JD.com’s on-demand delivery unit, Dada Nexus, loses 46 per cent of US stock value overnight amid internal inquiry into potential fraud

While the amount that is subject of the inquiry makes up just about a third of Dada’s total revenue in the September quarter, a potential fraud in the company’s books could further undermine investor confidence in Chinese internet stocks.

Dada Nexus chairman Xin Lijun stepped down from his post “for personal reasons” on December 19, 2023. That came more than a month after he was removed as chief executive of JD Retail in November. Photo: Bloomberg

The investigation at Dada comes nearly a month since the company’s chairman, Xin Lijun, stepped down from his post “for personal reasons” effective on December 19. In that same corporate announcement of management changes at Dada, Chen Zhaoming resigned as the firm’s chief financial officer.

Shanghai-based Dada, according to a report by Chinese news outlet The Paper, has reported the potential fraud case to local police.

A JD.com representative referred the South China Morning Post to Dada’s US filing and declined to provide further details. Dada did not immediately respond to a request for comment on Tuesday.

Dada had earlier said it was working with third-party agencies, including an accounting company and a law firm, to conduct an independent review of the case.

In separate filings with regulators, both JD.com and Dada said they are committed to maintaining high corporate-governance standards and internal controls.

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Founded in Shanghai in 2014, Dada runs two core businesses: parent JD.com’s on-demand retail platform JD Daojia and its own Dada Now. Both these operations work with bricks-and-mortar retailers and merchants on fulfilment, including delivery of online orders to consumers in under roughly an hour.

JD Daojia operates in more than 1,700 counties, districts and cities across mainland China, while Dada Now does business in 2,700 domestic locations.

In November, Dada reported that total third-quarter revenue rose 20.4 per cent year on year to 2.9 billion yuan.

On-demand delivery is a hotly contested field on the mainland, where Dada competes against the likes of food delivery giant Meituan and JD.com rival Alibaba Group Holding, which owns the Post.

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