Earlier, China's market regulator SAMR had urged online platforms to set reasonable commissions for merchants, which would also make things difficult for e-commerce giants.
Shares of Meituan and JD.com have lost a combined $100 billion in market value since late last year, highlighting the fallout of a costly battle to win a bigger slice of the Chinese food delivery business.
The companies’ Hong Kong-listed shares have both dropped over 30% from a peak reached in early October and rank among the worst performers on the benchmark Hang Seng Tech Index. The stocks have suffered as DeepSeek’s technological advancement fuels a pivot toward firms with greater artificial intelligence capabilities, and JD.com deployed a cash-burning strategy to promote its food platform.
Meituan’s stock has pared some of its drop after sliding over 5% on Tuesday following the release of its March quarter results, but it’s still down almost 15% for the year.
Earlier, Chinese regulators issued draft guidelines over the fees online platforms charge merchants, spooking investors already concerned about slowing growth in the country’s e-commerce space.
Platform operators’ charges should be reasonable and take into account the operational status of merchants, the State Administration for Market Regulation, the country’s anti-monopoly regulator, said in a statement Sunday.
The guidelines follow a series of steps by Beijing to support local merchants under pressure from a sluggish economy and a trade war with the US, as well as online platforms’ longstanding customer-first approach. But they also coincide with rising price competition that’s squeezing margins throughout China’s e-commerce landscape.
Bloomberg cites Vey-Sern Ling, managing director at Union Bancaire Privee, who believes that given the weak economy and potential tariffs, the Chinese government wants to support small merchants, but it could be “quite negative for e-commerce platforms if this translates into substantive fee restrictions.”
Sources: Bloomberg 1, Bloomberg 2
