.

She liked the trial sessions, but the overly enthusiastic sales pitches made me hesitate.

An artist friend advised me not to enroll her too early in formal art classes. Before the age of 4, it’s better not to “teach” her too much. Azai reassured me, saying, “Mom, I love drawing. You don’t need to sign me up for a class. I can draw without a teacher.”

If she’s not in a rush, then neither am I.

I wasn’t in a hurry to buy a course package because I still hadn’t visited Young Merlot (a popular art institution).

People say it’s expensive but professional, so I thought I’d find time to try it out.

Then, just now, I stumbled upon this post 👇

It scared me into immediately searching on Xiaohongshu and it turned out to be true.

I read many posts about YMM’s closures. It turns out the one in Xiamen shut down, but other locations don’t seem to be doing well either.

Looking more closely, I found out that many of them are franchises.

No wonder—uncontrolled franchise expansion leads to varying levels of teacher quality, operations, and service, tarnishing the brand’s reputation.

It’s like when counterfeit products flood the market—if a brand doesn’t take strong action to address the problem, the reputation of the fakes can destroy the brand’s goodwill.

With translation help from Rongrong Zhuge and ChatGPT.