As Meituan released its better-than-expected Q2 earnings on Monday (30 Aug), it also highlighted that the regulatory investigations are still ongoing and could post a risk.
This is happening under the macro backdrop of government promoting ‘common prosperity’, and a string of tech crackdowns.
What we find particularly interest what Wang Xin, its founder, said during the earnings call (transcript here), answering questions raised by a Goldman Sachs analyst:
So, I would like to share some macro thinking, because ultimately there had been a lot of changes and so people are concerned. But everything happens for a reason. So, I would like to say, all for comment prosperity.
Even I would like to say, common prosperity is built in the gene of Meituan. Actually, it’s even in a name of Meituan, because the name Meituan came from two Chinese characters. When I need to explain the name Meituan to people who don’t speak Mandarin. As I say, ‘Mei’, that was the character means good or better and the second character ‘tuan’ means together. So Meituan means better together. So, that the common itself has always been build into our gene.
He went on to explain that the regulatory changes are “good for the sustainable development and orderly growth of the Internet platform economy. It promotes a fair competition, as well as the industry development. This is not just in China and we see similar regulation change globally as well.”
A tight balance
It is actually a fair point. Meituan has been able to thrive in competitive environments whether opponents are playing fair or not. Regulations that put the focus back on building the business rather than bottomless competitions will benefit Meituan more than its competitors.
It is a tight balance though, as the tech-bashing trend in China might become self fulfilling.
We will have to trust that Wang, who survived many hardships and a few near-death experiences for his business, will be able to navigate through this choppy ocean.
(The feature image shows Wang clapping at Xi’s speech. This happened during the Communist Party of China’s centenary celebrations on 1 July this year).
Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected]