Rot starts to spread in China’s e-grocery frenzy

Missfresh

09/07/2021 04:52

(The author is a Reuters Breakingviews columnist. The opinions
expressed are their own.)
    HONG KONG, July 9 (Reuters Breakingviews) - The country’s
hottest e-commerce craze is souring fast. Tongcheng Shenghuo,
which operates a group-buying app for fresh produce and other
daily necessities, has decided to file for bankruptcy, according
to its social media account. Boss He Pengyu blamed larger rivals
including the $210 billion food delivery company Meituan
 3690.HK  and e-tailer JD.com  9618.HK   JD.O  for piling into
the sector and sparking off cash-burning subsidy wars.
    The three-year-old company was last valued at $1 billion
with 80,000 distribution centers across China. Tongcheng
Shenghuo recruited community leaders to organise bulk purchases
online and handle deliveries. It’s a business  urn:newsml:reuters.com:*:nL4N2MF288 that
has attracted nearly $3 billion in funding last year alone,
according to Chinese data provider Qichacha. 
    More trouble is brewing across the broader online grocery
sector. Regulators are clamping down on practices such as price
fixing and dumping. The disappointing performance of
recently-listed Dingdong Maicai  DDL.N  and MissFresh  MF.O 
 urn:newsml:reuters.com:*:nL2N2OA01Y shows the frenzy may be nearing the end of its
shelf life. (By Yawen Chen)
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 (Editing by Robyn Mak and Katrina Hamlin)
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