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Fantuan soars on delivery app

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A delivery man (right) from Fantuan, one of the largest Chinese and Asian food delivery app service providers in North America, picks up food at a restaurant in Vancouver, Canada. [Provided to China Daily]

Company launches North American expansion blitz in 40 cities

Fantuan, one of the largest food delivery application service providers in China and Asia in North America, has unveiled an ambitious plan to strengthen its presence with overseas consumers and diversify its business under the ongoing COVID-19 pandemic.

“Fantuan does not want to stand still on its activities tailored to the Chinese community in the region, and it is optimizing its application only in English,” said Zhu Xiang, chief technology officer of Fantuan, in his office in Tianjin, in the north. from China, rather than at the company’s head office in Vancouver, Canada.

“With the launch of an English-only app, the company has seen its orders increase nearly 900% in three months in Vancouver and the trend is being copied to other parts of North America,” Zhu said.

The move follows Fantuan’s expansion from Canada to San Francisco, Chicago and Boston in the United States last year, increasing its presence in North America to 40 cities.

“Last year the company’s revenue jumped almost 400% and the COVID-19 pandemic is actually accelerating growth,” he said.

This year, the company expects its gross merchandise volume to reach $ 800 million, double the figure for 2020. It started making profits just two years after it was established in Canada in 2014 by Chinese student Wu Leping.

Previously, international students and young Chinese office workers were among the top users of the app. However, the pandemic has encouraged many local families to use a food delivery service.

Fantuan expects to optimize its business in terms of reviews, coupons, shopping, content marketing and more, a comprehensive business model that thrives among Chinese food delivery apps such as Meituan, Zhu said.

Fantuan co-founder Feng Yaofei said the company envisioned that “amid the downward trend of the COVID-19 pandemic, the” restaurant business “(referring to consumers selecting a restaurant after having looking at reviews on Fantuan and arriving at the restaurant) could account for a fifth of the total consumers who click on a mobile device and order a food delivery service.

Zhu attributed Fantuan’s rapid growth to the “Copy from China” model.

Meituan, one of China’s most popular online meal ordering and delivery services, saw revenues reach 114.79 billion yuan ($ 17.78 billion) last year, a 17.7% year-over-year increase.

Meituan is making profits not only from deliveries, but also from restaurant reviews and its catering business, in China’s first to fourth-tier cities.

In addition, Fantuan’s development has benefited from its research and development and central control centers in Tianjin, thanks to reductions in sales costs and leading R&D teams.

“We are riding the tides that the R&D teams of many leading internet companies are now based in China, so we started to act in 2016,” Zhu said.

For example, US-based online meeting service provider Zoom Video Communications, founded by a Chinese entrepreneur, has set up three R&D centers in Hangzhou, Zhejiang Province, Suzhou, Province of Jiangsu, and in Hefei, Anhui province, since 2011.

Singapore-based e-commerce company Shopee, also founded by a Chinese entrepreneur, has established its R&D centers in Shenzhen, Guangdong Province, Beijing and Shanghai since 2016.

“The Tianjin government has put in place favorable policies for foreign entities, and the city has a talent pool from which we can hire people providing R&D support services,” he said. declared.

Tianjin launched the Haihe Elite project in 2018, which lowered the threshold to reach a hukou, or permanent household registration, for university graduates and leading technology personnel who will be dedicated to R&D in the city.

A recent initiative to modernize the project announced in August is that a Chinese citizen who has obtained a bachelor’s or higher degree from a foreign university can be granted a hukou in Tianjin, without conditions.

Cheng Muge, an analyst for 36Kr, a Chinese science and technology information provider, wrote in an online article: “Fantuan demonstrates that the ‘Copy from China’ model has generated huge profits overseas. Chinese applications to overseas markets and enable ethnic Chinese or international Chinese students from China to run businesses, as these people have a good understanding of the local market. “

Cheng also wrote that in North America, delivery apps founded by Chinese immigrants have flourished despite fierce competition.

“Fantuan faces challenges related to sourcing. The industry has changed dramatically as many restaurants have closed, but some are poised to reopen. How to educate restaurateurs about the importance of online operations will be our next project at long term, “Zhu mentioned.

Statista, a provider of market and consumer data, forecast that online food delivery segment revenue to reach $ 306.81 billion globally and $ 31.91 billion in the United States in 2021. .

In 2020, the four largest food delivery service apps in North America, namely DoorDash, Uber Eats, Grubhub, and Postmates, all saw their revenues double.


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