Troubled Beijing-based e-grocer Missfresh comes under regulatory scrutiny
A Missfresh warehouse is apparently shut down in Beijing, China, July 29, 2022. /CFP

A Missfresh warehouse is apparently shut down in Beijing, China, July 29, 2022. /CFP

A government-approved consumer watchdog, the Beijing Consumer Association (BCA), on Tuesday said it has summoned e-grocer Missfresh, urging the firm to quickly issue customer refunds as it reportedly faced cashflow problems.

The Beijing-based firm recently caught the public eye as a purported internal notice, circulating on social media, claimed that the company was running out of cash and unable to keep operating.

Missfresh later denied issuing any notices and told local media that what was being circulated online was false.

However, recent checks by CGTN on the Missfresh app showed that the company has stopped its key 30-minute grocery delivery services. Since end-July, Missfresh's orders can only be delivered as quickly as the next day and it was no longer taking same-day delivery orders. Several attempts to place fresh orders in Beijing failed as of Wednesday.

Missfresh had already suspended most of its staff's work and salary payments since late July, according to Caixin Global. Dozens of Missfresh employees have sued the company in a Beijing labor arbitration court for over two-months worth of unpaid salaries and severances.

The grocery delivery platform had said layoffs were due to business restructuring.

As of Tuesday, Missfresh's Nasdaq-listed stock price has plunged over 98 percent from its listing price to $0.16 apiece.

In a statement, the Beijing consumer-rights group BCA said it notified Missfresh about the consumer complaints they received on August 4 and inquired about the current situation of the company.

The association asked the grocery startup to quickly reveal refund plans as some clients complained they could not retrieve their pre-paid funds or gift card balances.

It also required the company to address the current situation and hand over a rectification plan within three working days to ensure protection of consumer rights.

Missfresh – established in 2014 and backed by Tencent, Tiger Global and Goldman Sachs – listed on the Nasdaq in June last year. It was the first pure e-grocer to list among many of China's growing online grocer market.

However, its share price has fallen below $1 since April, and it faces the risk of delisting. Aside from failing to disclose its 2021 annual report on time, Missfresh also received a warning letter from the Nasdaq's listing qualification department.

According to the company, 85 percent of is total net revenues came from on-demand distributed mini-warehouse services. The service enables quick food deliveries by placing small warehouses closer to residential neighborhoods.

Between 2018 and 2020, Missfresh lost a total of 7.05 billion yuan ($1.04 billion), according to its earnings reports.

Missfresh did not immediately respond to CGTN's request for comment.

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