Cold Chain Warms Up: Dongpin Daojia Grabs CNY 35 Million
COVID-19 and China
Image credit: Dev Benjamin/Unsplash

Chinese cold chain company Dongpin Daojia (冻品到家) announced receiving nearly USD 5 million in funding on February 25. The investment was led by Plum Ventures (梅花创投), followed by Buhuo Ventures (不惑创投) and Mfund (魔量资本). The company aims at integrating upstream factories that provide cold goods and expanding beyond their traditional markets, Beijing and the Langfang area. 

Dongpin Daojia was founded in 2016. Last year, the firm reached the break-even point, with CNY 500 million (USD 71.13 million) in annual revenue. It claims to run a business driven by big data and AI: the technologies are used to forecast the demand and manage the supply chain.

With regard to the existing problems in the cold chain, Dongpin Daojia wants to solve and optimize information opaque, high logistic and storage costs as well as significant market price fluctuation and so on. It received a pre-Series A investment round of undisclosed amount in March 2017. Later on, it was funded two more times: in August 2017 and in August 2018 it brought home tens of millions of yuan from Beijing Life Service Fund and a handful of other investors.

"The larger the scale of the frozen food, the larger the data, the higher the efficiency, and the higher the barriers," said (in Chinese) Xu Luhe, founder of Dongpin Daojia. "Under the current epidemic, it is both a challenge and an opportunity for us. Frozen products will usher in the dual benefits of consumer awareness and policies. Empower the industry upstream and downstream."

The cold chain industry in China is a trillion-yuan level market. The industry is highly fragmented with scattered upstream suppliers, purchase and logistic low efficiency, production and marketing mismatch. The future trends thereby will focus on integrating suppliers, improving delivery and purchase efficiency, matching productions with market demands.

Internet B2B platforms might be among the most effective solutions here. They can gather suppliers and dealers, directing access to terminals from manufacturers to improve industry circulation efficiency. Businesses of this type are able to grab data from end-user transactions and requirements to match output with the current demand.

In China, there are many other players in this industry. One example is Dongpin Zaixian (冻品在线), which has already received (in Chinese) CNY 120 million (USD 17.03 million) Series B. Dongpin Hui (冻品汇), another rival of the company, carried out the latest funding last November when it obtained (in Chinese) USD 100 million. These two companies are big in the local cold chain area, and their service menu and missions are pretty similar to that of Dongpin Daojia.

For the Beijing-based startup, a more challenging issue is that the abovementioned companies have all attracted a lot of investors' attention. Dongpin Daojia is facing fierce competition since they have a larger business scope, which also includes China's biggest restaurant chains.

Moreover, Dongpin Zaixian has established 9 cold chain warehouse distribution centers nationwide and launched the "freezing mining network" to lay out county-level markets. As Mr. Xu has observed (in Chinese), "It is a typical monopoly industry, with relatively high barriers to entry." How will his company react to the strong rivalry and stand out to make a difference in the harsh market, let's see. 

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