Shared Phone Charger Startups Closed Down One after Another

Shared phone chargers have attracted attention from the market, especially after Leo Chen, CEO of Jvyoumei（聚美优品）, invested 300 million yuan into AnkerBox (Anker街电), an enterprise that produces shared phone chargers. Also, “National Husband”—billionaire investor Wang Sicong’s bold statement that he would eat shit if shared phone chargers can succeed made this industry known to more people. However, Mr Wang seems to win in light of current situation.

Recently, Hidian（Hi电）, a shared phone charger enterprise, was reported to cut its sales teams among which 200 employees were forced out.

How are the rest of enterprises doing in the industry? Less hot money poured in the industry, to say the least of it. Chen has not taken further moves yet except promising to add more investment.

Meanwhile, “Our industry is still in an initial stage of expansion” an insider of shared phone charger industry said in an interview with Securities Daily. “The priority of enterprises in this industry is to invest in R&D, lay the ground work, and expand channels to invigorate the market and improve customers’ loyalty.”

Shared Phone Chargers Enterprises Closed Down

News came out that Hidian contracted its sales team; accordingly, about 200 employees will be fired. More surprisingly, it adopts an unusual approach: it dispatches employees from original work place to cities in border provinces and demanded that they should report for duty in their new position within three days; otherwise, they will be regarded as “quitting the job voluntarily”.

Now these employees established a Wechat group and planned to defend their rights. They have two complaints overall: first, the arrears; second, the forced layoffs. Liu Wenyuan, the founder of Hidian, refused to comment on the story.

It is reported that Hidian completed two rounds of financing: one is the angel round which raised tens of millions yuan led by Zhizhuo Capital（志拙资本）, with the participation of Feitongfanxiang management co., LTD（非同凡想创投） and four other four celebrities; another is series A round that raised about 100 million yuan, led by Lightspeed, with the participation of a famous fund and a senior shareholder.

Now, less than half a year after the last round of financing, Hidian is involved in negative news such as forced layoffs and salary arrears.

Disclosed information shows that there are three mainstream models in the shared phone charger industry: first, enterprises represented by Laidian（来电） target large scenes including large shopping malls and bus or train stations with large cabinets; second, enterprises represented by Jiedian（街电） target small scenes such as restaurants and cafes with small cabinets; third, enterprises represented by Xiaodian（小电） target the fixed mode of desk in restaurants and cafes (Hidian belongs to this variety).

In recent years, shared phone charger industry has attracted many entrepreneurs. Data reveals that the total scale of capital financed by shared economy reached 171 billion yuan in 2016, increasing 130% year on year. This year has seen that over 20 companies financed investment worth over a billion yuan in two months.

Will Wang Sicong win the bet?

Hot money flowing into shared phone charger projects is a catalyst for Mr Wang’s bet with Leo Chen. On May 4 this year, Chen, holding 60% of Jiedian’s stocks, became the director of board of Jiedian after he injected 300 million yuan in it.

Mr. Wang expressed his grim view over shared phone chargers in his Wechat’s Moment after the deal was concluded. Chen responded to Mr Wang’s remark in a high profile in Weibo, saying that “Wang should not stop this project from entering Wanda Plazas because of his personal emotions”. Chen’s weibo record shows that he has been beating the drum for benefits of shared phone chargers and claimed that Jiedian had changed his habits. He also believes in the future success of this industry.

Some scholars who have studied sharing economy pointed out: “phone charging with power banks is frequent, yet a single product has limited value. This is why this industry is subjected to skepticism.”

However, the insider said in an interview with Securities Daily, “it’s too early to say this industry has failed. Now the industry is still in an initial stage of expansion. Moreover, judging from the collapse of Hidian, we cannot rule out the possibility of management problems within the company. In a word, we cannot conclude that shared phone charging industry doesn’t have a future.”

This article originally appeared in Securities Daily and was translated by Pandaily.

Click here to read the original Chinese article.