The Chinese authorities have asked companies specializing in the delivery of meals to charge a lower commission from the businesses with which they collaborate. At the announcement of this new measure, the action of Meituan, Chinese giant of the sector, collapsed on the stock market.
Help Chinese restaurants
China’s National Development and Reform Commission, along with thirteen other government agencies, thus explained that they were going to guide delivery platforms to reduce the fees charged to restaurateurs. Objective: to reduce operating costs for the latter, which have been put in difficulty by the Covid-19 pandemic.
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By the way, Beijing has also ordered affected companies to give periodic preferential discounts to restaurant owners in cities where the virus has wreaked havoc recently. Indeed, Chinese measures to curb the pandemic over the past year have led to tighter social distancing rules and lockdowns in some cities, which have directly hurt the restaurant industry.
Meituan, one of whose main shareholders is Tencent, saw its stock on the Hong Kong stock market fall by more than 15% following this announcement. As a reminder, the company earned $4 billion in revenue in the third quarter of 2021. Ele.me, an Alibaba-owned food delivery service, was down nearly 4%.
China wants to better regulate its big tech
These directives come in a very specific context in China: the government wants to better regulate its big tech while promoting common prosperity. Meituan has already paid the price for this regulation by being fined 456 million euros for having forced restaurateurs to use the platform exclusively.
Last fall, moreover, the authorities asked delivery platforms to improve the working conditions of delivery people. As explained TechCrunchthe latter are sometimes under increased stress, in particular because of efficiency optimization algorithms that do not fully take into account human capacity and road conditions.
For example, Meituan and Alibaba have started offering drivers connected helmets with voice command functions, so that they no longer need to consult their phone to find their way around; the platforms have also relaxed delivery times for drivers.
The gig economy in the sights of several countries
China is not the only country to want to regulate the gig economy. This is also the case of Europe, which moreover tabled a proposal for a directive last December aimed at salaried delivery people and drivers of platforms such as Deliveroo or Uber.
The economic model of these platforms sometimes poses a problem for legislators who wish to better regulate them. Consequently, the latter must find the balance between profitability and the well-being of workers. The new measures decided in China are nevertheless likely to have a strong impact on Meituan’s profits: commissions contributed 60% to the firm’s turnover during the quarter ended in September 2021.