Waterdrop Inc.: Creating a Business Model in China

Shen Peng founded Beijing Zongqing Forward Technology Co (Waterdrop) in Beijing, China, in 2016. After more than three years of development, Waterdrop began to provide health-care funding solutions and insurance services to the public through three business subsidiaries: Waterdrop Mutual Aid, Waterdrop Medical Crowdfunding, and Waterdrop Insurance. Waterdrop had become a leading domestic insurance and health-care service platform in China. However, a potential business risk emerged for Waterdrop Mutual Aid. The increasingly stringent regulatory policies of the mutual aid sector in China could impact profits. At the same time, Waterdrop Medical Crowdfunding was unable to generate revenue, and profits from Waterdrop Insurance were struggling to support the Waterdrop parent company. The profitability of Waterdrop’s three subsidiaries was weak and the company found itself in a challenging financial position on December 31, 2020. The company reported a net loss of US$90 million for the year, reflecting its ongoing financial difficulties. In the face of this combined crisis, Shen considered closing Waterdrop Mutual Aid and expanding into the clinical trial patient recruitment industry. The idea had received mixed reactions from the company’s executives. Given Waterdrop’s financial difficulties, should Shen proceed with closing Waterdrop Mutual Aid and venture into clinical trial patient recruitment?

The case is suitable for senior undergraduate, graduate, and executive-level courses in strategy management and entrepreneurial management.<br><br>This case is designed to guide students to consider a company’s past, present, and future. It will help them to understand a company’s development strategy through in-depth analysis of business modelling and strategic planning. Students will be able to apply analytical tools such as PEST (political, environmental, social, and technological), the 4Cs (community, content, convenience, and communication), the business model canvas, diversification strategy, and SWOT (strengths, weaknesses, opportunities, and threats) to further deepen their thinking. After working through the case and assignment questions, students will be able to<br><br><ul><li>understand the online mutual aid, health-care crowdfunding, and insurance markets;</li><li>use the PEST tool to analyze business model innovation drivers;</li><li>understand the process of business model innovation and build a business model canvas;</li><li>apply the 4Cs to master how a company can use new media marketing methods to grow its customers within the structure of its business model; and</li><li>understand the definition of diversification strategy and use the SWOT analysis tool to synthesize the benefits and risks of a business decision to determine whether to pursue a diversification strategy.</li></ul>

• business model
• business model canvas
• Waterdrop technology
• health-care funding
• mutual aid sector
• medical crowdfunding
• insurance services
• financial strategy
• business model innovation
• clinical trial recruitment
• market analysis
• PEST analysis
• SWOT analysis
• diversification strategy
• online health insurance
• revenue generation
• regulatory compliance
• financial challenges
• strategic planning
• digital marketing
• customer growth
• entrepreneurial management.