UK markets close in 5 hours 52 minutes
  • FTSE 100

    7,364.16
    -135.44 (-1.81%)
     
  • FTSE 250

    18,461.90
    -268.06 (-1.43%)
     
  • AIM

    800.86
    -6.58 (-0.81%)
     
  • GBP/EUR

    1.1363
    +0.0026 (+0.22%)
     
  • GBP/USD

    1.2203
    -0.0085 (-0.69%)
     
  • Bitcoin GBP

    22,984.33
    +283.14 (+1.25%)
     
  • CMC Crypto 200

    611.69
    +14.23 (+2.38%)
     
  • S&P 500

    3,948.72
    +11.75 (+0.30%)
     
  • DOW

    32,105.25
    +75.14 (+0.23%)
     
  • CRUDE OIL

    67.40
    -2.56 (-3.66%)
     
  • GOLD FUTURES

    1,999.60
    +3.70 (+0.19%)
     
  • NIKKEI 225

    27,385.25
    -34.36 (-0.13%)
     
  • HANG SENG

    19,915.68
    -133.96 (-0.67%)
     
  • DAX

    14,921.84
    -288.55 (-1.90%)
     
  • CAC 40

    7,000.04
    -139.21 (-1.95%)
     

China Tech Giant Meituan Hires 10,000 to Counter ByteDance

(Bloomberg) -- Meituan dived its most in two months after unveiling plans to hire as many as 10,000 people this quarter, as the Chinese food delivery company tries to fend off a challenge from ByteDance Ltd.

Most Read from Bloomberg

Meituan’s recruitment drive — which will span the nation from Beijing to Shenzhen — contrasts with layoffs rocking the tech industry as Silicon Valley titans and startups fire people to weather a potential recession. The campaign is intended to catch an upswing in consumer consumption, the company said in a statement.

That push coincides with ByteDance’s expanding efforts to get into a delivery arena that Meituan dominates, and where Alibaba Group Holding Ltd.’s Ele.me is a distant second. ByteDance’s Douyin — Tiktok’s cousin in China — is testing a grocery and food delivery service in Beijing, Shanghai and Chengdu and could consider expanding that to more cities in future, a spokesperson said, confirming local media reports.

Meituan ended more than 6% lower at its lowest level since November.

“Douyin seems to be expanding its ambition beyond cooperation with Ele.me and wants to do it nationwide,” said Willer Chen, senior research analyst at Forsyth Barr Asia Ltd. “This will lead to more head-to-head competition between Meituan and Douyin.”

If Tiktok’s operator forges ahead with full-fledged services, it could re-ignite a battle for control of the market that wiped out billions of dollars in value over the span of a year, before Beijing began to crack down on “reckless expansion of capital.”

Meituan, which continues to report losses, saw revenue surge 28% in the September quarter as demand held up during the downturn. China’s reopening is expected to spur economic activity and benefit Meituan in the longer run.

What Bloomberg Intelligence Says

Meituan’s core local-commerce margin can withstand competition from ByteDance’s Douyin food-delivery trial, which is due to expand according to local media reports, as domestic tourism spurs a rebound in Meituan’s travel-related profit this year. If Alibaba remains determined to reduce losses at Ele.me, it’s unlikely to cut prices aggressively. So the operating landscape could stay rational, supporting margins at Meituan, which shares 95% of China’s delivery market with Alibaba.

- Catherine Lim and Trini Tan, analysts

Click here for the research.

Douyin is becoming more ubiquitous in China, much like Tencent Holdings Ltd.’s super-app WeChat. Apart from bite-sized clips and live streams, ByteDance’s flagship video forum is making forays into online commerce through services like grocery and food delivery. That could help ByteDance diversify its revenue from online advertising, and reduce the influence of Alibaba and Meituan over China’s app-based digital economy.

“The local services market in China is large and penetration is still low, so there can be sustainable growth for multiple players,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “Douyin has substantial user traffic but its local service offerings may cater more to push-based recommendations and impulse-buying, rather than Meituan’s more comprehensive services.”

(Updates with share action and ByteDance’s comment from the fourth paragraph)

Most Read from Bloomberg Businessweek

©2023 Bloomberg L.P.