Alibaba, Meituan, JD.com: Watch These Stocks As China’s Latest Probe Said To Target Food-Delivery Quality
Synopsis
- China’s market regulator conducts checks at major food-delivery firms’ offices.
- These inspections are part of ongoing probes as Beijing reviews the sector for anticompetitive and quality concerns.
- With JD’s entry earlier this year, China’s food-delivery market has become highly competitive.
Officials from China’s competition regulator conducted checks at the offices of the country’s leading food delivery operators, Alibaba Group Holding Ltd.’s Ele.me, Meituan, and JD.com Inc. this month, according to a Bloomberg report citing an article in the Chinese publication Economic Observer.
ByteDance Ltd.’s Douyin was also among the companies investigated.
The reported inspections are the latest in Beijing’s scrutiny of the domestic food delivery sector. The country’s three largest platforms have been locked in an intense price war this year, drawing criticism from top leadership concerned about price distortion and anticompetitive practices.
In July, President Xi Jinping backed a campaign to curb “disorderly competition,” and earlier this month, China’s economic planning agency and market regulator announced new measures to support the initiative. Authorities have also cited consumer complaints about food and service among the issues they are probing.
The investigations are ongoing, and platforms are preparing materials requested by the authorities, according to the report.
The development comes amid a high-stakes war in China's food-delivery space, where companies have resorted to aggressive discounting to undercut rivals.
The competition escalated earlier this year when JD.com entered the space, prompting Meituan and Alibaba's Ele.me to double down on promotions and subsidies to keep customers from jumping to rival services.
On Stocktwits, the retail sentiment was ‘bearish’ for BABA and ‘extremely bearish’ for JD as of early Friday. Alibaba’s shares are up 105% year-to-date, while JD’s shares have declined 2.8%.
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