China Price War Drives Meituan To Record Loss

Meituan's revenue rose 2% year-on-year to RMB 95.5 billion (US$13.45 billion), but net profit swung from a RMB 12.865 billion (US$1.81 billion) gain last year to this record quarterly loss. Selling and marketing expenses soared 90.9% to RMB 34.3 billion (US$4.83 billion), jumping from 19.2% to 35.9% of revenue, reflecting expanded promotional campaigns.

Meituan CEO Wang Xing stated the food-delivery price war is a "low-quality, low-price form of 'involution' competition" and is unsustainable. Alibaba and JD.com aggressively entered the instant retail sector, launching massive subsidy plans, including JD's "100-billion-yuan subsidy" and Alibaba's RMB 50 billion (US$7.04 billion) plan.

Media estimates indicate the combined profits of Meituan, JD, and Alibaba fell by nearly RMB 80 billion (US$11.27 billion) in Q2 and Q3 compared with the previous year, with Alibaba's operating profit plunging 85% and JD's net profit dropping 55%. This intense competition significantly impacts the alcohol industry, where merchants co-fund vouchers, leading to promotional prices near wholesale levels and shrinking margins.

Wang Yutian, Marketing Director at Torre Oria, confirmed the challenge, noting that while instant retail boosts sales and clears inventory, it forces stores to sell at a loss to maintain visibility. Torre Oria plans to maintain an active presence, recommending product differentiation and private-traffic channels for sustainability.