Last Friday (18 Feb) afternoon, a joint communique from 14 government departments sent Meituan’s share prices into nose dive:
The joint communique, led by National Development and Reform Commission, was aimed at helping the service sector recover from the difficulties during the pandemic. The document had one mentioning about guiding food delivery platforms to reduce service fees to help lower costs for F&B businesses, and issue temporary fee relieves on areas impacted by the pandemic.
As it was issued not long before the close of the week, the capital flight was almost instant:
This morning (23 Feb), Economic Daily, an official publication published an a commentary named ““Guidance” is not “Order”, please do not overreact“.
The article basically said the market has overreacted:
“The whole policy had more than 5000 words, amongst which only one or two lines were about platforms. It was not intended to go against the platform economy. In fact, when the Party Central and Government listed the platforms as the highly-hoped party to help with the relief policies, it is exactly because platforms are recognised as important part of the economy, linked to tens of millions of market participants, and with high hopes for the future.”
It also told investors not to worry about the future of the platforms.
A few friends asked us: “does this represent the official government interepretation?”
The answer is simple: Yes. Economic Daily is a party mouthpiece on economic issues, as People’s Daily is on political issues.
Close to 10 million individuals in China have worked as riders for Meituan (with 3-4 million active), and 7 million active merchants, Meituan is a very important part of the economy. It is also expected by the government to show some social responsibility, which Didi apparently failed to do so last year.