By YU Hao

Once, when asked to define his company, Meituan’s Wang Xing famously quipped there was “no point in confining ourselves.”

True to his word, Meituan, a company that started in 2010 as a?group-buying site, has become a many-headed hydra that infects almost all corners of life.

Expand, expand, expand

Triumphant in the group-buying turf war in the early 2010s, Meituan is forever expanding. By the time it went public in 2018, its business had more than two hundred sub-sectors as different as food delivery and travel booking, ride-hailing from cleaning. Last year’s foray into online groceries resulted in a loss of billions of yuan.

Since 2014, the company has been investing in and acquiring other companies. Meituan seems prepared to take a punt on almost anything. As Meituan ventures into new markets and overseas and with Alibaba following its every move closely, future success is anything but guaranteed.

Meituan came out of the wild west years of China’s internet economy. Founded in 2010, it was then one of the thousands of Groupon knock-offs, but the one that?ended up the winner of a two-year last-man-standing contest. And then the expansion began.

The relentless land grab left Meituan constantly strained of cash, people, and time. In the race for capital was at one time, it was burning up capital as quickly as it was acquired. The rivalry with Eleme.com, a food delivery company later acquired by Alibaba, escalated into an all-out war. The Meituan quietly started making its own investments, mostly in startups that supplemented or overlapped with its own businesses. It started delivering food to college dorms and began selling travel at the low end of the market and serving restaurants and hotels.

The most significant move around that time was Meituan the merger with the restaurant review website Dianping. Dianping’s strength in “high-value, low-frequency” events such as weddings and conferences, gave Meituan access to a whole chunk of the market it had never explored. Other big tech companies, including Alibaba, Baidu, and 58.com, also invested in review and booking.

When Meituan shacked up with Dianping, Alibaba dumped its shares in Dianping and flounced off. Alibaba then created Koubei local services, Taopiaopiao for movie tickets, Fliggy for travel,?apparently to directly mess with Meituan’s mind.?Alibaba acquired Meituan’s principal competitor Eleme.com for US$1.25 billion (8.1 billion yuan) in 2016 and merged it with Koubei to mount a direct challenge to Meituan’s core business.

Meituan expanded again,?through new brands and?acquisitions,?most notably the inexplicable US$2.7-billion acquisition of Mobike.

Lavish spending was powered by revenue and fundraising. The former fueled the latter, stoked up by the Dianping merger. In the three years after 2015, Meituan’s revenue grew by about 50 percent each year and between 2016 and 2017, it raised US$7.3 billion.

A closer look at Meituan’s investments around this time reveals a high concentration of enterprise-facing tech companies in digitization and supply chain. But the company never loosened its grip on the consumer-facing side. In 2017, it founded Longzhu Capital with money from Tencent, by then an important partner. It sank 2.4 billion yuan (US$3.6 billion) into consumer brands in 2018.

Tiny triumphs

Meituan and Alibaba were advancing on all fronts, both building networks of businesses covering all aspects of everyday lives. A face-off was inevitable, but Meituan was stretched too thin. Its 2018 financial reports showed new businesses spanning restaurant management systems and bike-sharing. Overall growth had slowed and the company failed to make a profit. Alibaba’s acquisition of Eleme.com undermined market confidence, sending Meituan shares into a spin.

At the beginning of 2019, Meituan had more cash on hand than a year before but was spending more prudently. Meituan’s three 2019 splurges were a smart device company, an Indonesian outfit similar to itself (Gojek), and a Nigerian mobile payment company (Opay). Mobike was renamed Meituan Bike, and a lot of other misfiring junk was jettisoned.

The numbers immediately improved and Meituan turned a profit for the first time in 2019 and, equally consequentially, overtook Alibaba in food deliveries and hotel bookings, two of Meituan’s core businesses, but both pretty inconsequentially dust in Alibaba’s vast universe.

In 2020, Meituan recommenced its forays into random markets. This time autonomous driving and robotics. Wang has stressed his priority in robotics is in delivery and domestic service. Cost ballooned to 70.3 percent of revenue in 2020, mainly driven by labor costs in food delivery.

World domination?

Despite Meituan’s determination to expand globally overseas, results have been less than inspiring. The company pussyfooted around its foreign counterparts in its core businesses such as food delivery or ride-hailing. Instead, it has chosen to invest, buying up Indian food delivery app Swiggy along with Gojek in Indonesia and turning them into sprawling jungles akin to Meituan itself. ?Alibaba has followed closely behind, hoovering up Indian review site Zomato.

With few exceptions, Meituan’s investments have followed a consistent strategy. The companies either enhance Meituan’s existing businesses or expand them geographically. Short-term financial returns are not unvalued. Meituan has made investments purely for a quick profit, most notably in Li Auto. But in most cases, strategic importance takes priority over immediate returns.

Caring not a jot for equilibrium and seemingly immune to previous missteps, in the boardroom of shape-shifting Meituan, time would appear to heal all wounds.