Meituan’s chief adopts Xi’s wealth redistribution rhetoric

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The head of Meituan has become the latest Chinese tech tycoon to mirror President Xi Jinping’s recent rhetoric on wealth redistribution, while vowing to overhaul his company’s practices amid an increasing regulatory crackdown.

Wang Xing, the founder and chief executive of the Beijing-based food delivery service, told investors on Monday that “common prosperity” was “built into the genes” of his company. Xi used the same phrase in an influential speech earlier this month, in which China’s president warned about excessively high incomes in the world’s second-largest economy.

“We will continue to actively implement compliance requirements, improve internal control mechanisms across all our businesses, conduct in-depth self reviews and actively rectify any issues to ensure full business compliance and to avoid risk,” Wang said.

With an expansive crackdown across the Chinese tech sector gathering pace, Wang added that Beijing’s actions were both a “warning and motivating”.

“We believe that these regulatory changes are good for the sustainable development and orderly growth of the internet platform economy,” he said, while conceding that there would be short-term effects from “fine tuning” the company’s practices.

The vow to overhaul compliance comes after a tumultuous period for Meituan and its founder, who sparked a sharp drop in his company’s share price in May with a social media post that was widely interpreted as a veiled attack on Xi.

In April, the company became the focus of China’s second-ever antitrust investigation, just weeks after Alibaba was handed a record $2.8bn fine for abusing its market dominance. In its results filing on Monday, Meituan said the investigation was ongoing, while warning that it “could be required to make changes to its business practices” and potentially faced “significant” fines.

Also on Monday, Beijing’s State Administration for Market Regulation said it was investigating Meituan’s 2018 acquisition of Mobike, one of China’s top bicycle-sharing companies.

Despite the regulatory ructions, Meituan reported robust second-quarter revenues of Rmb43.8bn ($6.8bn), a 77 per cent gain on Rmb24.7bn in the same period a year earlier, beating analysts’ expectations.

Meituan, which is backed by Chinese technology heavyweight Tencent, reported a net loss of Rmb3.4bn, its third consecutive quarterly loss, compared with a profit of Rmb2.2bn for the second quarter in 2020. It attributed the loss to its rapid expansion into new businesses.

The company’s shares have lost almost half their value since hitting a peak in February but they remain twice as high as at the start of 2020, following a blockbuster rally last year.

Wang has also joined a clique of Chinese billionaires in ramping up philanthropic efforts, donating millions of dollars to his former school and university over recent weeks, building on donations of more than $2bn to his personal charity in June.

Adding further pressure on China’s tech sector, Beijing’s top court said on Friday a “996” overtime policy, under which employees work 9am to 9pm, six days a week, was illegal, while the country’s top internet regulatory body released draft proposals outlining stricter oversight on tech companies’ algorithms.

Additional reporting by Sherry Fei Ju