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Chinese Food Delivery Giants Are Taking a Hit to Please Beijing

The country’s biggest platforms, Meituan and Alibaba’s, have cut or waived fees for restaurants hit hardest by Covid. That’s worrying investors.

A Meituan delivery.

A Meituan delivery.

Photographer: Yang Huafeng/China News Service/Getty Images

It’s a tough time to run a restaurant in China, as the Covid-19 pandemic enters its third year, holding back the country’s economy. The government has tapped an unlikely source of potential relief, compelling the country’s biggest food delivery platforms to cut their fees as a sign of willingness to share the pain. But it remains uncertain whether the move will really help restaurants and how much it could harm the tech companies.

Meituan, China’s biggest food delivery platform, said on March 1 that it would reduce its technology service fee by 50%, capping it at 1 yuan, or 16¢, for merchants in pandemic-hit regions if their daily average user transaction volume has fallen more than 30%. Alibaba Group Holding Ltd.’s, the second-largest platform, said on March 2 that it would cut or waive commissions for merchants in areas hit by Covid for at least 15 days.