E-grocery as a new site of financialization? Financial drivers of the rise and fall of China’s E-grocery sector

During the past five years, the e-grocery sector in China has experienced double-digit growth which accelerated at the onset of the COVID-19 pandemic. Part of this hypergrowth was fueled by changing consumption patterns and pandemic-induced demand for contactless food delivery. However, this study highlights two other important but understudied drivers of the e-grocery boom -the rising financial investment and the deepening engagement of dot-com companies in the food retail sector. This study characterizes the recent financial investments in China’s e-grocery sector and analyzes the food security implications, which contributes to the scholarly literature on financialization, corporate power, and digitization in the food system in novel ways. This study advances three research findings: a) the e-grocery sector has become a new site of financialization in the food sector; b) this new site was developed partly through pandemic-induced demand for food delivery and partly as a by-product of the expansion of China’s dot-com economy; c) by the last quarter of 2021 and in 2022, many investors fled China’s e-grocery sector after an anti-trust crackdown was launched and as most e-grocery businesses struggled to make a profit. Overall, the boom and bust of the e-grocery bubble in China posed multiple challenges to food security, such as causing cash flow crises for grocery suppliers and compromising fair competition in the grocery market. Furthermore, the twin processes of financialization and digitization have forged a mutually reinforcing relationship that has far-reaching implications for China’s food system as a whole.