Author | Liu Baodan
Editor | Zhou Zhiyu
In 2023, the local life giant Meituan was fiercely attacked by Douyin, disrupting its position. Amidst doubts, Meituan's market value plummeted by 2 trillion at its peak.
Meituan's founder Wang Xing launched a counterattack through a series of internal reforms, refocusing on core business, with the effects now reflected in its financial reports.
On March 22, Meituan released its annual report, showing that the operating profit of its core local business slightly exceeded market expectations. Particularly, online marketing saw a recovery in growth, and new businesses continued to reduce losses, showing investors Meituan's resilience.
Meituan's stock price also surged against the market on March 25, rising by 9.69% at one point and closing at HKD 93.3 per share. Compared to its low point in February, Meituan's stock price rebounded by over 50%.
However, Wang Xing is not out of the woods yet. The local life battlefield is ever-changing, with Douyin, Alibaba, Kuaishou, JD, and others increasing their investments. The market landscape is set for a major reshuffle, and as the leader, Meituan will undoubtedly become a target of criticism. The real crisis may just be beginning.
In this competition that is reshuffling the entire internet industry, whether Meituan can continue to hold its position as the king remains unknown.
Counterattack
Facing attacks from competitors and skepticism from the capital market, Meituan quickly adjusted its state and gradually found a rhythm to respond.
Its 2023 financial report shows that Meituan's &#34;Meituan Dianping&#34; business is gradually solidifying its market position, with the core local business showing growth resilience. Meituan is slowly recovering from its previous passive situation.
According to the financial report, in 2023, Meituan's transactions in offline stores, hotels, and travel businesses grew by over 100% year-on-year, with annual transaction users and active merchants growing by over 30% and 60% respectively.
Especially in the fourth quarter, Meituan's commission and online marketing service revenue in the core local business reached 19.4 billion and 10.9 billion respectively, with growth rates of 32.7% and 40.8%, showing a recovery in high growth. The growth rate of online marketing services even increased by 10 percentage points compared to the previous quarter.
In its core food delivery business, Meituan adopted a strategy of &#34;trading price for volume&#34; by stimulating consumer demand through reducing food delivery costs.
In the fourth quarter, Meituan's delivery service revenue was 21.9 billion, a year-on-year growth of 10.9%, which was lower than the performance of the previous three quarters. However, with reduced delivery fees, Meituan saw a further increase in food delivery orders. In the fourth quarter, Meituan's real-time delivery transactions reached 6 billion, a 25.2% year-on-year growth. In 2023, Meituan's real-time delivery transactions reached 21.89 billion, a 23.9% year-on-year growth.
Meituan's core business profitability is also starting to recover. In the fourth quarter, Meituan's operating profit in the core local business was 8 billion, a year-on-year growth of 11.1%, which was 2.8 percentage points higher than the third quarter, but still lower than the first and second quarters.
Behind the performance is a series of counterattacks by Meituan. From strengthening its content strategy in live streaming and short videos to frequent strategic adjustments, Wang Xing promoted five vice presidents in September last year, changing Meituan's previous passive and confused state
Moreover, even the new business that Wang Xing values highly, Meituan has made a strategic shift, significantly reducing the losses that have been plaguing Meituan's performance.
In the fourth quarter, the loss from Meituan's new business decreased to 4.8 billion yuan, with the quarterly loss dropping below 5 billion yuan. In 2023, the total loss from Meituan's new business was 20.2 billion yuan, a substantial reduction compared to the past two years' 28.4 billion yuan and 35.9 billion yuan.
Furthermore, with regards to further reducing losses from the new business in 2024, Wang Xing has provided clear guidance. He acknowledged in the financial report that the community group buying market is more challenging than previously expected. &#34;In 2024, we will make strategic adjustments, improve the business model, with the goal of significantly reducing operational losses.&#34;
With a combination of strategies, the main factors affecting Meituan's performance, including competition in the offline business, slowing growth in food delivery orders, and continuous losses from the new business, are gradually being addressed.
Institutions such as Citigroup, JP Morgan, and Morgan Stanley have also shown optimism towards the changes in Meituan over the past year, with many raising Meituan's target price or upgrading its rating.
