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China’s Growing e-Commerce Graveyard: These Companies Already Failed in 2017

China’s e-commerce market is a dog-eat-dog world, with new companies popping up every day, while older ones are throwing in the towel. How (not) to make it in China’s crazy world of e-commerce has become a hot topic of discussion on Chinese social media. What’s on Weibo takes a look at 3 big – once successful – Chinese online companies, and why they failed in 2017.

Manya Koetse

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China’s e-commerce market is a dog-eat-dog world, with new companies popping up every day, while older ones are throwing in the towel. How (not) to make it in China’s crazy world of e-commerce has become a hot topic of discussion on Chinese social media. What’s on Weibo takes a look at 3 big – once successful – Chinese online companies, and why they failed in 2017. (Premium Content).

It is still early in the year, but already some big online companies have exited China’s chaotic world of e-commerce. The release of an ‘e-commerce dead list’ (#2017电商死亡名单#) became top trending on Chinese social media on February 22, and triggered discussions on the status-quo of the market.

“One by one they collapse, one by one they pop up,” one netizen (@逛吃秦皇岛) says. With an ever-growing Chinese online population and the world’s largest e-commerce market, more companies seek to join, hoping to find a goldmine. Instead, many of them soon end up on the e-commerce graveyard. The popular idea about China’s e-market that “when there’s enough wind, even a pig can fly” (当风来了, 猪也会飞起来) does not seem to hold true for all online businesses.

Their collapse does not necessarily mean the end – for many, it is just a new beginning. “This whole business is like gambling,” one Weibo commenter responds. Another micro-blogger says: “E-commerce companies all soon become like conventional businesses. The large online companies are just too strong. It is easy to join [the market], but hard to survive.”

Let’s take a look at 3 big companies that have already collapsed this year, and what experts say goes wrong in their approach to the Chinese online market.

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“China’s 2017 e-Commerce Dead List”

Along with other Chinese media, China’s influential online e-commerce magazine Ebrun.com recently released a list of big companies that have closed their doors this year. We have selected the 3 biggest ones.

 

1. Dingfangbao 订房宝

Business: Online Hotel Bookings

With the slogan “You only sleep ten hours, why would you spend all your money for the day on it?” (只睡十小时,为何要花整天的钱), Dingfangbao was an up-and-coming online hotel booking site (app + website) selling high-class hotel rooms at low prices, focused at offering clients a luxurious room for the night.

The company started in late 2014 with its own formula that allowed customers to search for available hotel rooms after 6 pm. Through the Dingfangbao app and site, four and five-star hotels in big cities such as Beijing, Shanghai, Guangzhou, and Shenzhen could offer their rooms at competitive prices if they were not occupied or reserved by 6 pm. A win-win situation: Dingfangbao users could get a top room for a cheap price, and hotels wouldn’t be left with empty hotel rooms.

The Dingfangbao service (Dingfangbao literally meaning ‘booking treasure’) was especially aimed at business travelers who won’t arrive at their hotels until the evenings due to late meetings and leave again early in the morning.

With Japanese nude model/(adult) film actress Sola Aoi (苍井空) as their company ambassador, it seemed that Dingfangbao was also aiming at luring customers to luxurious hotels at nighttime for other purposes – similar to the ‘love hotels’ in Japan.

Japanese sexy actress Sola Aoi was Dingfangbao’s spokesperson.

Dingfangbao had a promising take-off in 2014, with various fundings and an initial angel investment of 6 million RMB (±870K$), followed by second- and third-round funding of a total of 13 million RMB (±1.9M$) in 2015 and 2016.

But on 27 January 2017, Dingfangbao announced that it would be stopping its services. CEO Sun Jianrong (孙建荣) told the media that although there certainly is a market for the Dingbaofang formula, the frequency with which its clients used these services was too low and not enough to cover their operational costs.

On Weibo, the company still has around 19000 followers. Sola Aoi, who has a staggering 17 million fans on her Weibo page, announced on February 8 that she would step down as the company’s spokesperson. A day later, the company officially closed its doors, although its website is still live at the time of writing.

 

2. Greenbox 绿盒子

Business: O2O Children’s Clothing

Online trendy children’s clothing brand Greenbox (绿盒子) was a success story when it first entered China’s O2O (online-to-offline) retail market in 2010. The company was already established by businesswoman Wu Fangfang (吴芳芳) years before, but it made a conscious shift from offline to e-commerce when Wu realized the potential of middle-class moms spending more time shopping for their kids on the internet.

