Meituan, Alibaba, and JD.com announced plans to curb price wars in China’s food delivery sector on August 1, 2025.

The three companies released statements pledging to avoid aggressive discounting and promote fairer competition, following recent warnings from Chinese regulators.

In July, China’s State Administration for Market Regulation urged the firms to reduce subsidy-driven competition that has pressured profit margins.

JD.com said it would avoid “malicious” subsidies. Meituan and Alibaba’s Ele.me said they would protect merchant margins and not force participation in discounts.

All three companies have recently used heavy subsidies and promotions to attract users in the US$80 billion food delivery market.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ China’s food delivery price wars follow a cyclical pattern of unsustainable spending

The current truce mirrors a similar cycle from nearly a decade ago, when companies couldn’t maintain their aggressive subsidy strategies.

In 2015, Meituan was spending RMB 200 million monthly on subsidies while Ele.me allocated RMB 100 million, with analysts at the time noting that “companies were unable to sustain high subsidy levels”1.

The pattern shows how these price wars repeatedly emerge when new competitors enter or existing players seek market share, but eventually hit financial limits that force industry-wide pullbacks.

Even with substantially larger revenues today, the fundamental economics remain challenging. Source 2 noted that analysts downgraded Meituan’s shares specifically due to concerns over profit margins during the recent price war.

The recurring nature of these cycles suggests that despite short-term consumer benefits like $1 meals mentioned in the article, the underlying competitive dynamics make sustained price wars financially unviable for the platforms.

2️⃣ Regulatory intervention reflects broader government strategy to control tech sector competition

The State Administration for Market Regulation’s intervention follows an established pattern of increasing oversight over China’s tech giants.

SAMR previously fined Meituan $478 million for anti-competitive practices including exclusive restaurant contracts, demonstrating the government’s willingness to impose substantial penalties3.

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