Probably no companies will want to learn from Fat Donglai in the future.

Article | Business Privacy Society, Author | Haoran

The “Pang Donglai” company has further refined its original profit distribution mechanism, making it more transparent and institutionalized. This development has increased the difficulty for other companies to learn from Pang Donglai, and many are no longer interested in trying.

The world is diverse—some companies treat employees as “consumables,” while others like Pang Donglai. The fundamental difference in management approaches stems from managers’ differing views on human nature.

Some managers assume that people are inherently averse to work, content with mediocrity, and unwilling to take responsibility. As a result, they increase control and supervision over employees, a practice known as “management control.”

Others believe that people possess self-motivation and creativity capable of solving organizational problems. If employees are lazy or passive, it’s because the company has not provided enough opportunities to unlock their potential. They should create conditions to inspire employees, achieving the unity of personal and organizational goals, which is called “organizational integration.”

Years of “involution” competition, increasingly sharp workplace conflicts, and the call for human creativity and initiative in the AI era all indicate that management control in companies is nearing its end.

It’s time for companies to reduce management control and explore more in organizational integration.

01 The Increasing Difficulty of “Learning from Pang Donglai”

Recently, the “Pang Donglai 4.8 billion profit-sharing plan” sparked widespread discussion.

Founder Yu Donglai announced on social media that Pang Donglai’s profit-sharing plan involves distributing nearly 3.8 billion yuan of company assets, roughly split 50% to the management team and 50% to employees.

This isn’t about direct cash payments but “shareholding.”

In the future, these assets will serve as company equity, with annual profits continuing to be allocated 50% for team bonuses and 50% for shareholder returns.

From Yu Donglai’s detailed explanation, 12 store managers each receive 20 million shares; even the most基层员工 (entry-level employees), totaling over 8,600 people, will get 200,000 shares each. Over 10,000 employees share the benefits—full employee ownership.

Yu Donglai has also clarified multiple times that:

This isn’t about giving out cash directly but converting assets into equity, which remains in use within the company;

It’s not a temporary decision but a continuation of Pang Donglai’s 20-year-old profit-sharing system, which initially involved gift and proxy holdings by early shareholders. Now, with the Zhengzhou Dream City store expansion, assets are converted into equity to clarify ownership;

He himself holds about 5% (roughly 200 million yuan).

Overall, Pang Donglai has essentially upgraded its original profit distribution system, making it more explicit and institutionalized.

This “employee shareholding system” transforms employees from “workers” into “partners,” embedding profit sharing into the system rather than relying on the owner’s goodwill.

This further increases the difficulty of “learning from Pang Donglai.”

In recent years, many retail companies have tried to emulate Pang Donglai’s store reforms, but most, like Yonghui, Meitehao, and Zhongbai, have not replicated its success. Instead, they have fallen into losses and store closures.

The key reason is Pang Donglai’s unique employee待遇 (treatment)—基层员工 (entry-level employees) earn an average actual salary of over 9,000 yuan/month; they work no more than 7 hours daily; they have 30 days of annual leave plus 10 days of自由假 (free days) that require no reason and are approved unconditionally by supervisors; stores have “Employee Homes” with various leisure and entertainment facilities.

This isn’t just about待遇 (benefits); it’s a cultural atmosphere of “treating employees like family.” With such culture, it naturally develops into制度 (systems). As Yu Donglai said, “When employees mature within this culture, the company can transition to a true股份制 (shareholding) operation.” This制度 (system) rooted in the company’s unique culture makes it even harder for other companies to imitate.

Of course, many companies are reluctant to learn.

02 The Essence: Views on Human Nature

This also reflects the diversity of the world.

On one side are companies with strict KPIs, where “996” overtime is normal, and employees are like screws on an assembly line—supervised, commanded, and controlled.

On the other side are companies like Pang Donglai, which give employees more relaxation and autonomy, and explore “employee shareholding systems.”

Fundamentally, these two attitudes toward employees stem from managers’ different views on human nature, shaping distinct management styles, incentive mechanisms, and organizational cultures.

The first type of manager’s assumption is:

People are inherently averse to work, and given the chance, they will “slack off”;

Most people are mediocre, unwilling to take responsibility, and prefer to be assigned and directed. Only a few can handle management roles.

Managers holding this assumption believe that control, supervision, and punishment are necessary, concentrating power in a few managers, and that employees should not be given more autonomy to achieve organizational goals.

The second type of manager’s assumption is:

People are not inherently averse to work; their attitude depends on external conditions;

People can proactively take responsibility, self-direct, and motivate themselves;

Most have high imagination and creativity to solve organizational problems;

Under modern enterprise conditions, only some employees’ potentials are developed, while most remain dormant.

