Meituan’s CEO unveils changes to tackle China antitrust concerns

Bloomberg

Chinese food-delivery giant Meituan is working to address regulators’ concerns about its business, changing practices that sparked an antitrust probe while promising better treatment for its millions of drivers and restaurants.
The Beijing-based company has set up a dedicated team to work with officials conducting the investigation and vowed strict compliance with new guidelines. It’s also providing insurance for its delivery force — a victory for an army of mostly part-time personnel — and cutting fees for partner restaurants. Chief Executive Officer Wang Xing said he anticipates “no significant impact” from the government scrutiny.
Meituan’s billionaire founder is trying to quell investor unease about the fallout from Beijing’s crackdown on powerful internet firms. The months-long campaign has helped wipe $130 billion from Meituan’s market value since its February peak, forced the overhaul of budding fintech businesses and spurred giants like Jack Ma’s Alibaba Group Holding Ltd to adjust internal policies to
address accusations of monopolistic behaviour. Meituan pledged to avoid forcing exclusive arrangements with its merchants, the alleged practice that landed Alibaba a record $2.8 billion fine.
Meituan’s selloff accelerated in May after Wang posted a classical poem about book burning during the Qin dynasty that some interpreted as a veiled criticism of Beijing. The entrepreneur deleted it days later and issued a clarification that he used the poem in reference to the company’s competitors. Wang borrowed several of Beijing’s oft-cited catchphrases including Xi Jinping’s “dual circulation” approach to boosting domestic consumption.
“In terms of our day to day operation, we haven’t been significantly impacted,” the 42-year-old billionaire assured investors during the earnings call. “This event will not jeopardise the competitive advantage of our food delivery business.”
Beijing announced an investigation into the tech giant in April over alleged antitrust violations. Financial regulators then imposed wide-ranging restrictions on its fintech operations, alongside those of peers like Didi. Renewed scrutiny over the treatment of its delivery riders have fueled concern that labor expenses are poised to soar, which would further compound losses stemming from increased spending.
For now, Wang’s company is riding a strong post-Covid recovery. Meituan reported better-than-expected revenue of $5.8 billion in the March quarter, more than doubling from the pandemic-hit year-earlier period.