Grocery Delivery Services In China In Turmoil

08/03/2022

The downturn in the economy in China coupled with unbridled competition and mismanagement has taken a toll on grocery delivery companies in that Nation.  Industry leader, MissFresh, founded in 2014, is now technically bankrupt down from a peak valuation of $3 billion.  MissFresh and its competitors established too many distribution centers, expanded at a rapid rate and assumed high debt burdens. that benefitted from the COVID shutdowns.  Although MissFresh is the first of the large online grocery delivery enterprises to fail, Shihui Technology, backed by Alibaba, has closed operations in over 2,000 cities and has incurred the displeasure of regulators who fined the company $450,000 for inappropriate marketing practices.  A subsidiary of rideshare giant Didi Global, also in grocery delivery, has laid off thousands of workers.

 

At its peak, MissFresh, funded by Tiger Global Management and Tencent Holdings, established 600 warehouses in the suburbs of 17 cities in China to achieve 30-minute delivery times.

 

As with many companies in China, the veracity of financial reports are questionable and MissFresh failed to release a 2021 annual report with the last quarterly results available covering  the second quarter of 2021.  As of September 2021, the company had $479 million in cash with short-term liabilities exceeding $500 million.

 

Inevitably, backers abhor extended cash burn and ultimately withdraw support from startup companies that fail to generate free cash flow resulting in collapse.










































































































































































































Top