Food and agricultural product processing continue to create new hot spots in China's services market.
►The investment arrives in an already competitive landscape, with plenty o involvement from Internet giants and startups.
►Meituan is betting on the B2B foodservice niche, with its own operations and investments.
Lehe Food, a Chinese fresh food supplier, announced the completion of its CNY 400 million (USD 56.5 million) Series C, led by Meituan Dianping’s Longzhu Capital and CDH Investments.
The business-to-business (B2B) firm is eyeing the lucrative CNY 700 billion institutional catering market, providing one-stop food services for thousands of canteens, hotels and supermarkets daily. The company also engages in product processing, farm management and catering management consulting, among other things, for the domestic agriculture industry.
Lehe now has 49 Distribution Centers (DCs), as stated on its website. Lehe plans to increase the number to 300 in the coming two years.
To expand penetration along the supply chain, Lehe has the same partnership system as its domestic peers, such as Meicai – providing for small- and medium-sized clients with a set of standardized supply chain management solutions. And Meicai has a new way to compete in the market with its newly launched standalone brand Jiacai, making ready-to-cook meals for restaurants.
Read more about Meicai’s story.
Meicai, a strong competitor, claimed it had operated in Chinese 200 cities, with 200,000 trucks and 700,000 square meters of warehouse space, at the end of 2019.
During the coronavirus, Chinese B2C grocery firms, including Freshippo and MissFresh, have shown their robustness, providing consumers with vegetables, meats, and fruits every day. A likely aftereffect will see change customer purchase preferences change further, say, raising their willingness to buy foods online, and increasing the penetration of online choices in lower-tier cites.
With the investment in Lehe, the Chinese foodservice distribution industry becomes more crowded. Giants like Alibaba and the new category champion Meituan Dianping (Kuailv Jinhuo) are carving out their own presences here, along with startups like Songxiaocai, Meicai and Lehe.