Spectacular Failures of Chinese Startups | Generated by AI
Question: What are spectacular failures in Chinese startups in the last 15 years, like Wowotuan, Lashou, Ofo, etc.?
Answer:
Over the past 15 years (2010–2025), China’s startup ecosystem has seen explosive growth followed by numerous high-profile collapses, often due to aggressive cash-burning strategies, intense competition, unsustainable business models, regulatory pressures, and economic shifts. Many involved heavy venture funding leading to rapid expansion but eventual bankruptcy or severe downturns. Here are some of the most spectacular examples:
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Ofo (dockless bike-sharing, founded 2014): Once valued at over $2–3 billion with millions of yellow bikes flooding Chinese cities and international markets, Ofo raised billions but collapsed under massive debts, unpaid supplier bills, and inability to refund user deposits (affecting millions). Over-expansion, vandalism, and competition from Mobike (acquired by Meituan) led to near-bankruptcy by 2018–2019.
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Lashou (group-buying/daily deals, founded ~2010): A leading Groupon clone in China’s “thousand Groupons war,” Lashou rejected acquisition offers, attempted a U.S. IPO multiple times (delayed/withdrawn due to accounting issues), and ultimately faded amid fierce competition and market consolidation dominated by Meituan-Dianping.
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Luckin Coffee (coffee chain, founded 2017): Rapidly expanded to surpass Starbucks in store count, but a 2020 scandal revealed fabricated sales of ~$310 million, causing stock to crash 90%+, delisting from Nasdaq, and bankruptcy filing. It later recovered somewhat but remains a symbol of accounting fraud in Chinese startups.
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Mobike (dockless bike-sharing, founded 2015): Rival to Ofo, raised huge funding and expanded aggressively, but was acquired by Meituan in 2018; its independent brand and app were eventually shut down as the sector consolidated.
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Byton (electric vehicle startup, founded 2016): Valued at billions, aimed to compete in EVs but burned massive cash without mass production; filed for bankruptcy around 2023 after failed investments.
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Weltmeister (WM Motor, EV startup): Another highly funded EV unicorn that collapsed in recent years due to funding droughts and market saturation.
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Various O2O and on-demand services (e.g., car wash startups like eXiche, ~2015): Multiple heavily funded players in niche sectors failed spectacularly due to subsidy wars and lack of profitability.
Other notable downturns include Ant Group’s blocked $34 billion IPO (2020, regulatory intervention) and Didi’s regulatory probes post-IPO leading to delisting pressures, though not full failures. The bike-sharing boom/bust and group-buying wars of the early 2010s produced dozens of casualties. Recent years (post-2020) saw broader declines due to regulatory crackdowns, economic slowdown, and reduced VC funding.
These cases highlight common pitfalls: over-reliance on subsidies, ignoring unit economics, and vulnerability to regulation or consolidation by giants like Alibaba, Tencent, and Meituan.
References:
- https://www.rolandberger.com/en/Insights/Publications/The-rise-and-fall-of-Chinese-bike-sharing-startups.html
- https://www.scmp.com/tech/start-ups/article/3114932/rise-and-fall-mobike-and-ofo-chinas-bike-sharing-twin-stars
- https://en.wikipedia.org/wiki/Ofo_(company)
- https://www.reuters.com/article/china-groupbuying/the-party-is-over-for-chinas-group-buying-websites-idUSL4E7MT1AA20111201/
- https://en.wikipedia.org/wiki/Luckin_Coffee
- https://fortune.com/2022/05/22/luckin-coffee-china-wall-street-listing-nasdaq-scandal-fraud-starbucks/
- https://en.tmtpost.com/post/6586507