# Tongcheng Life (2018 – 2021)

- URL: https://girisimcikafasi.com/en/startup-graveyard/tongcheng-life/
- Sector: E-commerce
- Country: China
- Total funding: $300 million
- Cause of closure: Lost to competitors

## What did it do?

Tongcheng Life was founded in Suzhou in 2018 as a spin-off from the travel company Tongcheng Elong. Through a WeChat mini-program it let neighbourhood residents buy groceries together at a discount. Suzhou Fresh Orange Technology ran the operation. It raised USD 100 million in September 2019 and USD 200 million in June 2020 in a round led by Joyy.

## Why did it shut down?

After the June 2020 round, founder Wu Zhixiang put the company's value above RMB 5 billion. Community group buying in China became crowded, and according to analysis reported by Yicai, thin margins, competitive pressure and a lack of sustained funding began to knock players out. Summer cold-chain costs added to the burden. In July 2021 the company first renamed itself Micheng Life and a day later announced that it would file for bankruptcy. TechNode reported that it owed about RMB 200 million to more than 1,000 suppliers, and the operating company cited poor business performance.

## The story

In 2020 community group buying was one of China's hottest retail ideas. A neighbourhood organiser gathered orders in a WeChat group and the goods arrived at one collection point the next day. Tongcheng Life entered this market in Suzhou in 2018 as a spin-off from Tongcheng Elong.

The investment came quickly: USD 100 million in September 2019, then USD 200 million in June 2020 in a round led by Joyy. Founder Wu Zhixiang said the value had passed RMB 5 billion, which was about USD 710 million.

But the field was crowded, margins were thin and moving fresh food was expensive. The company's cash was not enough to keep up with rivals. In July 2021, as suppliers demanded payment, it renamed itself Micheng Life. A day later came news of the bankruptcy filing.

The debt to suppliers came to about RMB 200 million. Other players in the sector soon pulled back as well. Tongcheng Life shows that in a market built on subsidies the survivor is not the one with the best idea but the one able to spend the longest.

## Lessons

- If you are buying growth in thin-margin fresh food with investor money, your rival may still be spending on the day your cash runs out. Count their war chest as well as yours.
- Supplier debt is a silent loan. Delaying payment to 1,000 suppliers does not save you; it only makes the collapse visible.
- Changing your name the day before a bankruptcy notice does not restore trust. Talk to suppliers first and put a payment plan in writing.

## Sources

- [Community group-buy startup Tongcheng Life files for bankruptcy](https://technode.com/2021/07/08/community-group-buy-startup-tongcheng-life-files-for-bankruptcy/)
- [Chinese Community Group Buying Firms Suffer As Summer Costs Soar](https://www.yicaiglobal.com/news/chinese-community-group-buying-firms-suffer-as-summer-costs-soar)
- [Online group-buying platform Tongcheng Life closes USD 200 million fundraising](https://amp.kr-asia.com/online-group-buying-platform-tongcheng-life-closes-usd-200-million-fundraising)