Chinese consumers’ demand for fresh food delivery has grown during the COVID-19 pandemic, driving a young Chinese e-commerce player to raise nearly half a billion dollars to continue expanding its delivery network.
Beijing-based home delivery firm Missfresh has raised USD 495 million (EUR 425.7 million), split between cash injections from state-backed China International Capital Corporation (CICC) and state-run ICBC International Securities as well, as U.S. hedge fund Tiger Global and Abu Dhabi Capital Group.
Also putting in cash in the latest funding round is Chinese technology giant Tencent, which owns the popular Wechat microblogging service. Missfresh’s app is synched with Tencent’s WeChat messenger platform and its payment processing service.
Founded in 2014, Missfresh – known better to its customers by its Mandarin name, “Mei Ri Youxian” – claims it has 1,500 small warehouses in 30 Chinese cities, through which it can deliver within 30 minutes. Various imported seafood items are available on the site, including salmon and shrimp from North America as well as crab and shellfish from Europe.
Missfresh runs its operations out of Changshu, a suburb of the prosperous east coast city of Suzhou (an hour from Shanghai by bullet train), and local government there is also contributing to the company’s latest round of fundraising, though the exact figure hasn’t been specified.
Growing Sino-U.S. tensions over technology don’t appear to be impacting the appetite among U.S. investors for Chinese tech plays, as evidenced by the fact that among the early investors in Missfresh was marquee U.S. investment firm Goldman Sachs. Investors keen to get in on the growth story that is Chinese online food sales are putting in cash to allow leading players like Missfresh to establish a dominant position before the market matures.
China’s home delivery service is dominated by tech firms with the deep pockets required to invest in cold chain logistics across a vast country. With its Tencent affiliation and money, Missfresh will compete against the Alibaba-owned Hema Xiansheng (also known as Freshippo) supermarket chain.
However, the investment comes at a time when Chinese consumer spending is weak in relative terms. China’s retail sales were down 1.8 percent year-on-year in June, according to the National Bureau of Statistics, as consumers delay purchase in an uncertain economic landscape. While Chinese consumers are buying more online, there has been a hit to consumer sentiment from the COVID-19 outbreak, as well as ongoing Sino-U.S. trade frictions.
