Didi’s community group buying business shrinks, with lay-offs across China as biggest players eye domination
- The shrinking community group buying unit adds to Didi’s wider woes amid an ongoing cybersecurity probe of its main ride-hailing business
- Competition has become extremely fierce and the sector has also attracted the attention of Beijing for its price wars and impact on traditional merchants
Chengxin Youxuan, the community group buying business of ride-hailing giant Didi Chuxing, has closed operations in a number of cities, resulting in lay-offs, as the whole industry faces a reality check amid fierce competition and tighter regulation.
The shrinking community group buying unit adds to Didi’s wider woes amid an ongoing cybersecurity probe of its main ride-hailing business. Chenxin Youxuan emerged as a major player in the country’s community group buying industry soon after its launch in June 2020, and was valued by Didi at around US$1.8 billion as of March 30.
According to a report by Chinese online media outlet LatePost, the unit had 16,000 staff at the end of last year but this has now fallen to 10,000, with daily orders dropping to six million from a peak of over 10 million, far behind Meituan and Pinduoduo’s community group buying units which each run at about 20 million daily orders.
A 28-year-old employee of the community group buying unit, surnamed Lu, who declined to give his full name, told the South China Morning Post he was one of those fired. A business development manager from Langfang, in northern Hebei province, he joined Chengxin Youxin nine months ago when the service launched there.
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Lu said there were about six regular staff at the unit and about 30 outsourced workers like him, and they have now all been fired. Lu said that building up the team and launching operations had taken months, but the retreat only took a few days – gone in a “flash”, he said.
Another former staff member, based in Qingyuan in Guangdong province and who declined to be named because he is not authorised to speak to the media, said he was fired without any prior warning on August 18 and that the whole operation was slated to close.
