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China’s Meituan lowers commissions in response to regulatory guidance

THE STAR – Chinese food delivery giant Meituan said yesterday that it would lower commissions for merchants on its platform, including capping fees for around a million small and medium sized merchants facing operational difficulties at five per cent this year.

It would also cut half of commissions, capping at CNY1 per order, for catering vendors in pandemic-hit areas, Meituan said, adding that it aimed to achieve full nationwide transparency in charging commissions this year.

Chinese regulators last month issued guidance for online food delivery platforms to reduce service fees to help to lower operating costs for catering businesses, to promote a faster recovery from the pandemic in the services sector.

The proposed policy had wiped as much as USD26 billion off the market capitalisation of Meituan, China’s dominant food delivery platform, on the issuing day.

The market had overreacted to the government’s guidance, as the policy was not intended to target the platform economy, a Chinese state-run newspaper Economic Daily said in a commentary last week.

Meituan currently charges around 12 per cent in commissions for its food delivery business, a unit accounting for more than 50 per cent of its total revenue, according to analysts estimates.

Two Meituan food deliverymen riding their scooters in Beijing. PHOTO: AFP

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