Morgan Stanley stated that despite the continued competitive environment, Meituan has successfully stabilized its market position and continues to expand its user and merchant base, which will help Meituan achieve more stable development in the future. The bank believes that Meituan will reach a turning point in profitability in the second half of this year.
Sticking it out
Fourteen years ago, Meituan pioneered the new field of local life and emerged as the king of local life in the fierce market competition.
However, the strong entry of Douyin with over 600 million daily active users exposed the seemingly impregnable moat of Meituan; the departure of long-term investors exacerbated market concerns. In 2023, with its stock price halved and a further 60% drop, Meituan's former glory gradually faded.
Through the financial report of 2023, Wang Xing proved that Meituan's years of accumulation in the local life market cannot be easily broken through overnight. However, Douyin's attack still destroyed Meituan's peripheral defense line, bringing an end to Meituan's comfortable days.
Next, the local life market will enter a true battle of giants. Zhuang Shuai, a retail e-commerce industry expert and founder of Bailian Consulting, believes that Meituan's challenge comes from the competition in offline business brought by Douyin's content platform, Xiaohongshu's community platform, and WeChat's social platform.
At the end of last year, Douyin's commercialization head, Pu Yanzhi, took over the local life business, updating the sales target from 400 billion yuan to 600 billion yuan, aiming for a doubling of growth. Kuaishou also recently announced an investment of billions in platform subsidies and hundreds of billions in traffic, aiming to replicate all group buying activities on Kuaishou.
Even old rival Alibaba is gearing up. At the end of March, Alibaba's local life group will undergo a management iteration, with a group of management personnel with technical backgrounds taking the forefront. Alibaba, which has been dormant for a long time, may take the initiative to strike, focusing on food delivery and instant retail through Ele.me.
Even JD.com is looking to get involved in instant retail. Recently, it was reported that JD Retail has set three major winning battles for 2024, including instant retail
Meituan has become the target of internet giants for division, as everyone wants to get involved in the local life market.
Wang Xing is well aware of the fierce market competition at present, so he has focused on enhancing Meituan's moat.
In February, Meituan initiated its largest restructuring in recent years, merging the at-home and in-store business groups, and unified them under the leadership of Senior Vice President Wang Puzhong. In March, Meituan made adjustments to the heads of departments such as in-store dining, allowing more &#34;young blood&#34; to take the lead.
Meituan is also actively seeking new possibilities, including expanding into new markets. In February, Meituan further elevated the priority of exploratory businesses such as technology and internationalization, with Wang Xing personally taking the helm.
After launching the delivery brand KeeTa in Hong Kong, Wang Xing saw the possibility of Meituan exporting its core capabilities overseas. However, he also mentioned that it took Meituan ten years to build up the current delivery business system in China, so patience is required for the development of overseas business as well.
Meituan has started to heavily invest in technology, including investments in AI unicorn companies like Moon's Dark Side and Zhipu AI, as well as large-scale model companies, unmanned technology, and robotics companies. Meituan is trying to enhance its competitiveness through technology.
All these actions indicate that Meituan is trying to regain the combat power it had during the era of the &#34;Hundred Regiments War&#34; and return to a &#34;wolf-like&#34; state.
However, for Meituan, which has been comfortable for a long time, to win the third major battle in local life, it may require much more strenuous efforts than the previous group buying and food delivery wars.
After the baptism of the capital market in 2023, Meituan and Wang Xing will definitely have a clearer understanding of the reshuffling of the internet landscape. In the business market where there is no stable dominance, more challenges lie ahead for Meituan

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Meituan released its 2023 annual report, showing that the operating profit of its core local business slightly exceeded expectations, while new businesses continued to reduce losses. Meituan's stock price surged against the market on March 25th, rising by as much as 9.69% intraday, and ultimately closing at HKD 93.3 per share, with the stock price rebounding by over 50%. However, facing attacks from competitors and market doubts, Meituan still faces an uncertain situation. Whether Meituan can continue to solidify its leading position in the entire internet competition remains unknown

Wang Xing barely held onto the throne