Business News – Sept 21, 2024.

1 - Meituan riders out-earn the average worker in Beijing, data from food delivery giant shows

South China Morning Post. September 20, 2024.

New data released by Meituan, China's largest on-demand services provider, showed that its food delivery crews working in major cities such as Beijing, Shanghai and Shenzhen earn more on average than the local population.

According to the report, Meituan delivery people who work in major cities and meet the company's minimum work time requirement took home an average monthly pay of 11,000 yuan (US$1,550) in June. Those who work less than the minimum time made 7,354 yuan on average.

Both numbers were higher than Beijing's per-capita monthly disposable income of 7,180 yuan in the first half of the year.

Amid China's ongoing economic challenges, more people have turned to flexible employment in the food delivery and ride-hailing sectors to support themselves while looking for full-time jobs.

In the first six months of the year, the number of delivery workers in Beijing soared 50 per cent year on year to 17,000, while the unemployment rate edged down slightly to 4.1 per cent, according to the municipal statistics bureau.

Almost half of the 7.45 million delivery workers hired by Meituan worked fewer than 30 days last year, the report showed - a sign that many viewed their gigs as a transitional job. Only 11 per cent of all Meituan riders accepted orders for more than 260 days last year, the company said.

"It has become normal for people to look for other opportunities while working in food delivery," Meituan's research team said.

Under the rising trend of gig employment, the Chinese government has for the past few years rolled out a slew of measures to protect the rights of flexible workers, who are excluded from the labour protections afforded by formal employment.

Gig workers made up about 23 per cent of China's working population, or around 200 million people, in the past three years, according to the National Bureau of Statistics.

Last year, around 60 per cent of Meituan riders, or 4.5 million of them, were covered by occupational injury insurance, offered via a nationwide pilot programme initiated in 2022 to protect gig workers, company co-founder and CEO Wang Xing said in an internal letter on Tuesday.

2 - Meituan’s 63% Stock Surge Faces Risks in China Consumer Malaise

Henry Ren and Jeanny Yu. Bloomberg. September 19, 2024.

Meituan’s strategy to focus on lower prices has helped the Chinese food delivery company beat sales targets even as the slowing economy drags peers. Investors are now wondering whether its steep share-price gains can last as the macro weakness deepens.

The firm last month posted 21% sales growth and a record high gross margin for the latest quarter despite anemic consumer spending. Backed by strong results, its Hong Kong-listed stock has surged 63% this year, outperforming all global food-delivery peers and topping the Hang Seng China Enterprises Index in 2024.

Meituan’s secret weapon is its cheaper, group-based Pin Hao Fan platform for ordering meals. The service’s success has helped cushion the company’s results so far, but concerns are growing about whether that offering alone will be able to defy the broader consumer slump.

“It’s a tricky one, because on one hand you’re seeing this robust revenue growth relative to other platforms, but on the other hand, you still have macro that’s weighing it down,” said Morningstar Inc. analyst Kai Wang. “And there’s still a long-term risk with regard to competition.”

For now at least, Meituan has benefited from a reduced threat by rivals. Alibaba Group Holding Ltd. is focusing on bolstering its core e-commerce business rather than its Ele.me food-delivery operation, while ByteDance Ltd.’s Douyin is emphasizing profitability over market share.

In addition to winning over customers, Pin Hao Fan is also attracting restaurants that are keen to advertise their cheaper products. As a result, the number