Chinese Authorities Summon Three Major Food Delivery Platforms
"Comply with the Law and Compete Fairly"
'Free Food' Promotions Emerge Amidst Three-Way Rivalry
As the three major food delivery platforms in China engage in cutthroat competition, regulatory authorities have summoned these companies and issued a warning.
According to China's state-run Xinhua News Agency and China Central Television (CCTV) on July 19, the State Administration for Market Regulation (SAMR), which oversees market regulation and supervision in China, announced via its official social media account the previous day that it had summoned representatives from Ele.me, Meituan, and JD.com, warning them to engage in fair competition.
The authorities demanded that these companies comply with China's E-commerce Law, Anti-Unfair Competition Law, and National Food Safety Law, among other relevant laws and regulations, and further standardize their promotional activities. They also urged the companies to jointly establish an ecosystem where all parties?including consumers, partner merchants, and delivery riders?can achieve a "win-win" outcome, thereby promoting healthy and sustainable development within the industry.
The authorities used the term "yuetan" (約談) to describe this action, which refers to a form of verbal warning in which authorities summon companies, institutions, or individuals to point out wrongdoing, demand corrections, or communicate requirements.
For years, the Chinese delivery app market was dominated by Meituan and Ele.me, but this year, JD.com entered the competition with its strong capital, creating a three-way rivalry. As a result, fierce competition has erupted over product price reductions and the recruitment of delivery personnel, leading to cases of "zero-yuan delivery" where not only the delivery fee but even the food itself is free.
According to Chinese economic data analysis firm Wind, the size of China's delivery market has continued to grow, surpassing 1 trillion yuan (approximately 190 trillion won). As of the end of last year, there were about 592 million delivery app users in China.
Global investment bank Goldman Sachs forecasts that this "delivery war" will continue for a long time, and that the three major companies, which invested a total of 25 billion yuan (about 4.8 trillion won) in the second quarter of this year alone, are expected to incur large-scale losses. Goldman Sachs predicts that from July this year to June next year, Ele.me will record an operating loss of 41 billion yuan (about 7.9 trillion won), JD.com will record 26 billion yuan (about 5 trillion won) in operating losses, and Meituan's operating profit will decrease by 25 billion yuan (about 4.8 trillion won).
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