Delivery firm Missfresh collapses as another Nasdaq-listed Chinese firm falls prey to weakening economy
- The Tencent-backed on-demand delivery firm abruptly announced on Thursday that it had run out of cash, dismissing workers and leaving suppliers unpaid
- Missfresh blamed a coal miner for failing to come through on a promised investment, but China’s Covid-19 restrictions have hurt delivery operations and consumer spending
Nasdaq-listed retailer Missfresh, one of the new faces of China’s e-commerce sector, collapsed on Thursday with a dramatic announcement that it was dismissing most of its employees and leaving hundreds of suppliers unpaid.
Missfresh’s stock price on the Nasdaq had fallen to just 14 US cents on Thursday, about 1 per cent of its initial public offering price of US$13 last June, as its key business of delivering fruit and vegetables had largely ceased operation. The company said in a statement that services were facing a “temporary shutdown” amid “staff optimisation”.
For its suppliers, employees and consumers, however, the Beijing-based firm’s story is over.
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Missfresh employees were told to stay at home on Thursday. In the afternoon, they were called into an online meeting and told that it would be their last day on the job. The company said it was not sure when June and July salaries would be paid, according to an online meeting record shared with the South China Morning Post.
All executives, including its CEO and chief financial officer, have remained out of public view while a number of employees complained about their disappearance, according to the recording.
A lone security guard at the Borun Technology Park in northeastern Beijing’s Shunyi district, where Missfresh is based, said on Friday that all the company’s employees had moved out and no one had returned to the office from the day before.
Missfresh said on Thursday that the company ran out of money after a coal miner failed to deliver 200 million yuan (US$30 million) in 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 its promise of 30-minute deliveries, has also seen its operations, which rely on extremely efficient logistics, severely disrupted by quarantine requirements, mini lockdowns and other policies designed to control the spread of Covid-19.
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The 8-year-old company recently notified users through its app that the half-hour delivery promise would be changed to next-day delivery.
The companies competed for market share by offering massive discounts, leading to scrutiny from China’s market regulator. Missfresh, Didi and Meituan, among others, were all fined for unfair price competition.
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In March, Dingdong was summoned by the market regulator in Beijing over food safety issues, including selling dead fish while marketing it as alive and offering vegetables past their sell-by date.
The online-to-offline grocery industry “has long been mired in unhealthy competition and price wars that result in losses”, said Li Chengdong, CEO of e-commerce consultancy Dolphin Think Tank. “In addition, strict regulations have dampened the capital market’s outlook for the industry.”
Missfresh reported a loss of US$151 million in the third quarter of 2021, widening by 58 per cent from a year earlier, according to its latest financial disclosure.
