Caixin
Aug 31, 2021 06:36 AM
BUSINESS

Meituan Reports More Red Ink Thanks to New Businesses

What’s new: Chinese food-delivery giant Meituan reported a 77% increase in quarterly revenue, but red ink in its community group buying and other new businesses kept the company unprofitable for a third consecutive quarter.

In the second quarter, Meituan swung to a net loss of 3.36 billion yuan ($519 million) from a profit of 2.2 billion yuan a year earlier.

Revenue from the core food-delivery business expanded 59% to 23.1 billion yuan, and the hotel business grew 89% to 8.6 billion yuan. Those operations were in the black to the tune of 6.1 billion yuan, twice as much as a year ago. But losses from community group buying and other new businesses widened 5.3 times to 9.2 billion yuan.

Chief Executive Officer Wang Xing said the company will continue investing in new businesses over the next few quarters, mainly in warehousing and distribution, supply chain, marketing and promotion. Meituan started building cold chain logistics facilities across the country, he said.

Meituan also warned Monday that it may have to make changes to its business practices as a result of an ongoing investigation by China’s antitrust regulator, and it could face significant fines.

The background: In April, China’s State Administration for Market Regulation (SAMR) launched an investigation of Meituan for suspected anti-competitive practices, including the policy known as “picking sides,” in which a platform forces merchants to work exclusively with it and shun competitors.

Meituan was also among 25 technology companies ordered by the Ministry of Industry Information Technology to carry out internal reviews and fix issues ranging from data security to protection of consumer rights.

Last month, SAMR and the Ministry of Human Resources and Social Security ordered Meituan to pay social insurance for delivery drivers, threatening to significantly drive up costs.

Quick Takes are condensed versions of China-related stories for fast news you can use. To read the full story in Chinese, click here.

Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bobsimison@caixin.com)

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