Meituan (美團) has shed more than US$58 billion of its market value over two frenetic trading sessions, after Beijing unveiled sweeping reforms against private-sector companies that darkened the outlook for the world’s biggest food delivery giant.
The Chinese company yesterday slid a record 17 percent in Hong Kong, on top of a 14 percent plummet the previous day. The Tencent Holdings Ltd (騰訊)-backed company, already the target of an antitrust probe with uncertain outcomes, was caught up in a broader sell-off of Internet stocks after China ordered swathes of its US$100 billion private education sector to go non-profit.
The clampdown on the booming industry has shocked seasoned China watchers, prompting a rethink of how far Chinese President Xi Jinping’s (習近平) Chinese Communist Party is willing to go as it tightens its grip on the world’s second-largest economy.
Meituan’s losses deepened after the nation’s powerful antitrust watchdog posted rules late on Monday ordering online food platforms to ensure their workers earn at least the local minimum wage, which appeared to target the sector’s leader.
The Chinese government also asked meal delivery operators to respect the rights of delivery staff, according to a guideline released by seven government agencies including the Chinese State Administration for Market Regulation.
The guidelines were not a surprise, but the timing of their announcement was, Citigroup analyst Alicia Yap wrote. “We do see risks of slower profit growth and push out of near-term margins.”
Meituan’s stock has tumbled more than 50 percent from its peak in February as the company grapples with scrutiny on multiple fronts. The food industry regulations added to a litany of regulatory woes.
Beijing in April announced an investigation into whether Meituan contravened anti-monopoly laws through practices such as forced exclusivity arrangements with restaurants.
The company has also drawn criticism over the way it treats hundreds of thousands of low-income delivery riders, who were put to the test during the COVID-19 pandemic.
Meituan chief executive officer Wang Xing (王興) himself has been warned to keep a low profile, Bloomberg News has reported, after the founder posted a controversial poem that convulsed markets and sparked a social media furor.
Wang has detailed plans to address government concerns about its business practices. Among other things, the company has pledged to work with regulators and improve its compliance standards.
It also promised to provide insurance for millions of its delivery drivers — many of them work as part-time personnel and lack proper employee benefits — and has started to reform its commissions scheme in a move to cut fees for partner restaurants.
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