Wang Xing rushes into the new battlefield

Author | Liu Baodan

Editor | Zhou Zhiyu

From performance to market confidence, Meituan is emerging from a three-year low, but Wang Xing is not stopping there, he has bigger plans.

Going global has become a must for Chinese companies, and Meituan, which started warming up 8 years ago, has finally made up its mind to put going global on the agenda.

Recently, Meituan has started recruiting senior engineers for international direct banking connections. After successfully running the model in the Hong Kong market, Meituan officially kicked off its global expansion, accelerating recruitment efforts and choosing the first stop for going global in Saudi Arabia.

Going global is a crucial turning point, meaning that after more than ten years of capability accumulation, Meituan is going to export its local life capabilities globally, a significance comparable to ByteDance replicating Douyin into TikTok.

In the wave of internet companies going global, Meituan is a bit late to the game, mainly because the local life model is more important than social networking, e-commerce, and other industries. However, Wang Xing must take this step of going global. Against the backdrop of intensified competition in the domestic market and the contraction of community group buying, he must find a new growth story.

Wang Xing, who is persistent on the entrepreneurial path, still wants to create a new business myth in a global adventure.

A Must-Read Topic

Meituan fought a beautiful takeaway battle in Hong Kong.

On May 6th, according to the latest data released by market research firm Measurable AI, based on the number of orders in March 2024, Meituan's KeeTa business in Hong Kong has captured a market share of 44%, making it the largest takeaway platform in Hong Kong.

However, Hong Kong is just a stop for Meituan's global expansion, with the true first stop being set in Saudi Arabia.

Wall Street News learned that Meituan has been aggressively recruiting in the direction of going global in the past two months, with positions including engineers, overseas human resource operations experts, international payment transaction product managers, etc., mainly responsible for payments, employee management, and related products in overseas markets.

More importantly, the recruitment of local talent. Over a month ago, Meituan posted relevant recruitment information on well-known social platform LinkedIn and Middle East recruitment platform Baye.com, with the job location being Riyadh, the capital of Saudi Arabia.

In terms of city selection, Meituan did not choose the larger market space of the United States, nor did it choose the culturally and gastronomically similar Southeast Asia, but chose Saudi Arabia. It can be seen that Meituan's global expansion strategy still has a significant experimental component and is relatively cautious.

Wang Xing does not fight unprepared battles, and for this global expansion, Meituan has been planning for many years.

As early as 2016, Wang Xing began to consider going global, visiting Silicon Valley, Berlin, Israel, Jakarta, and other places. In 2017, Meituan officially entered the overseas accommodation business, connecting hotels from nearly a hundred countries to the Meituan app.

At that time, the domestic food delivery war was in full swing, coupled with Meituan's listing in Hong Kong in 2018, Wang Xing's global expansion strategy was forced to be put on hold. Since then, Meituan has made a series of international investments, including companies such as Swiggy in India, Gojek in Indonesia, and Opay in Nigeria, involving food, ride-hailing, payments, and other fields, preparing for going global With Meituan's frequent good news in Hong Kong, Meituan's overseas expansion plan has finally been raised to an unprecedented strategic height in 2024, with Wang Xing once again taking the lead.

In February, Meituan unified its home business group, store business group, etc. into the core local business segment, with Wang Puzhong appointed as CEO, while Wang Xing personally took charge of overseas business, ensuring the implementation of the overseas expansion strategy in the organizational structure.

In fact, before the overseas expansion strategy was confirmed, Wang Xing personally visited the Middle East in May last year and met with members of the Saudi royal family, laying the groundwork for Meituan's future layout in Saudi Arabia.

In terms of city selection, Meituan had a wide range of choices, but Wang Xing ultimately chose Saudi Arabia, possibly attracted by Saudi Arabia's economic status and market potential.

Saudi Arabia has a strong economic foundation, being the largest economy in the Middle East. In 2022, Saudi Arabia's per capita GDP reached as high as $30,000, ranking among the top in the world. The capital Riyadh has a population of about 6 million, similar to large cities in China such as Hangzhou and Nanjing.

Moreover, Saudi Arabia has a strong user base for food delivery and infrastructure. The size of the Saudi food market in 2024 is around $30 billion, with many market players including local food delivery platforms Jahez, and Hunger Station, a Saudi subsidiary of the German food delivery giant Delivery Hero, making it suitable for Meituan to "practice".

