Major disruption I Offering support and resources I The pickup

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TechNode
In focus / Meituan
Issue #6

  • Major disruption
  • The pickup
Dear readers,

Over the past few months, we’ve discussed how Meituan Dianping became a leading player in China’s lucrative food delivery market. This week, however, we’re taking a look at how the novel covid-19 epidemic is disrupting food delivery—a service that has become indispensable for city dwellers in China.

We also look at how Meituan and rival Ele.me are supporting affected regions as well as how they are dealing with the challenges of labor protection and food safety.

Questions? Feedback? We’d love to hear what you think.

Enjoy,

Nicole and Emma
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Major disruption
How the outbreak is disrupting Chinese daily life
Over the past month, China has been battling the spread of a lethal strain of novel covid-19. As of this writing, the outbreak has claimed more than 1,000 lives in China and infected over 37,000 individuals—rendering it more deadly than the 2003 SARS (severe acute respiratory syndrome) outbreak, according to the latest figures released by Chinese officials.

The epidemic has severely affected almost all businesses in China, and the food delivery sector is no exception.

Now Meituan and Ele.me, the two food-delivery platforms that hold more than 90% combined share of the market in China, are scrambling to address the many concerns spurred by the outbreak and to minimize the impact on their operations.

The rising death toll has put everyone in China on high alert, as people have become increasingly wary of coming into close contact with strangers. Because food delivery couriers necessarily are required to interact with restaurant staff and customers, these workers are struggling with the dilemma of trying to limit their own risk of exposure to the virus. 

A Beijing-based delivery driver who requested to be identified only as Liu told TechNode he has not been taking delivery orders and has mostly stayed indoors over the past month. There are confirmed covid-19 cases in popular residential areas located in the heart of the Chinese capital, he added. 

Earlier this week, Chinese authorities escalated measures against the spread of covid-19 as millions of workers returned from an extended Spring Festival holiday. Officials announced the implementation of “closed community management" to restrict access for outside visitors, such as delivery couriers.

Some delivery drivers did remain at their posts over the holiday, hoping to earn extra cash. However, others noted that during the extended holiday, the number of delivery orders declined as many restaurants remained closed and customers shifted toward cooking at home instead of ordering takeout. 

Instead of going back to his hometown as he usually does, Ele.me deliveryman Xiaoyue had stayed in Beijing, planning to earn extra income over the Spring Festival holiday, which began on January 24. However, his plan was interrupted by the covid-19 outbreak. “There are fewer orders and my daily income now just covers my basic living costs in Beijing,” he told TechNode.

The restaurant and dining sector has been among the hardest-hit by the drop in consumer spending. Some major restaurant chains have temporarily closed their locations across China. Beijing News reported (in Chinese) that only 13% of the city's 87,000 restaurants kept their doors open during the holiday.

Many consumers have become hesitant about ordering takeout because they are afraid of coming into contact with delivery drivers. Some turned to preparing home-cooked meals because they had extra free time during the holiday and did not want to worry about food safety.

Although meal delivery orders seem to have dropped in the wake of the epidemic, people are still relying on delivery services for buying daily necessities and groceries. Ele.me claimed that its fresh produce delivery grew ninefold (in Chinese) compared with last year. The number of orders received by grocery stores doubled over the holiday.

To reassure consumers, Meituan rolled out a “contactless delivery” service in 184 cities nationwide, which allows drivers and customers to avoid meeting face-to-face.

The company updated its app, allowing users to request that the courier to drop off the meal at an agreed-upon location. Ele.me and other delivery apps have launched a similar feature.

Despite these protective measures, Xiaoyue is still concerned about the risks of becoming infected. Making his living from food delivery has made him feel pretty helpless about the current situation. “Who cares about the safety of those who live at the bottom of the society?” he asked.

Beijing native Li Sen is another Ele.me deliveryman who noticed a decline in orders during the Spring Festival holiday. The virus also affected the return of his coworkers; Li says that his delivery fleet is currently only half its usual size.

Nevertheless, the food delivery industry is seeing one of the highest return-to-work rates after the Spring Festival holiday. A survey (in Chinese) from 58.com published on February 5 showed that 84% of China’s workforce had not returned to their posts after the official start date, though it did not specify whether employees working remotely had been taken into account. In comparison, around half of the food-delivery workforce was already back to work—the highest of all categories, along with drivers and house cleaners.

There are additional challenges. Many Chinese cities are currently under lockdown. Traffic restrictions make delivering meals increasingly difficult. In urban areas, many gated apartment complexes are forbidding delivery couriers to enter, requiring residents to pick up their orders at the front gate of the complex.