In 2010, Greenbox received two rounds of funding from Trust Bridge Partners (TBP) of 20 million RMB (3M$), and of 100 million (14.5M$) from DCM. Children clothing brands such as Miss de Mode, M.I.L. Boy, Jenny Bear, and a special Disney brand all belonged to Greenbox, which soon was named one of China’s top 10 e-retailers.

Greenbox tapped into the children’s clothing at the right time, as this retail segment has become especially booming business over the past few years. Together with the surge in other children-related products, there has been a shift to bigger sales of these ‘non-traditional products’ that show that China’s ‘Mummy Economy’ (妈妈经济) has become increasingly more relevant.

Wu Fangfang, the founder of Greenbox.

Soon after the brand was established, it became one of the most popular children’s clothing brands (ranking no.1 for three years in a row) on Alibaba’s online malls Tmall and Taobao. But Greenbox was not solely sold through Alibaba; it was also available through other online shopping platforms such as JD.com and Dangdang. The brand also had its own shop on WeChat.

In 2015, Greenbox started opening up physical stores besides its online ones. It had around 100 (flagship) stores in China’s first-tier cities, solely focused on online sales for the second- and third-tier cities. Was the company taking on more than it could? According to some Chinese media, the brand was “blindly expanding” and growing too fast, too soon, which led to recurring financial difficulties throughout the years. Their financial problems severely worsened in 2016, as the children’s clothing became increasingly competitive. In January 2017, the brand finally announced its bankruptcy.

On Weibo the brand still has 76000 fans, but it has been inactive for months. Some netizens are surprised that the well-known brand has quit, and wonder what this means for the future of other successful ‘Taobao brands.’

 

3. An Home 安个家

Business: Online Real Estate

An Home (安个家) was established in April of 2015. Headquartered in Shanghai, it was independently funded (10 million RMB, 1.5M$) by CEO Liang Weiping (梁伟平). Its business offered online real estate services with a focus on its mobile app, attempting to rival with traditional real estate services.

Different from offline realtors, An Home aimed to be an online (mobile) platform where its home-seekers, homeowners, and consultants could connect with each other, making the process of buying and selling a house less time-consuming and more efficient.

An Home was a promising start-up for which Liang Weiping gathered a team coming from prosperous companies such as Tencent and Alibaba.

But by late December of 2016, Liang admitted to Chinese media that the company was facing financial hardships, and that they had not succeeded in finding the right way to compete with their offline rivals through online channels. As booming as all corners of China’s e-commerce market might seem, people might not be ready for O2O when it comes to real estate.

One of the reasons for its failure was that eventually, no matter online or offline, access to a large number of houses is the key to winning over the real estate market – and it was precisely this issue where the company feel behind compared to the more traditional channels.

Late 2016, CEO Liang sent out a letter to all of its staff that An Home had to halt operations due to financial difficulties. The company has now closed its doors.

What Can We Learn from the Graveyard Companies?

The aforementioned online companies are not the only ones who did not make it this year. Bollain Home Textile (帛澜家纺天猫店), founded in 2012 and selling bedding and home textiles through over 50 online stores in China, has collapsed after running behind approximately 16 million RMB (2.3M$) in its payments to suppliers and staff.

Online recruitment company Job Tong (周伯通招聘), established in 2013 as a major social recruitment platform and even receiving a 28 million RMB investment from NetEase, also went down earlier this year – its online competitors, including lagou.com, liepin.com, and zhipin.com, simply grew too strong.

 

“Even the most clever housewife cannot cook without rice”

 

And then we have not even mentioned foreign brands such as Lotte and others that closed their doors this doors in the highly competitive Chinese e-market.

So what is the lesson to be learned from these start-up failures? Of course, there is not one answer.

But Chinese e-commerce guru Wang Yongjun (王勇军), who has over 2,5 million fans on his Weibo account (@老高电商圈子), thinks he knows what China’s e-commerce start-ups need.

Wang runs a large networking group called the ‘Laogao Club’ for online entrepreneurs in China that are active on Taobao, Tmall, JD.com, etc, and in response to the ‘2017 failing e-commerce list’, published a blog on February 22 in which he gives some main points on how to succeed in this dog-eat-dog e-commerce world.

Mr. Wang, founder of the Laogao Club, explains how businesses can become successful on platforms such as Taobao or JD.com.

According to Wang’s article (in Chinese), which received many views on Weibo on February 22, building up an online community is key for any e-commerce business in China.

