Commercial Dishwasher Maker Chu Xin Snags USD 33 Million in New Fundraising
COVID-19 and China
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Chinese commercial dishwasher manufacturer Chu Xin (厨芯) has announced the completion of a Series B round of funding worth CNY 230 million (USD 33 million). Lan Fund (蓝图创投) led the investment, followed by Gan Jiawei (干嘉伟, former Meituan COO) and HeJun Capital (和君资本). The proceeds will be used to expand the company’s business and build a more extensive sales network.

Established in 2016, Chu Xin provides intelligent solutions for the back kitchen of catering companies. The company claims to be different from traditional kitchen equipment providers, having initiated a full set of AIoT solution services for merchants and created rental services for its clients.

"Regulation is the key driver for the market of commercial dishwashers," said Liu Changyi (刘昌毅), founder and CEO of Chu Xin. "And China has been paying more attention to food safety."

In 2016, the National Health Commission released the National Food Safety Standard for Disinfecting Tableware, indicating that the regulatory inspection has expanded from food itself to a broader spectrum of range related to the safety in the catering industry.

In the same year, the State Administration for Market Regulation was established. The new body has incorporated responsibilities such as food and drug quality inspection and quarantine, signaling stepped-up official efforts to guarantee food safety by involving stricter law enforcement and other resources.

Amid more stringent law enforcement and tighter regulatory supervision, catering companies are increasingly compelled to pay more attention to the hygiene of their tableware.

For instance, under the new standards detailed in food safety regulations, eateries are obliged to sanitize their tableware to pass tests on human senses, chemical and physical composition, and the levels of microbes. But these requirements are hard to meet through manual labor.

In a similar vein, catering companies find it hard to ensure that the hygienic condition of their tableware can meet the national standard. 

Over the past three years, Chu Xin has expanded to more than 75 cities across the country and has served more than 3,000 food and beverage brands. Its customers include famous restaurant chains such as Grandma’s Home (外婆家), xiabu xiabu (呷哺呷哺), Muwu Barbeque (木屋烧烤) and Mystic South-Yunnan Ethnic Cuisine (云海肴). Their offerings span an array of segments ranging from fast food, buffet, hot pot, barbecue and seafood to Western food and Japanese and Korean cuisine. 

As commercial dishwashers develop rapidly in recent years, Liu says that Chu Xin has already become the number one brand in China in terms of shipment, taking a 20% market share. Moreover, compared with 2018, the overall equipment leasing revenue has tripled this year compared to the sum a year earlier, says Liu, without disclosing the exact amount of revenue.

Although the entry threshold is low for China’s CNY 4 trillion (USD 573 billion) catering market, few large-scale players have emerged in this sector from upstream to downstream, due to the high elimination rate and low concentration, plus the difficulty of standardizing. But with a rapid roll-out of 5G and IoT technology and the tighter regulatory environment in China, the catering industry will also face an industry reshuffle. As it happens, it is set to place a premium on innovation. And companies will be encouraged to disrupt themselves and stay committed to advancing inclusive growth strategies. 

Despite the rise of AIoT-empowered applications across a spectrum of industries, the growth prospect of Chu Xin remains uncertain. Whether this commercial dishwasher maker will stand above the crowd amid an industrial shift will mainly come down to regulatory trends and brand awareness among consumers.

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