Chinese regulators fined edtech companies Zuoyebang and Yuanfudao for unfair competition. Share prices for Tencent-backed Meituan fell to a seven-month low after a controversial social media post. Didi Chuxing has announced plans for its community group-buy platform to list as early as next year. Suning Group signed an agreement with local-level government agencies to establish a public-private fund.
Retail
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China’s e-commerce and retail market offers a fire hose of products, choices, business models, rapidly changing content, and more. Here’s what you need to know about China’s online retail market for the week of May 6 – 12.
Regulation and fines
- Regulators on Monday slapped Chinese edtech rising stars Zuoyebang and Yuanfudao with RMB 2.5 million ($389,000) penalties each for unfair competition. The startups were found to use misleading marketing tactics, offer nonexistent discounts, and making false claims to lure consumers. Other edtech sector companies were previously dealt smaller penalties. Zuoyebang is considering a US IPO. (TechNode)
- Apps by Alibaba, Baidu, and Tencent were among 84 mobile security and online lending platforms singled out by China’s top internet regulatory body for invasion of privacy and unwarranted collection of user data. Companies mentioned have 15 days to change their practices before further action will be taken. Regulators named in March an earlier batch of 33 apps found to infringe on consumer privacy. (SCMP)
Meituan troubles
- Food delivery giant Meituan’s shares fell by 9.8% in Hong Kong on Monday before closing 7.1% down, wiping $16 billion from its market cap. The sudden drop occurred after Meituan co-founder Wang Xing posted a Tang dynasty poem on the Fanfou social media platform criticizing book burning. The since-deleted post comes at a politically sensitive time, after Chinese regulators opened an investigation into Meituan on April 26 for antitrust violations and torpedoed fintech firm Ant Group’s dual IPO in November following public criticism of the “over-regulated” fintech industry by founder Jack Ma. (Bloomberg)
- Shanghai’s Consumer Council met with Meituan on Monday, criticizing the lifestyle platform for misleading content, refund issues, and its delivery process for perishable foods. According to the Council’s statement, Meituan said that the company will conduct a self-evaluation and promptly submit a rectification report. (Shanghai Consumer Council, in Chinese)
IPOs and funding
- Chengxin Youxuan, the grocery division of ride-hailing leader Didi, intends to spin off and file for an IPO as soon as next year, according to company executives. The platform is one of many recent initiatives by China’s tech giants to claim a share of the rapidly expanding community group-buying market. (TechNode)
- JD Logistics’ latest Hong Kong prospectus showed that its losses in 2020 widened to $620 million from $340 million in 2019. The JD.com affiliate received approval on April 29 from the Hong Kong stock exchange for a public offering, through which it aims to raise $4 billion. (KrAsia)
- Online grocery delivery platform Dingdong Maicai has secured $330 million in a “D-plus round” led by SoftBank Vision Fund, according to its advisor Cygnus Equity. Dingdong Maicai has raised more than $1 billion this year including a $700 million D round it received in April. (TechNode)
- Cloud storage and data analytics platform Qiniu has filed for an IPO on the Nasdaq exchange. Alibaba, by way of Taobao China, is the largest stakeholder with a 17.7% stake. The company is trending towards profitability, showing a 30% increase in revenue since last year. It’s the leader by market share among companies following the platform-as-a-service model, and a key player in China’s flourishing cloud services economy. (Nikkei Asia)
Suning Group
- Chinese retailer Suning Group announced on May 6 that the company had signed an agreement for the creation of a New Retail Development Fund with the state-owned Assets Supervision and Administration Commissions of Jiangsu Province and Nanjing City. According to the statement, the RMB 20 billion public-private fund will be used to invest in Suning’s businesses and assets in new retail. (Suning Blog)
Amazon pulls Chinese products
- At least 11 top Chinese sellers, including gadget brands Aukey and Mpow, have disappeared from the Amazon platform for questionable marketing tactics such as manipulating user reviews, according to e-commerce research film Marketplace Pulse. The suspended accounts contributed over $1 billion to Amazon’s GMV. Chinese merchants account for 75% of new sellers on Amazon in January, seeing it as an opportunity to expand overseas amid domestic competition. (TechCrunch)