“Even the most clever housewife cannot cook without rice”, Wang argues, seeing an online following as the key ingredient to any online-based business. Drawing in communal media followers costs time and energy – haste makes waste.

The ‘guru’ says that online businesses can’t just gather their following by simply arranging a KOL (Key Opinion Leader) or online celebrity (see the first Dingfangbao example) for their brand; it is something a brand has to do themself, since they are the core that needs to attract fans.

 

“No matter how good you are, or how good your product is, it is worth nothing without an online community.”

 

“No matter how good you are, or how good your product is, it is worth nothing without an online community,” Wang writes. In a time when netizens are drowning in the information that is presented to them, it is essential that brands and companies are precise in targeting their relevant audiences and shooting their arrows in the right place.

Wang strongly advises companies to set up the right online environment that suits their target audience, and to pick the right timing to market their messages. Sometimes brands are lucky when their campaign goes viral, but mostly it is about smart strategy.

Before converting your assets into cash, it is important to continue to be valuable to followers and give them a reason to stay. Wang stresses that it is never a good idea to start the money-making machine too soon – you first need to make sure you have a steady and loyal group of online followers that is attached to your brand/company.

 

“Don’t drown the pond to get at the fish.”

 

“Don’t be overhasty, don’t drain the pond to get to the fish” (不能操之过急、竭泽而渔), is one of the messages of the Laogao Club for their online entrepreneurs. You can only transform your brand and starting making money once your ‘fans’ trust your brand/company enough and feel connected to its ‘flavor.’

Keeping up the quality of your services and products, and always making sure it brings more than just a ‘bargain’, it is therefore key to survive in the fiercely competitive Chinese e-commerce market.

Reading from the Laogao Club’s road to e-success, we could draw the conclusion that Dingfangbao had not worked enough on creating its own communal following of trusting and loyal fans before attempting to converting its assets into cash. An Home jumped into the pond before there were any fish at all, and Greenbox went ahead of itself and became too hasty to expand.

“If you enter the pit, be cautious”, some netizens respond on Weibo: “It is risky business.”

“There are too many people who don’t understand and think they are already running an e-business simply because they openened an online company. It looks good on paper, but in reality, it’s nothing,” another person writes.

– By Manya Koetse

©2017 Whatsonweibo. All rights reserved. Do not reproduce our content without permission – you can contact us at info@whatsonweibo.com.

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Manya Koetse is the editor-in-chief of www.whatsonweibo.com. She is a writer and consultant (Sinologist, MPhil) on social trends in China, with a focus on social media and digital developments, popular culture, and gender issues. Contact at manya@whatsonweibo.com, or follow on Twitter.

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China Digital

WeChat’s New Emoji Are Here (Including a Watermelon-Eating and Doge One)

WeChat’s new emoji are based on popular memes.

Manya Koetse

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On January 14, Tencent’s Wechat introduced new emoji to its existing emoji set. The new emoji include, among others, a watermelon-eating emoji and a smiling Shiba Inu.

On Weibo, the new emoji have become a topic of discussion under the hashtags “WeChat’s New Emoji” (#微信上线新表情#), “WeChat’s Watermelon Eating Emoji” (#微信上线吃瓜表情#), and “WeChat’s Dog Emoji” (#微信上线狗头表情#).

Different from the Unicode emoji (see Emojipedia), WeChat and Weibo have their own sets of emoji, although there is overlap.

The reason why especially the watermelon-eating and dog emoji are being discussed on social media, is because these emoji are based on popular internet memes.

“Eating watermelon” (吃瓜 chī guā) is an online expression that comes from “watermelon-eating masses” (吃瓜群众 chī guā qúnzhòng), which describes a common mentality of Internet users who have no idea what is actually going on but are still commenting or following online stories for their enjoyment – perhaps comparable to the “popcorn memes” that are ubiquitous on Western social media platforms.

The smiling dog has been around since 2013 and is known as the doge meme, based on a photo of a Shiba inu. The meme was originally spread on social media platforms such as Reddit, but then also became hugely popular in China, where it became a symbol of sarcasm (also read this Abacus article on this topic).

Other new emoji are the “wow” emoji, and others to express “ok,” “add oil,” “emm,” “oh!”

There’s also a “shehui shehui” (社会社会, lit. “society society”) emoji, which also comes from online culture and is a way among friends to (self-mockingly) talk about being ‘gangsters,’ ‘brothers.’ or ‘scoundrels.’

