The surge of growth is a testament to a unique business environment, as well as a population more than three times larger than the U.S. At the same time, it bears all the points of concerns global investors have about an overheated Chinese economy.
"I do think that the reason some of these companies can justify their valuation is because at the end of the day, the addressable market is double the size of the U.S., on mobile particularly," said Edith Yeung, partner at early stage investor 500 Startups. "I understand why the valuation is so high. But the key thing is not just the future, but healthy growth towards the future."She pointed to Chinese bike-sharing companies Mobike and Ofo as examples.
Both grew quickly in the last few years, driving a trend that spawned many other bike-sharing companies in China, but the business model proved unsustainable. Mobike was acquired last year, while Ofo is reportedly on the brink of bankruptcy.Luckin bills itself as a homegrown coffee chain and began delivering to customers months before Starbucks officially did. The Chinese company has quickly set up its stores — many of which have little to no seating.
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