Mar 12, 2019 (China Knowledge) - Chinese on-demand services giant Meituan-Dianping has been hit hard by intensifying competition from rivals Alibaba Group in its smaller businesses, leading to net loss at the company widening by 57% to RMB 3.4 billion in its most recent earnings release.
With profitability in segments such as travel, bike-sharing and hotel bookings narrowing, the company has since embarked on a restructuring that will see subsidiary Mobike exit from most of its overseas markets to reduce costs.
As Meituan continues to engage Alibaba’s Ele.me and other subsidiaries for the on-demand services market, the company has taken a toll on its bottom line and founder Wang Xing has pledged to increase cost-discipline and to be more selective as to where and when to allocate capital as growth in the on-demand services industry decelerates.
Meituan will now focus on its food-related initiatives such as restaurant management services which can complement its core food-delivery business and reduce losses by slowing down subsidies in its other non-core businesses such as ride-hailing and bike-sharing.
New initiatives such as ride-hailing, bike-sharing and restaurant management had put a drag on the company’s margins during the period due to the high losses incurred in these segments.
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