This manager believes that if employees become lazy, passive, or uncooperative, it’s not human nature but because the organization lacks the right conditions, and managers lack the ability to unlock their potential.

These two management approaches, based on different assumptions about human nature, are called “Theory X” and “Theory Y” by management scholar Douglas McGregor in his book “The Human Side of Enterprise.”

“Theory X” assumes people are negative toward work, somewhat “human nature is evil,” while “Theory Y” sees people positively, aligning with “human nature is good.”

The management styles associated with these are management control and organizational integration. The former emphasizes supervision and control; the latter emphasizes creating conditions to help employees achieve their goals while fulfilling organizational objectives.

As an employee, if given a choice, you would definitely prefer to work in a “Theory Y” company, like Pang Donglai. But as a manager, most would ultimately adopt “Theory X” management.

It’s obvious that managing a company with “Theory Y” is very difficult.

McGregor also suggested many methods, such as shifting managers from “supervisors” to “enablers”; building a trust culture, reducing unnecessary control; focusing on employee growth rather than just performance; promoting based on potential and willingness to develop, not seniority or relationships; establishing transparent, open compensation systems to reduce internal competition. Once these measures mature, profit sharing and employee participation systems should be established.

See, Pang Donglai is actually doing this. Yu Donglai may not know McGregor or “Theory X-Y,” but he manages based on the fundamental assumption of “human nature is good,” which naturally makes Pang Donglai a seemingly difficult-to-achieve “Theory Y” enterprise.

The key to success with “Theory Y” is the organizational culture—trust, respect, openness, rather than authoritarianism, control, and suspicion.

This culture is cultivated over many years, meaning companies that follow “Theory X” cannot suddenly switch to “Theory Y.” When facing intensified competition and low efficiency, they can only tighten control, unable to rely on individual creativity and initiative to break through bottlenecks.

03 The Time for Change Has Come

In recent years, it’s clear that companies have pushed management control to its limit. Employees’ attitudes toward work have become increasingly negative, with initiative, creativity, and confidence almost vanished. Many are just going through the motions, let alone feeling happiness.

Although AI capabilities are improving and may replace some jobs, AI can only imitate humans step by step; it cannot generate more human-based insights and creativity. Moreover, as we enter the AI era, AI skills will become standard in companies, but the real competitive edge will still depend on human creativity and initiative.

Therefore, it’s time for companies to focus on “Theory Y,” reduce management control, and explore more in organizational integration.

But this exploration is undoubtedly difficult because, historically, human managers have been better at management control.

The earliest and most extreme example of management control was in the United States. Through the scientific management revolution, complex production skills were deconstructed and standardized.

Workers only needed to perform simple tasks, with no room for original ideas, and even unnecessary movements were eliminated—“workers define the product, but the product now defines the worker,” like Charlie Chaplin’s character in “Modern Times.”

This control aimed at maximizing efficiency, enabling the U.S. to develop large-scale standardized industrial production. However, it also led to de-skilling of workers, gradually weakening their bargaining power against management.

After the 1970s oil crisis, Germany, Japan, and the U.S. engaged in fierce economic competition. They learned from American management practices, mastering standardization and mass production, with management control becoming the basic skill.

The focus of manufacturing competition shifted toward organizational integration to improve productivity.

Germany increased national efforts in vocational education, pioneering the “dual system”—training through alternating study at higher education institutions and enterprises, enhancing worker skills and preventing de-skilling. They also implemented “co-determination” in corporate decision-making, giving worker representatives voting rights to protect skilled workers’ interests.

Japan’s management and labor also established three influential systems: lifetime employment for core workers, seniority-based wages, and negotiation through unions.

These measures motivated frontline employees, who improved their skills to create greater value for the company and received compensation matching their efforts.

German and Japanese companies’ ability to mobilize基层员工 (frontline workers) through organizational integration was one of the reasons they were more competitive than American firms in the 1970s.

Faced with international competition, the U.S. did not address its organizational integration shortcomings but continued to focus on efficiency, leveraging globalized, cheaper labor to regain industrial competitiveness.

Meanwhile, companies became increasingly financialized, with stock prices integrated into management compensation, leading managers to prioritize shareholder interests—through layoffs, mergers, dividends—further dividing management and employees and undermining organizational stability.

It’s no surprise that the U.S. has both “cutthroat” scenarios like Silicon Valley layoffs of 100,000 people and super-large corporations with market values over $5 trillion and executives earning billions.

Today, the long-standing “involution” competition, price wars, and escalating workplace conflicts all show that traditional efficiency-boosting methods have reached their limit. Management control is nearly failing.

In the AI era, the most scarce resource is human creativity and passion. Companies need to evolve their management models further.