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China’s Big Tech puts the brakes on community group buying as government scrutiny increases

  • China’s Big Tech platforms have applied their default strategy of ‘blitzscaling’ to grocery delivery in the country’s price-sensitive areas
  • Beijing has become increasingly concerned, as the new business model threatens traditional distribution channels and tens of millions of jobs

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The next big thing for China’s Big Tech has raised red flags over its threats to traditional distribution networks of wholesale markets and family-run shops – as well as tens of millions of jobs. Photo: EPA-EFE
Tracy Quin Nanchang,Jane Zhangin NanchangandMinghe Hu
Xiong Jingfang opened her convenience store four years ago on a narrow street in downtown Nanchang, the capital of eastern China’s Jiangxi province. Last year, her shop became one of the thousands of pickup points in the city, joining in China’s latest Big Tech trend: community group buying.

When residents of her surrounding neighbourhood place orders with their group for vegetables, fruit, meat, and snacks, deliveries will arrive at Xiong’s store for pickup and she’ll make a commission as the last stop in a much larger logistics strategy.

However, the amount she is able to make has dropped steadily from 10 per cent in late 2020 to now as little as 1 per cent.

“It has become just a sideline. I’ll take orders when they come in, but now it does not really make much difference,” the 29-year-old Xiong said.

Behind Xiong’s dampened enthusiasm is a much broader cooling of a once-hot business model, as it comes under increasing scrutiny from Beijing, worried about its potential disruption of traditional distribution networks of wholesale markets and family-run shops – as well as tens of millions of jobs.
Traditional retailers and service outlets in a Nanchang street. Photo: Tracy Qu
Traditional retailers and service outlets in a Nanchang street. Photo: Tracy Qu

Community group buying has become an easy target amid Beijing’s change of heart about the country’s Big Tech, with stated media reports attacking the business model as greedy capitalists trying to steal business from local business owners just trying to get by.

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