The dismissal signals a weakening trend in China’s community group-buying businesses, under the pressure of government supervision and flawed business models
Jingxi (Chinese: 京喜), the social e-commerce arm of China’s online retail giant JD.com (JD: Nasdaq), is reportedly laying off 10-15% of its employees.
Launched in 2019 as a Pinduoduo (PDD: Nasdaq) rival, Jingxi targets consumers in small cities and rural areas, fitting into JD.com’s broad strategy of penetrating lower-tier markets.
JD.com’s new business reported an operating revenue of CNY 26.05 billion (USD 4.09 billion) and a loss of CNY 10.51 billion in 2021. Jingxi has been the focus of JD.com’s investment and the main source of losses among a number of new businesses.
The company will mainly cut employees of Jingxi Pinpin, a group-buying service under Jingxi, an insider of the parent company told the media. The platform has gradually closed its businesses in provinces including Fujian, Gansu, Guizhou, Jilin, Ningxia, Qinghai, and Shanxi since May 2021.
Jingxi has focused on improving its supply chain efficiency and lowering costs from the second half of 2021, Xu Lei, the president of JD.com, said during the company’s Q3 and Q4 earnings call.
A majority of China’s group-buying service providers have announced layoffs recently, including Meituan Youxuan (Chinese: 美团优选) run by Meituan (3690: HK) and Alibaba (9988: HK)’s local life businesses Ele.me (Chinese:饿了么) and Koubei (Chinese:口碑). The group-buying platform under Didi (DIDI: NYSE) has also been shut down, Economic Daily reported on March 10.