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.
CHIP WAR: Tariffs on Taiwanese chips would prompt companies to move their factories, but not necessarily to the US, unleashing a ‘global cross-sector tariff war’ US President Donald Trump would “shoot himself in the foot” if he follows through on his recent pledge to impose higher tariffs on Taiwanese and other foreign semiconductors entering the US, analysts said. Trump’s plans to raise tariffs on chips manufactured in Taiwan to as high as 100 percent would backfire, macroeconomist Henry Wu (吳嘉隆) said. He would “shoot himself in the foot,” Wu said on Saturday, as such economic measures would lead Taiwanese chip suppliers to pass on additional costs to their US clients and consumers, and ultimately cause another wave of inflation. Trump has claimed that Taiwan took up to
A start-up in Mexico is trying to help get a handle on one coastal city’s plastic waste problem by converting it into gasoline, diesel and other fuels. With less than 10 percent of the world’s plastics being recycled, Petgas’ idea is that rather than letting discarded plastic become waste, it can become productive again as fuel. Petgas developed a machine in the port city of Boca del Rio that uses pyrolysis, a thermodynamic process that heats plastics in the absence of oxygen, breaking it down to produce gasoline, diesel, kerosene, paraffin and coke. Petgas chief technology officer Carlos Parraguirre Diaz said that in
Japan intends to closely monitor the impact on its currency of US President Donald Trump’s new tariffs and is worried about the international fallout from the trade imposts, Japanese Minister of Finance Katsunobu Kato said. “We need to carefully see how the exchange rate and other factors will be affected and what form US monetary policy will take in the future,” Kato said yesterday in an interview with Fuji Television. Japan is very concerned about how the tariffs might impact the global economy, he added. Kato spoke as nations and firms brace for potential repercussions after Trump unleashed the first salvo of
SUPPORT: The government said it would help firms deal with supply disruptions, after Trump signed orders imposing tariffs of 25 percent on imports from Canada and Mexico The government pledged to help companies with operations in Mexico, such as iPhone assembler Hon Hai Precision Industry Co (鴻海精密), also known as Foxconn Technology Group (富士康科技集團), shift production lines and investment if needed to deal with higher US tariffs. The Ministry of Economic Affairs yesterday announced measures to help local firms cope with the US tariff increases on Canada, Mexico, China and other potential areas. The ministry said that it would establish an investment and trade service center in the US to help Taiwanese firms assess the investment environment in different US states, plan supply chain relocation strategies and
RSS