Chinese grocery delivery company Missfresh Photo:VCG

Nasdaq-listed Chinese grocery delivery company Missfresh is now struggling to survive due to a cash shortage amid mounting reports of employee layoffs. 

The company's shares fell 13.75 percent to just $0.12 a share at the opening on Friday following a 43 percent plunge on Thursday after the company said it would temporarily shut down its main fast delivery service on Thursday, triggering dissolution rumors.

Missfresh caught social media attention on Thursday after an internal meeting record circulating online showed that the company was running out of cash and dismissing most of its workers. This sparked market speculation that the company is to shut down.

According to the meeting record, the workers were summoned to an online meeting and were told that Thursday would be their last day on the job because an expected investment had not materialized. The company didn't address the employees' questions as to when their salary for June and July would be paid.

In response to the shutdown rumors, Missfresh said it had made adjustments to some of its business units and conducted staff optimization, Chinanews.com reported.

The unit in question is its fast delivery service, which allows clients living near its warehouses to receive their orders within 30 minutes. 

An announcement on its WeChat mini program showed that the orders are now to be delivered as quickly as the next day, the Global Times noticed on Friday.

Liu Dingding, a tech industry observer, said that the business contraction of Missfresh exposed problems in terms of cash flow, as the fresh food delivery industry is a money-burning game.

Startups face the risk of ruptured cash flow if they do not develop a certain ability to make profits, Liu told the Global Times on Friday.

Investing rather than making ends meet has become a malpractice among fresh food online to offline delivery companies, which have high operation and storage costs at their warehouses, as well as problems during the transportation of fresh fruit and vegetables, experts said.

However, Liu remained confident in China's fresh food delivery industry in the long term.

China's online-to-offline fresh food sector has become a booming industry in the past few years. 

According to data from Guangzhou-based consultancy iiMedia Group, the size of China's fresh food e-commerce market was 311 billion yuan ($46.09 billion) in 2021, up 18.2 percent from the year before due to strong demand for online shopping during the epidemic. It is expected to reach a scale of 419 billion yuan in 2023.

Global Times