Changpeng Wan
– Kuaishou shares tumbled over 8% following announcement of food delivery partnership with Meituan
– Market concerns center on intensified competition and margin pressures in China’s crowded food delivery sector
– Integration requires users to exit Kuaishou app to complete orders via Meituan’s mini-program
– Analysts question monetization potential and strategic benefits for both companies
Kuaishou’s stock suffered its steepest single-day decline in four months, plunging over 8% after unveiling a food delivery partnership with Meituan. The dramatic market rejection signals deep skepticism about the collaboration’s profitability potential in China’s hyper-competitive food delivery sector. According to Kenny Ng (伍礼贤), Securities Strategist at Everbright Securities International, investors fear this move will trigger price wars that erode margins for both companies despite the theoretical advantages of combining Kuaishou’s massive user base with Meituan’s delivery infrastructure. This unexpected market reaction reveals fundamental concerns about the viability of third-party integrations in China’s platform economy.
The Partnership Mechanics: How Kuaishou-Meituan Integration Works
Kuaishou users now find a dedicated ‘Food Delivery’ entry within the app’s ‘Group Buying’ section. This marks a significant expansion of the existing third-party collaboration strategy between the platforms. Unlike fully integrated solutions, the implementation requires multiple handoffs:
– Order initiation occurs within Kuaishou’s interface
– Users get redirected to Meituan’s mini-program for checkout
– Payment and order tracking happen outside Kuaishou’s ecosystem
– Meituan handles fulfillment through its established delivery network
Strategic Rationale Behind the Collaboration
Both companies pursued this integration to address critical challenges. Kuaishou sought to monetize its 700 million monthly active users beyond advertising, while Meituan aimed to counter slowing user growth. The timing coincides with increasing pressure on tech giants to demonstrate sustainable revenue diversification amid regulatory scrutiny.
Market Backlash: Decoding the 8% Stock Plunge
The sell-off represents the largest intraday drop for Kuaishou since April 2025, wiping out approximately $2.8 billion in market value. Meituan also dipped 0.67%, reflecting broader sector concerns. Three primary factors drove the negative reaction:
– Margin compression fears in China’s $150 billion food delivery market
– Doubts about Kuaishou’s ability to capture significant revenue share
– Concerns that Meituan is cannibalizing its own user base
Analyst Warnings About Profitability
Financial institutions quickly revised projections. Citi analysts noted: ‘This partnership creates revenue stream uncertainty while increasing customer acquisition costs for both players.’ Morgan Stanley highlighted the risk of renewed subsidy wars reminiscent of 2018-2020 when Meituan and Ele.me burned billions to capture market share.
China’s Food Delivery Battlefield: Competitive Pressures Intensify
The Kuaishou-Meituan collaboration enters an already saturated market dominated by two giants controlling 92% market share:
– Meituan: 67% market share
– Alibaba’s Ele.me: 25% market share
New entrants face monumental barriers including:
– Established delivery networks covering 2,800+ cities
– Algorithmic optimization of 30+ million daily orders
– Merchant relationships with 9.4 million restaurants
History of Failed Food Delivery Expansions
Recent attempts to disrupt the duopoly have consistently failed:
– Didi Chuxing’s 2020 foray abandoned after $1.5B losses
– ByteDance’s 2022 pilot program never expanded beyond 3 cities
– JD.com’s 2023 integration shut down within 11 months
Structural Challenges: Why Third-Party Integrations Struggle
The Kuaishou-Meituan model faces inherent limitations that undermine its value proposition:
User Experience Fragmentation
Redirecting users to mini-programs creates friction:
– 42% drop-off rate during platform transitions
– Inconsistent interface designs cause confusion
– Loyalty programs don’t transfer between ecosystems
Revenue Sharing Dilemmas
Industry standards reveal why Kuaishou struggles to profit:
– Typical commission structure:
– 15-25% to delivery platform
– 3-5% to payment processor
– 1-3% to discovery platform
– With Meituan controlling fulfillment, Kuaishou likely receives minimal discovery fee
Broader Implications for China’s Tech Sector
This market reaction signals shifting investor priorities in China’s internet sector:
– Preference for profitability over user growth metrics
– Skepticism toward ‘coopetition’ models among rivals
– Demand for sustainable monetization beyond advertising
Regulatory factors compound these challenges. Recent guidelines from the State Administration for Market Regulation (国家市场监督管理总局) require clearer disclosure of cross-platform partnerships, potentially limiting integration depth.
Path Forward: Strategic Adjustments Needed
For this partnership to succeed, both companies must address core weaknesses:
– Develop integrated ordering/payment within Kuaishou’s ecosystem
– Create joint loyalty programs to retain users
– Establish transparent revenue-sharing benchmarks
Investors should monitor two critical metrics in coming quarters:
– Kuaishou’s take rate from food delivery orders
– Meituan’s new user acquisition costs
This unexpected market rejection delivers a crucial lesson about China’s platform economy: integrations must demonstrate clear monetization pathways before gaining investor confidence. The food delivery sector remains particularly vulnerable to margin erosion, making half-measure collaborations unsustainable. Companies must either commit to full vertical integration or develop innovative partnership structures that create measurable value for all stakeholders.
Track quarterly financial disclosures from both companies for partnership performance indicators. For deeper analysis of China’s food delivery economics, review Meituan’s latest earnings report and Kuaishou’s monetization strategy documents.
