An undercover report released Tuesday by The Beijing News revealed that a warehouse operated by grocery-buying platform Dingdong Maicai in the capital city’s Haidian District cheated consumers by claiming dead fish were fresh and fabricating labels. The firm’s stock price dropped by 10.82% to $3.79 per share on Thursday.
On Thursday, the Haidian Administration for Market Regulation said in a statement via its official WeChat account that it had launched an investigation and ordered Dingdong Maicai to abide by food safety regulations.
After an investigation led by the company’s CEO, Liang Changlin, Dingdong Maicai confirmed on Thursday evening that claims in the report were true, adding that it has since suspended operations at the warehouse in question.
In its reply, Dingdong Maicai revealed that it has carried out inspections of its warehouses across China to ensure that dead and fresh fish are sold separately and that expired food items are destroyed. It has also started work on setting up a whistleblowing system and is updating its monitoring protocol.
Dingdong Maicai was founded in May 2017. According to its recent financial report, revenue in 2021 was 20.12 billion yuan ($3.17 billion), a year-on-year increase of 77.5%. In Q4 ended December 31, 2021, the total revenue increased from 3.188 billion yuan in the same period of 2020 to 5.484 billion yuan, a year-on-year increase of 72.0%. In Q4 2021, the non-GAAP net loss was 1.034 billion yuan, compared with 1.239 billion yuan in the same period of 2020.