Outlook For Chinese Listings Uncertain, But Connected Economy Here To Stay

Maybe there’ll be a drinking game tied to the state of Chinese firms in an uncertain regulatory environment.

You take a sip very time an alcohol delivery firm lists for funds, take two when an initial public offering (IPO) is pulled in another sector.

We’re being a bit tongue in cheek, of course. But a spate of recent headlines seems to indicate just how rocky the market for corporate activity has become. We’re speaking, of course, of the fact that in the wake of the Didi-listing-that-turned into a broken-IPO plunge that has apparently scared off other firms. The Chinese fitness app that is known as Keep has withdrawn its plan for a U.S. listing. So has LinkDoc.

We noted in this space recently that increased scrutiny over Didi — and the fact that the government has forced it to severely limit its presence even within its home country (by pulling the app from WeChat and Alipay) — has sparked concern through the sector.

But on the other hand, the firms that are listing and pulling, as it were, are still showing the continued impacts of the digital shift and changing expectations in China — namely, that consumers are embracing platforms, and apps.

What Remains 

And those sea changes may linger long after crackdowns and regulatory filings are in the rearview mirror.

News came this week, per Bloomberg, that Jiuxiaoer, an alcoholic beverage delivery company based in China, is seeking to raise about $200 million in a new funding round.

Separately, the news outlet also reports that Chinese convenience store chain startup Bianlifeng has filed confidentially for a U.S. initial public offering. That offering  could raise about $500 million, according to Bloomberg.  We’ll know more about the financials when they are filed with the SEC.

But consider the business models, which show high tech at work, and changes in the ways in which Chinese consumers opt to pay and the ways in which they expect to get what they need.

Bianlifeng operates cashierless convenience stores. And in a setup reminiscent of, say, Amazon Go, consumers can buy goods right off the shelves by scanning QR codes. Jiuxiaoer, which Bloomberg said translates into “wine server,” operates as an online platform and app that gets customers their booze within about 25 minutes, directly to the doorstep. In a further nod to the platform economy, LinkDoc provides healthcare services that are steeped in big data and artificial intelligence (AI).

We note that even with the confidential filings, and the (thus far) lack of financial data that might give the nod to just how pervasive the digital shift has been at least for some of the aforementioned firms, we can turn to Didi’s own filing to see the groundswell. Didi said in its filing that there exists a massive opportunity for fresh food and grocery (a $1.8 trillion industry) to shift online in China. “In 2020, only 20.9 percent of total fresh food and grocery spend was transacted online,” said the company, a tally that is expected to grow to more than 45 percent by 2025.