In two months, Bloomberg-Meituan dived its most in two months after it announced plans to hire 10,000 people in the quarter, a remarkable move by a Chinese food delivery giant trying to fend off a challenge from ByteDance Ltd.
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 efforts to get into a delivery arena that Meituan dominates, and where Alibaba Group Holding Ltd.'s Ele.me is a distant second. China News reported that ByteDance's cousin in China, Tiktok, is testing a grocery and food delivery service in Beijing, Shanghai and Chengdu. ByteDance representatives didn't respond immediately to requests for comment.
Willer Chen, senior research analyst at Forsyth Barr Asia Ltd, said that Douyin seems to be expanding its ambition beyond cooperation with Ele.me and wants to do it nationwide. This will lead to more head-to- head competition between Douyin and Meituan. If Tiktok takes full-fledged services ahead, it might spark 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. Revenue surged 28% in the September quarter as demand held up during the downturn, as Meituan continued to report losses. The reopening of China is expected to spur economic activity and benefit Meituan in the long run.
Douyin is becoming more ubiquitous in China, much like Tencent Holdings Ltd.'s super-app WeChat. ByteDance's flagship video forum is making forays into online commerce through services like grocery and food delivery, besides bite-sized clips and live streams. That could help ByteDance diversify its revenue from online advertising and reduce the influence of Alibaba and Meituan on China's app-based digital economy.
Vey-Sern Ling, managing director at Union Bancaire Privee said that the local services market in China is large and penetration is still low. Douyin has a lot of user traffic but its local service offerings may cater more to push-based recommendations and impulse-buying, rather than Meituan's more comprehensive services. When financial bubbles are hard to pop, none if it happens.