Jiemian News reported on Monday that the community group buying platform Nice Tuan had shut down all of its operations in cities across the country. The company has entered an aftermath stage in which it is dealing with payments to suppliers and settlements with employees.
However, contrary to Jieman News’ report, one reporter from Nanfang Metropolis Daily learned that the platform did not in fact shut down all of its country-wide businesses. Instead, it seems, the business is still in operation. The scope of the company’s operations, however, do appear to have shrunk quite a bit compared to its size last year.
In April 2018, Nice Tuan was established. On August 21st of that year, the company received 100 million yuan ($15.7 million) in angel financing. On August 30, 2019, the company completed a merger with another platform called “Ni Wo Nin” and became the leading company of community group buying.
In mid-2020, with the efficiency of operations and supply chains, NiceTuan was able to achieve positive profit margins. But more companies and money poured into the industry with the likes of Meituan, ByteDance, DiDi, Pinduoduo, Kuaishou and JD.com all entering into the field.
In March 2021, Nice Tuan received an investment of $750 million led by Alibaba, but it still failed to make any more gains.
In that same month, the State Administration for Market Regulation in China imposed administrative penalties on five community group buying enterprises including Nice Tuan. The company was fined 1.5 million yuan ($235,527), the maximum penalty. In May of the same year, Nice Tuan was fined 1.5 million yuan again, for “dumping goods at the price lower than the purchasing cost” and “using deceptive words to induce others to trade with them”. Its Jiangsu store later stopped doing business for internal rectification purposes for three days.
In order to survive, Nice Tuan has launched a number of actions to save itself. The company has shut down poor performing businesses in some cities, increased gross profits, shut down groups with poor sales, laid off employees, and launched new business ventures.
The waves of lay-offs began in August last year. The company shut down its business in more than 2,000 counties but continued operations in five select cities, including Changsha, Wuhan, Jinan, Jiangsu and Guangdong. At its peak, there were nearly 10,000 people employed by the company, but since August last year, the company’s workforce has been heavily reduced to only a few hundred people.
One supplier of Nice Tuan told Jiemian News that, “In February, we signed a 30% discount settlement scheme with the company. The arrears are 200,000 yuan, which was registered before this year, signed after the amount was determined, and received the payment the next day. Although we have no choice, at least we can get some money.” In addition to the payment of the suppliers, the company had previously delayed 30% of the payment owed to employees, a sum that has yet to be paid.