Jiang Han, a senior researcher at Pangu Think Tank, believes that with the deepening of globalization and the growing demand from consumers for a convenient life, the Meituan model has broad applicability, especially in emerging markets such as the Middle East where local life services are not yet perfect. Meituan has the opportunity to quickly gain market share.

Going overseas is a comprehensive test of Meituan's local life capabilities. Whether Meituan can break through in Saudi Arabia will also determine the path of Meituan's future expansion.

A New Capital Story

After giants like Alibaba, ByteDance, and Pinduoduo successively went overseas, Meituan has finally joined the wave of going global.

In the past fourteen years, Meituan has experienced two important strategic nodes: from the "Thousand Group Battle" to the food delivery war, Meituan has solidified its local life capabilities and expanded delivery to all categories; and Meituan's continuous exploration of community group buying business.

Now, Meituan's overseas expansion may be the third strategic shift, with overseas markets offering vast market space, carrying the new potential for Meituan's future performance growth, and having the potential to become a new capital story.

From the perspective of its own business development, now is the right time for Meituan to go overseas.

In the domestic local life business, after the intense competition with ByteDance, the competitive situation has stabilized. In the fourth quarter of 2023, Meituan's core local business saw a revenue growth rate of over 30% in commissions and online marketing services. In the first quarter of this year, the sales ratio between the two sides remained stable at about 2:1, with no further changes in market share.

This means that Meituan can consider longer-term plans with spare capacity, and if not going overseas at this time, then when?

Especially, the once promising community group buying business has been forced onto a path of contraction. Wang Xing admitted in the financial report that the community group buying market is more challenging than previously expected, and operating losses will be significantly reduced in 2024 In the field of group buying for associations, Meituan does not see the possibility of profitability in the short term, and Wang Xing needs to find a new growth engine for Meituan.

Meituan also needs to give investors more confidence. As of the close of today, Meituan's stock price was HKD 113.5, nearly doubling since February, but still far from its peak. Going global is undoubtedly the best way to open up performance growth space.

The difficulties are foreseeable. Zhu Xiaohu, founding partner of GSR Ventures, once said that the ability to go global defines the ceiling of Chinese internet companies. Meituan may redefine the height of the ceiling.

Compared to the manufacturing industry going global and internet companies going global, the challenges faced by Meituan are undoubtedly greater. On the supply side of food delivery, it requires a large number of merchants, connects with a large number of consumers on the demand side, and relies on delivery riders in between, involving many intricate details such as cultural and dining habits, policies and regulations, transportation, and delivery costs.

This poses very high demands on the business model. In China, Meituan achieves operational efficiency maximization through economies of scale and algorithm support, mainly relying on the in-store business with higher gross profit margins to achieve profit growth, while the delivery service has been continuously losing money for many years.

This means that the Meituan model has certain requirements for urban population and regional density when expanding internationally. There were reports that Meituan intended to acquire Foodpanda's food delivery business in Southeast Asia at the end of last year, but eventually gave up due to the difficulty in making profits.

In addition, Meituan also faces policy regulatory risks and market competition risks. The case of TikTok has already shown the high uncertainty of policies, which is also the biggest factor affecting companies going global. Whether Meituan can establish a global presence in food delivery, it has just begun.

The advantages are also obvious. Jiang Han believes that Meituan has accumulated rich operational experience and user data in the Chinese market, as well as technological and data-driven advantages. Coupled with Meituan's brand influence and financial strength, these will provide strong support for its expansion into overseas markets.

As Meituan gradually steps up its international expansion, capital is also beginning to reassess Meituan. On June 1st, Bloomberg data showed that Fidelity Advisor Focused Emerging Markets Fund under Fidelity increased its holdings in Meituan in the Hong Kong stock market in April. Bank of America Securities recently raised Meituan's target price to HKD 189 and reiterated a buy rating.

Undeniably, going global may be the most challenging market that Wang Xing faces, but it may also create a new business legend.

After experiencing the "Battle of a Thousand Groups," the "Food Delivery War," and the "Douyin War," Wang Xing is ready, and Meituan's global conquest has begun