China’s top three on-demand delivery service operators – Alibaba Group Holding, Meituan and JD.com – have publicly announced an “anti-involution” commitment, signalling a truce in their brutal price war.
On Friday, the three companies vowed to engage in “rational” competition and resist offering excessive subsidies, according to separate statements published two weeks after China’s market regulator urged them to stop engaging in excessive competition, known locally as “involution”. Alibaba, which operates Taobao and Ele.me, owns the South China Morning Post.
Alibaba’s Hong Kong-listed shares gained 1 per cent on Friday while Meituan gained 0.5 per cent, despite a broad decline in the Hang Seng stock index. JD.com was down 0.2 per cent
The fierce competition between the instant commerce giants was exemplified last month, when they offered consumers incentives such as free cups of milk tea and free lunchboxes. All three companies offered such freebies along with eye-popping discounts to catch consumer attention.
China’s State Administration for Market Regulation, the country’s market regulator, summoned Alibaba’s Ele.me, along with Meituan and JD.com, in late July, urging them to regulate promotional behaviour and engage in “rational” competition.
The meeting aimed to “further regulate promotional behaviour, encourage rational competition, and foster a healthy ecosystem and a win-win situation for consumers, merchants, delivery riders, and platform operators”, the regulator said.
