Last week, China launched an anti-trust probe into Alibaba and called in its financial services affiliate Ant Group for a meeting. Beverage chain Luckin Coffee’s growth slowed but continued in 2020. China’s K-12 edtech giants Zuoyebang and TAL Group received funding boosts, while rival Xuebajun is reportedly insolvent.
Alibaba founder’s empire facing scrutiny
- Chinese market regulators announced on Thursday an investigation of Chinese e-commerce giant Alibaba for anti-competitive practices. (TechNode)
- On the same day, regulators called in executives at Alibaba’s fintech affiliate Ant Group for a meeting about regulation compliance. (TechNode)
- China’s market watchdog summoned on Dec. 22 six of China’s largest consumer internet businesses, including Alibaba, Tencent, JD.com, and Meituan, for a meeting about tightening control over community group buying. It warned the firms about predatory pricing and selling counterfeits. (The Wall Street Journal)
Luckin’s rising revenue
A recent report submitted by Luckin Coffee’s liquidator to a Cayman Islands court offered a glimpse into the troubled coffee chain’s finances. Reeling from its sales fraud, ensuing Nasdaq delisting, and impact from the pandemic, Luckin reduced its store count 13.5% to 3,898 as of the end of the third quarter from 4,507 in end-2019.
Luckin Coffee earned RMB 1.15 billion ($176.3 million) in Q3, a 35.8% increase over the same period a year earlier. In Q2, revenue grew 49.9% year on year to RMB 980 million, while Q1 revenue—prior to its fraud admission—totaled RMB 565 million, 18.1% higher than the same period a year ago. Customer growth and purchase frequency powered growth, according to the company.
Edtech firms cash in
- Chinese edtech unicorn Zuoyebang announced Monday the completion of a more than $1.6 billion round from investors including Alibaba Group and SoftBank’s Vision Fund, as well as existing investors Tiger Global and Sequoia Capital China. The funding comes six months after a $750 million Series E received in June this year, raising the company’s total funds received to over $3.4 billion. (Reuters)
- Yuanfudao, another Chinese edtech firm, secured $300 million from Jack Ma’s Yunfeng Capital. This is the company’s third funding round received this year, following a $1 billion G1 round in March and $1.2 billion G2 round in October. (KrAsia)
- TAL Education, a K-12 after-school tutoring services provider in China, announced on Tuesday a $3.3 billion private placement plan led by tech venture capital firm Silver Lake. The private placement will account for a combined 6.5% of the company’s outstanding shares. (TAL)
- Zhangmen, a Warburg Pincus-backed Chinese online tutoring platform, is reportedly seeking to raise $300 million in a US stock market listing. (Bloomberg Quint)
- Xuebajun, an K-12 education app that received $200 million in funding since its establishment in 2013, is reportedly insolvent. Nearly 10,000 employees and teachers are owed payment and 100,000 users, who pre-paid for their services, have been affected, a self-identified employee of the company said in a WeChat post. The company has not officially filed for bankruptcy. (Sina, in Chinese)
Supermarkets and tech
- The average daily orders from Sam’s Club‘s nearly 100 warehouses in China have increased more than 10-fold in the three years since the American membership-only retailer entered into a partnership with Chinese grocery delivery platform JD Daojia. JD Daojia provides one-hour delivery to the wholesaler’s online orders. (Dada, in Chinese)
- Walmart, the supermarket chain behind Sam’s Club, hosted on Dec. 18 a one-hour livestream on TikTok, where users can purchase products featured by the livestreamers without leaving the app. (TechCrunch)