As the new emoji are still in their testing phase, not all WeChat users can use the new emoji yet, so you might have to wait a bit before being able to try them out.

By Manya Koetse, with thanks to @caaatchina
Follow @whatsonweibo

Spotted a mistake or want to add something? Please let us know in comments below or email us. First-time commenters, please be patient – we will have to manually approve your comment before it appears.

©2020 Whatsonweibo. All rights reserved. Do not reproduce our content without permission – you can contact us at info@whatsonweibo.com.

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‘Good Doctor’, Digital Hospitals: How Mobile Apps Are Alleviating China’s Healthcare Problems

With the rapid digitalization of China’s healthcare, Chinese patients now have more ways than one to receive medical assistance.

Manya Koetse

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China’s healthcare industry is facing some serious challenges. As Chinese society is rapidly digitalizing, mobile apps now provide innovative solutions to alleviate pressing problems in the country’s health services sector.

 
This is the “WE…WEI…WHAT?” column by Manya Koetse, originally published in German by Goethe Institut China on Goethe.de: “Good-Doctor Apps und Digitale Krankenhäuser.” 
 

Social Credit System, artificial intelligence, surveillance cameras; these are some of the hottest topics making headlines in mainstream Western media when discussing China-related developments recently.

With the rapid digitalization of Chinese society, these topics certainly have come to play a more important role in social media discussions within the People’s Republic of China (PRC). But if there is one issue that seems to concern Chinese social media users the most, it is not facial recognition nor their ‘Sesame score’: it is the topic of healthcare.

In December of 2017, a photo showing a crying mother kneeling down beside a toddler on the sidewalk in front of a Shanghai hospital went viral overnight. The moment was captured on camera by a reporter who was visiting Shanghai’s Children’s Hospital.

The photo of Guo Yinzhen and her son that went viral in China (image via NetEase, source: https://3g.163.com).

The mother, Guo Yinzhen, is a single parent who had traveled from a remote village to seek medical help for her 3-old-son, who was suffering from congenital hydrocephalus or ‘water on the brain.’ Already having traveled to the city multiple times and spending all her money on medical bills, Guo could not afford the additional 100.000 yuan (€ 12.600) for medical procedures needed to save her son’s life.

Guo’s story struck a chord with Chinese netizens, who continue to share the heartbreaking photo on social media to this day. It has become emblematic of China’s healthcare problems.

 

Crowded Hospitals and ‘Healthcare Disturbance’

 

The key to an adequate healthcare system, no matter where in the world, is that there is a right balancing in the “iron triangle” of efficiency/cost containment, high quality care, and patient access.[1] China, however, struggles with all three sides of this triangle.

Guo’s case is an extreme example, but many people in China dealing with less serious health issues and needing basic medical services also struggle to afford and access the healthcare they need.

Over 95% of people in China have health insurance, but people from different regions do not enjoy the same benefits and their out-of-pocket expenses can vary greatly. Uncovered medical costs can sometimes be catastrophic and simply unaffordable for patients and their families.

As more money flows are going to healthcare facilities in China’s cities, there is also the issue of varying levels of providers’ medical education and the overall healthcare quality, with the substantial majority of modern hospitals still existing in urban areas.

Easy access to the right kind of healthcare can be especially problematic for China’s rural population, as people often need to travel long distances and have to go through the lengthy process of registering and waiting for their doctor’s appointment, which sometimes requires them to stay in the city overnight.

For all of these reasons, China’s bigger public hospitals can get super crowded, sometimes resembling shopping malls on an end-of-season sales day. On social media, both patients and medical workers often complain about the stress brought about by the huge crowds and the shortage of doctors in hospitals across the country.

Perhaps it is no wonder that China even has a word to describe outbursts of violence between patients and doctors: ‘Yī nào’ (医闹, literally: “healthcare disturbance”).

Weibo user ‘Sunscreen’ complains about the crowds at Huashan Hospital.

One major problem within China’s healthcare conundrum is the lack of local family or primary-care doctors, which often makes bigger hospitals the first stop to any kind of medical treatment for Chinese patients.

The reasons for this issue are manifold. There is a general lack of trust in private and smaller local healthcare clinics, for example, and patients often choose to go directly to a bigger hospital to avoid making extra costs.

This makes it extra difficult for many community health care centers – that are already struggling – to make enough money and to retain qualified staff. In a society that is rapidly aging, the challenges facing China’s healthcare industry are only becoming more pressing.