Both Meituan and Ele.me declined to comment on questions regarding the outbreak.

Offering support and resources

An outpouring of support and donations have flooded into coronavirus-ravaged regions. Many tech companies have stepped up their efforts to help those in need.

During this crisis, Meituan has been handing out free meals every day to medical staff in Wuhan. Its business-to-business arm Kuailv, which normally delivers fresh food to restaurants, is now delivering fresh produce to hospitals. The company has installed lockers at hospitals around Wuhan where delivery drivers can deposit food for medical staff. Some delivery drivers are helping out with essentials like facemasks in lockdown areas.

Meituan has also donated RMB 200 million to help supply food for medical staff in Hubei.

Alibaba, Ele.me’s parent company, is donating RMB 1 billion for hospitals in Wuhan and Hubei province to buy medical supplies. Ele.me is also helping with food deliveries for hospital staff as well as offering financial support to delivery workers. The company said it has arranged a special health relief fund of up to RMB 300,000 yuan ($43,250) for its delivery workers. 

Both Meituan and Ele.me have also said that they are cracking down on all products considered wild game, which is said to be the source of the covid-19 outbreak. Wild animals like civet cats and badgers have reportedly been removed from popular Chinese e-commerce and food delivery platforms. In a statement last month, Meituan said it would respond to the government’s crackdown efforts by removing listings for all wild game products from its platform.

Although the covid-19 epidemic has caused major disruption in Meituan’s food delivery as well as its travel and hotel booking businesses, there may be a possible upside. Even though the extended holiday has come to an end, many companies are encouraging employees to work remotely; meanwhile, many schools remain closed. The continued confinement of consumers could potentially spur a spike in demand for delivery services in China.
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The pickup
Highlights from recent headlines
Meituan helps to launch real-name registration for public transit

TechNode: “As Beijing ramps up efforts to contain transmission of the novel covid-19, authorities in the northeastern city of Shenyang are launching a real-name registration system for public transit developed by China’s on-demand services provider Meituan Dianping, and many cities are beginning to follow suit.”

A mobile registration system requiring commuters to log their personal information via QR code before taking public transport went live last Thursday in Shenyang, the capital of northeast China’s Liaoning province. Changchun, a city in neighboring Jilin province, immediately followed suit. Meituan plans to deploy the system in collaboration with a dozen city governments across the country, according to a company spokeswoman.

Real-name registration for public transit is expected to improve the government’s ability to track the spread of the covid-19, but represents further erosion of individual privacy.


Meituan rolls out contactless delivery amid China coronavirus outbreak

Abacus: “The covid-19 outbreak in China is challenging tech companies to think creatively about carrying on with business. Now that customers might worry about getting infected by their food couriers and vice versa, food ordering app Meituan is launching ‘contactless delivery’ across the country.”

The new feature allows users to have their food delivered to a designated area without having to interact with a courier in person. Contactless delivery was first offered as an option in Wuhan before being rolled out to 184 cities across the country.

As human-to-human contact is being discouraged to reduce the risk of infection, major e-commerce and grocery platforms like JD.com, and Alibaba’s Ele.me and Hema grocery stores have also implemented contactless delivery, making the practice a new industry norm. The state is backing the practice by issuing new guidelines that all online retailers are required to adopt.


From bad Tsinghua student to Meituan second-in-command

TechNode: “Wang Huiwen will stay on as an honorary consultant on the board, lecturer at Meituan’s ‘Internet+ University’ internal training program, and strategist focused on talent and organizational transition. He said he was determined to ‘go all out in my work at Meituan, while ensuring an orderly handover.’”

Meituan’s senior vice president and co-founder Wang Huiwen will step down from management duties at the end of 2020. With the news of Wang’s departure, Meituan is seen to be reshuffling senior talent in preparation for the next decade.


Meituan boosts support for smaller merchants during coronavirus outbreak

Sina Tech (in Chinese): Meituan has unveiled support programs for small- to medium-sized businesses to help them weather the economic slowdown caused by the novel covid-19 outbreak.

In addition to lowering commission fees for merchants in Wuhan, the company is setting up a fund of RMB 350 million (around $50 million) to help retailers across the country continue operating. Meanwhile, it is providing no less than RMB 10 billion in low-interest loans to sellers and donating 10,000 cash register systems to merchants in Hubei province.

Meituan is among a group of Chinese tech giants that are ramping up support during the covid-19 outbreak. As of February 1, nearly 150 Chinese tech firms have donated a combined total of more than RMB 4 billion ($570 million) towards efforts to treat those affected by the outbreak.
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