Saturday, 2024 April 13

SoftBank is helping Alibaba create a formidable rival to Meituan

SoftBank, the world’s largest tech investor, is reportedly helping Alibaba create a formidable opponent to challenge Tencent-backed Meituan-Dianping, which just filed for its IPO in Hong Kong to raise up to US$4 billion.

Alibaba is raising $3 billion to $5 billion for in a new round led by SoftBank’s Vision Fund, and will be merging, an on-demand food delivery platform, with its Koubei, a local lifestyle ecommerce service resembles Meituan.


The catchup game

The intensity of the blood-bleeding battle for a larger stake in China’s food delivery sector has been relatively opaque given the fact that both Meituan & are both private & independently-run startups. But that is getting clearer., which was bought out by Alibaba in April this year, saw a decline of its market share to around 36%, trailing behind Meituan Waimai’s dominating 59%, as per a newly published Trustdata report (link in Chinese)  on Chinese food delivery market in the first half of this year.

The sharp share drop explains well why Alibaba and are splurging RMB3 billion yuan over the next few months in a fight to grab 50 per cent of the market.

Alibaba bought out in April this year in a deal valuing the Shanghai-based startup at $9.5 billion, and has started – in a typical Alibaba investment pattern – sending over staff, usually Alibaba veterans and confidants, to spearhead’s operations.

For instance, WANG Lei, the former CEO of Alibaba Health has replaced ZHANG Xuhao, co-founder and CEO of, to run the company. Additionally, a new CFO was also sent to take over CFO XU Ke.

Both and Meituan are making big losses on food delivery as the two are competing against each other by giving heavy discounts to customers.


Making of a challenger

The recent steps taken for further investments by indicate, not only the dire need for more capital in its fight in China’s food delivery sector with Meituan, but also Alibaba’s determination in curbing Meituan’s further growth.

Beijing-based Meituan has filed in June with HKEX for a $4 billion flotation. The company, which derives 62 per cent of its revenue from food deliveries, has posted ballooning overall losses, especially over the last 2 years from around $850m in 2016 to approximately $2.8b in 2017, according to its filed prospectus. Apparently, Meituan, which counts Tencent, Sequoia, Russia’s DST, Singapore’s Temasek, among others, as its backers, is now badly in need of public market capital injection to keep funding its competition with Alibaba-backed

Alibaba relaunched Koubei in 2015, the same year Meituan-Dianping came to life through a merger between Beijing-based Meituan and Shanghai-based Dianping.

Though the relaunch of Koubei originated in Alibaba’s yearning to pose challenges to Meituan-Dianping, which has grown to become the world’s largest on-demand services platform, the tall order foiled eventually. Alibaba later on invested in for the first time in 2016, placing bigger bets on the latter’s rivalry with Meituan, a move followed by its fully acquisition of earlier this year to double the bet, however only to see the gap widened between the two with Meituan winning.

That said, Chinese on-demand market is one lucrative market that no one could afford to lose grip to. By merging and Koubei in a move similar to the combination of Meituan and Dianping, a move coupled with SoftBank’s deep pockets, Alibaba is making a more serious challenger to Meituan right ahead of the latter’s imminent public market offering.


Editor: Ben Jiang


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