China’s Massive Community-Buying Industry Is Collapsing

China’s richest tech giants and financiers are hitting the brakes on one of the country’s hottest internet trends in years: community buying, in which tech companies facilitate the traditional practice of neighbors pooling resources to purchase items cheaply in bulk. Hundreds of startups have already gone bankrupt, and investors could lose billions of dollars in the latest cautionary tale of how quickly a shift in attitude in Beijing can doom a thriving industry.

Community buying was initially a rural phenomenon, with farmers banding together to save money by purchasing supplies in large volume. In recent years it’s become more urban, turbocharged by smartphones and used primarily for buying groceries rather than seeds and fertilizer. Hundreds of thousands of neighborhoods have begun using platforms such as JD.com, Meituan, and Pinduoduo in what looked like a revolution in e-commerce.