Chengxin Youxuan, the community group-buy unit of Chinese ride-hailing giant Didi Global, is to shut down operations in 22 provinces, accounting for more than 60% of its service locations, Chinese media Late Post (in Chinese) reported Wednesday. The downsizing came a month after the company laid off one-third of its staff and relocated its headquarters.

Why it matters: Didi is shrinking Chengxin Youxuan after failing to mount a significant challenge to Meituan’s and Pingduoduo’s community grocery products. China’s competitive community group-buy sector is going through new rounds of consolidation that already forced out players such as Tongcheng Life and Tencent-backed Shixianghui in July. 

Details: Chinese media Late Post reported that Chengxin Youxuan will reduce service locations from 31 provinces to nine provinces. 

  • Chengxin observed that most of the cut provinces are dominated by rivals Meituan Select and Duoduo Maicai, while the remaining nine provinces still have developing potential, the report said.
  • The downsizing is expected to be finished by next week. The unit could see more changes in the future, including further layoffs. Chengxin cut 30% of its staff in July and currently employs about 10,000 people. 
  • Chengxin is conducting 6 million daily transactions, a drop of nearly half from its peak, the report said. 
  • Didi’s spokesperson didn’t respond to TechNode’s Wednesday inquiries. 

Context: Didi was one of the first Chinese internet giants to get into the community group-buy sector, with the hope of bringing in new revenue streams as its core ride-hailing business slows. In May, the Information reported that Didi planned to spin off the unit in a separate listing as early as next year.

  • Didi is still under a state cybersecurity review that began in early July. The ride hailer listed on the New York Stock Exchange on June 30. Its market value has since tumbled to about $47 billion, a little more than half of that on its first trading day.

Zhanhang Ye

Zhanhang Ye is a Shanghai-based reporting intern for Technode, covering the content and entertainment industry. Reach out to him at 295227325@qq.com.