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China’s online cosmetics retailer to scale up investment in shared phone chargers
Photo: image.baidu.com
 
Jumei CEO Chen Ou claimed he’ll continue to invest into shared phone-charger company Ankerbox by $100 million on Saturday, in bid to boost investor confidence in the controversial sub-branch of China’s booming shared economy.
 
About a month ago, Jumei, one of China’s top online cosmetics retailers, invested 300 million yuan into the Shenzhen-based tech startup to acquire 60 percent of its shares. Now, Chen has apparently decided to be to be “All In”, expecting to fully cash in on the low-battery anxiety that is believed to be haunting China’s over one billion smartphone users.
 
Before any mature business model, investors in China have rushed a huge investment of 1.2 billion yuan into the business which is derided by many critics as being built on “fake demand.”
 
Chen Ou argued that the capital market in China has evolved these days. “In the past, (we have to) first have good performance and then gain financing, while now, projects could be financed on investors’ imagination of a huge market,” he said, noting that because all people want their cell phones to be fully charged, the concept of battery-charger would sell well.
 
Despite several high-profile investors’ endorsement including Tencent and Jumei, sarcastic reviews on the newly minted business idea have persisted. Wang Sicong, the son of China’s self-made property-to-media typhoon Wang Jianlin, had promised to “eat shit in a live show if shared phone-charger business could really make money.”
 
It is argued that Chinese smartphone users have already developed the habit of carrying portable power banks in case their phones run out of battery. Not to say that it is widely anticipated that as technology evolves, phone batteries will last longer and longer. So, the biggest concerns surrounding the business would be that the market demand might be hyped, or even “fake”.
 
And Chen Ou is among a group of venture investors who have betted on the idea’s feasibility and immediate success like shared bicycles.
 
Xiaodian, a shared power bank startup backed by Tencent, proclaimed to have acquired an investment of 350 million yuan this month. Ankerbox received 300 million yuan from Jumei in early May. Hidian, a Shanghai-based startup, gained 100 million yuan worth of investment and Laidian, another startup, absorbed $20 million in investment last month. Since the boom of bike-sharing business, the speed of investment in the new sharing economy craze has gained momentum almost immediately.
 
For the players, the most urgent problem is believed to gain market share. It was reported earlier that Ankerbox has installed nearly 40,000 charging machines and gained over three million users. Chen Ou vowed that the biggest strategy for Ankerbox now is to install five million machines by the end of 2017, in bid to fully cover China’ first and second-tier cities.
 
He added that more venture investors would be welcomed to enter Ankerbox. “Financing is not a problem, the problem is who could chip in and what share he would occupy,” he said.
 
In bid to outperform competitors, Chen has played the intellectual property card. Jumei is reported to have splashed 100 million yuan on buying key patents in building charging machines.
 
 “In the past, startups would not care too much about intellectual property, but the situation has changed. The patents may become our ‘nuclear weapons’ to prevent copycats from entering the market,” he said. 
 
Now, Ankerbox and Laidian would place charging machines where they could be taken away and put back. Xiaodian adopts a different business mode, in which it would install fixed charging booths in restaurants, and bars for the venues’ customers to use when they’re spending time there. Patents purchased by Jumei would not affect Xiaodian, while after looking through the IP files, Yuan Bingsong, the CEO of Laidian claimed they would not be affected either. 

 


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