Nasdaq-listed retailer Missfresh, one of the new encounters of Chinaʼs ecommerce sector, collapsed upon Thursday with a dramatic announcement that it was disregarding most of its workers and leaving hundreds of suppliers unpaid.
The meltdown associated with Missfresh, which has elevated at least US$2bil (RM8. 89bil) from big-name investors including Tencent Holdings plus Tiger Global, is another cautionary tale pertaining to investing in China-focused Internet services, as the world’s No 2 economy quickly loses momentum with Beijing’s “dynamic zero” Covid-19 plan contributing to lower customer spending.
Missfresh’s stock price for the Nasdaq had fallen to just 14 US cents on Thursday night, about 1% of its initial public providing price of US$13 (RM58) last June, as the key business associated with delivering fruit and vegetables got largely ceased operation. The company said in a statement that solutions were facing a “temporary shutdown” amid “staff optimisation”.
For its suppliers, employees and consumers, nevertheless , the Beijing-based firm’s story is over.
Missfresh employees had been told to stay at home on Thursday. In the afternoon, they were known as into an online meeting and told it would be their last day on the job. The company said it was unsure when June and July salaries will be paid, according to an online meeting record distributed to the South China Early morning Post .
All executives, which includes its CEO and chief financial official, have remained from public view whilst a number of employees lamented about their disappearance, according to the recording.
Missfresh said upon Thursday that the company ran out of money after a coal miner did not deliver 200mil yuan (RM132. 12mil) within investment in a deal reached between the two.
However , Missfresh has also been operating in an increasingly tough environment. Social retail spending, a general measure of consumer spending, contracted in China in the first half of 2022.
Missfresh, known for the promise of 30-minute deliveries, has also observed its operations, which usually rely on extremely efficient logistics, severely damaged by quarantine requirements, mini lockdowns along with other policies designed to control the spread of Covid-19.
The eight-year-old company lately notified users through its app the fact that half-hour delivery promise would be changed to next-day delivery.
Whenever Missfresh went community in New York final summer, it raised US$273mil (RM1. 21bil). Its SoftBank Group Corp -backed rival Dingdong Maicai detailed days later, raising US$95. 7mil (RM425. 91mil). Both businesses had lowered their preliminary IPO targets , reflecting concerns among investors about their own growth outlook among intense competition within the mainland’s on-demand shipping market.
China’s online-to-offline grocery portion started to take off in 2020, the very first year of the pandemic that saw technology giants including Meituan , Pinduoduo and Didi Chuxing expand into the booming industry.
The businesses competed for market share by offering substantial discounts, leading to scrutiny from China’s marketplace regulator. Missfresh, Didi and Meituan, among others, were all fined for unfair price competition.
Within March, Dingdong has been summoned by the marketplace regulator in Beijing over food security issues, including selling dead fish while marketing it because alive and offering vegetables past their own sell-by date.
The online-to-offline grocery store industry “has long been mired in unhealthy competition and cost wars that lead to losses”, said Li Chengdong, CEO of ecommerce consultancy Dolphin Think Tank. “In addition, strict rules have dampened the main city market’s outlook for that industry. ”
Missfresh reported the loss of US$151mil (RM672. 02mil) in the third quarter of 2021, widening by 58% from a year previously, according to its latest financial disclosure. – South China Early morning Post