 

A Doctor Today, Just an App Away

 

As China’s online environment is thriving, new innovative online apps are popping up on a daily basis. Some of these apps, that have found their ways into China’s most popular app rankings, are offering solutions to some of the country’s most pressing healthcare problems.

One of these apps is Ping’an Good Doctor (平安好医生), which was developed by health insurance provider Ping’an in 2015 and calls itself China’s “one-stop healthcare ecosystem.”

“Ping’an Good Doctor” promotional image by Ping’an.

Employing some 1000 medical staff in its in-house team, contracting over 5,200 external doctors, and collaborating with 3000 hospitals and thousands of pharmacy outlets across the country, the app is somewhat of an “online hospital.”

Through the app, users can look through an online database of medical professionals, order medicine at nearby pharmacies, get 24/7 online medical consultancy, search for information about both Western and Chinese Traditional Medicine, etc., but they can also use Ping’an Good Doctor as a fitness app to track their own health.

Screenshot of Ping’an app screen, by author.

When looking for a specific doctor for a one-on-one consult, the app first lets users select an area of expertise (e.g. dermatology or gynecology), and then offers a list of different specialists in various price categories.

Doctors from well-known hospitals, for example, or those with excellent ratings, have a one-time consultation fee of 100 yuan (€ 12,60). Other doctors can be consulted starting from 30 yuan (€3,70). All costs can be paid efficiently via online payment apps.

Doctors to pick from within the app’s various price categories.

Ping’an Good Doctor uses an AI-driven system to ask patients various questions about their symptoms and to automatically create a user’s medical record to save time. Based on the AI-generated record and the conversation with the patients – files such as photos can also be uploaded to the app -, the doctors can prescribe medicine or refer the patient to a hospital for an offline appointment if needed.

Ping’an recently announced that its number of registered users exceeded 300 million users, with 62 million monthly active users. Because the app keeps building on its AI-driven system, Ping’an Good Doctor can be expected to only become a ‘smarter’ smart health app the more popular it gets.

Although Ping’an is now leading within China’s medical app category, there are many other apps providing similar services, such as Chunyu Yisheng (春雨医生), Haodafu Online (好大夫在线), or DingXiang Doctor (丁香医生).

The emergence of these apps is just one of the many ways in which China’s digital developments, online media, and tech giants are impacting the healthcare industry, profoundly changing how patients receive healthcare information and access medical services now and in the future.

List of recommended medical apps in the Tencent app store.

In a way, China’s medical consultation apps fill the void in offline primary care. Patients who would otherwise turn to hospital care as their first stop can now  access medical consultations any time, any day, at a relatively low cost. Those who suffer from relatively harmless conditions could be diagnosed by a medical specialist via the app and get the medicine they need within a matter of minutes. With the growing popularity of these kinds of apps, many patients no longer need to visit a hospital at all.

Are smart health apps such as Ping’an Good Doctor the solution to China’s healthcare problems? No, they’re not. Struggling mums like Guo Yinzhen will not find the help they need there. But they do contribute to a more efficient healthcare environment where crowd flows in hospitals can be reduced, and patients do not need to spend a lot of time and money to stand in hour-long queues to get five minutes of their doctor’s time.

Although smart health apps could not help Guo Yinzhen and her son, social media apps could. As soon as their story went viral in late 2017, Shanghai Children’s Welfare Foundation Xiaoxingxin offered to cover medical treatments for the little boy, with a notable pediatric neurosurgeon operating the child. According to the latest updates, the boy’s situation was “looking good.”

Hopefully, the same holds true for the challenging sides of China’s healthcare industry.

By Manya Koetse
Follow @whatsonweibo

[1] Burns & Liu, 2017: 3-4.

References/Linked Sources

Burns, Lawton Robert, and Gordon G. Liu. 2017. “Introduction.” In China’s Healthcare Industry: A System Perspective, Lawton Robert Burns and Gordon G. Liu (eds), pp-1-116. Cambridge: Cambridge University Press.

Economist, 2017. “China needs many more primary-care doctors.” The Economist, May 11 https://www.economist.com/china/2017/05/11/china-needs-many-more-primary-care-doctors [20.10.19].

Zhou, Viola. 2018. “Does China Have Universal Healthcare? A Long (And Better) Answer.” Inkstone, Oct 10 https://www.inkstonenews.com/health/china-translated-does-china-have-universal-health-care/article/2167579

This text was first published by Goethe-Institut China under a CC-BY-NC-ND-4.0-DE license (Creative Commons) as part of a monthly column in collaboration with What’s On Weibo.

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