China will investigate cutthroat competition among food delivery platforms operated by tech firms such as Meituan and Alibaba, aiming to rein in price wars that have eroded profits and contributed to deflationary pressures plaguing the economy.
The State Council has decided to launch the investigation to ensure fair and orderly competition and create a market environment with high quality and reasonable pricing, the State Administration for Market Regulation said in a statement on Friday.
China’s consumer prices ended 2025 at the same level as the year before, missing by a wide margin policymakers’ goal of “around 2%”, despite a government campaign to curb overcapacity and stabilise prices.
Some issues in the food delivery sector, such as excessive subsidies and price wars, squeezed the real economy and intensified “involution-style” competition, the market regulator said. “Involution”, or neijuan in Chinese, refers to excessive competition which often leads to diminishing returns.
Competition is fierce in China’s so-called instant retail market, where goods, from food and beverages to over-the-counter medicine, are typically delivered within the hour.
China’s tech giants Alibaba, Meituan and JD have burned billions of dollars in an expensive bet that the fast-growing delivery segment will be vital to the future of China’s e-commerce market as a whole.
Meituan had for the third quarter last year posted its first quarterly loss since late 2022 and warned of likely further losses in the following quarter as a price war with rivals squeezes margins.
Meituan and Alibaba’s delivery platforms both said on Friday that they welcomed the government investigation and assessment, and would fully cooperate.
Reuters
