Regulatory questions and a looming crisis at Chinese real estate giant Evergrande are adding pressure to the China’s e-commerce sector.
China’s fast-growing internet economy has faced increased scrutiny in recent months from the Chinese government, which has questioned its processes and policies concerning data protection and consumer rights.
Fang Xinghai, vice chair of the China Securities Regulatory Commission, said in a recent statement China will increase regulation of companies with consumer-facing platforms and will look into imposing mandates requiring higher levels of data privacy and systems ensuring national security.
The news has spooked international investors, including those who backed the recent IPOs of grocery e-commerce start-ups Dingdong Maicai and MissFresh, whose stock prices have both suffered in public trading since their launches. Fang said he has briefed international investors to assure them their investments would be safe even with the government’s new proposals.
Meanwhile, a recent emphasis from the Chinese government on wealth redistribution has prompted much speculation among China’s wealthy about a widening of China’s tax net. A further illustration of government intent came recently with an announcement by the State Tax Administration of an escalation in its random checks of celebrities and online influencers – many of whom are hired to promote premium seafood products – for tax evasion.
The new central government push for “common prosperity” via wealth redistribution, alongside a debt crisis emerging at Evergrande, the country’s largest real estate developer, is rattling the property-owning middle class. There are fears a debt crisis at Evergrande could prove contagious, dragging down property prices that currently underpin urban prosperity in China.
Beijing-based MissFresh, which targets the rising Chinese middle-class demand for groceries, in part by targeting clients through data-tracking, could suffer as a result of either situation.
However, the company continues to expand, having recently announced it will be stepping up its deliveries of live seafood in China’s wealthy east coast cities.
MissFresh has claimed demand from customers for live seafood rose 20-fold between March and September this year. The firm is now promoting its capacity to deliver 100 varieties of live seafood within 30 minutes of ordering, thanks to a network of small, neighborhood warehouses which it has established. Live seafood is kept fresh through systems that include oxygen injection, according to MissFresh.
Photo courtesy of hxdbzxy/Shutterstock
