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美团被“盯”上了

Meituan has been “attacked”

巨潮商業評論 ·  Apr 26, 2021 17:41

01.pngNiuniu knocked on the blackboard:

Since BABA was punished by antitrust, it has been rumored that Meituan has also been targeted. According to the latest news on April 26th, according to the report, the General Administration of Market Supervision has filed an investigation into Meituan's suspected monopoly acts such as "choosing one of the two" in accordance with the law.

Editor's note: this article was published a week ago by Juchao Business Review, in which the author analyzed Meituan's business model and why Meituan became the next Internet giant to be targeted after BABA was punished by antitrust.

The author said that as China's most successful entrepreneurs and one of China's best Internet companies, Wang Xing and Meituan have a deeper understanding of antitrust issues than the media.

If you want to get money from capital, you must make more promises to earn more money for capital one day in the future. But the question is, how can Meituan make more money "without abusing his dominant market position"?

This has become a big problem in front of Wang Xing.

By Yang Xuran / tr. by Phil Newell)

Editor | Wang Fangyu

Produced | tide-biz

Wang Xing has always defined Meituan (HK:03690) as a borderless company. Like Amazon.Com Inc, it can expand all kinds of business almost unlimited. As a collection of a variety of offline services, local life as a whole, Meituan is one of the core entrances of traffic and consumption.

This business model seems simple, but in fact the barriers are extremely high.APP needs to spend a lot of time, goods, services and content to prove that it can meet all the needs of consumers for offline services, and eventually precipitate into usage habits and brands.

The barriers involved include:

Management capacity barriers. For Internet companies that are used to operating online, it is not easy to do offline push.Most entrepreneurs cannot have two kinds of thinking and ability at the same time, but this is the basic management of local enterprises.

Content barriers.People tend to use APP which is richer in content rather than APP which is poor in content.Finally, the Matthew effect is formed, and the applications with the most content occupy the most users. The development of Baidu, Inc. and Douyin follows this law.If users' comments on offline services are rich enough, they will have a great influence on other users.

Capital barriers. Because he has proved that he is strong enough in many entrepreneurial experiences, Wang Xing has received almost unlimited capital support from Tencent and Sequoia Capital. For a long time in the past, Meituan did not have to care about short-term profits or not. and finally help these capital to make excess profits in the secondary market.

Attention and brand barriers. In the era of mobile Internet, users may install 100 APP, but only 20 users are really used to using them every day.Users tend to choose services within APP rather than APP.Therefore, APP, which can get users' attention and achieve branding, can maximize its value.

Through these barriers, Meituan has established a deep business moat, and it is difficult for other enterprises (even BABA and Pinduoduo) to shake their core business. As a result, Meituan has occupied an oligopoly position in many kinds of local life services. and obtained a market capitalization of up to 2 trillion yuan.

However, fortune and misfortune depend on each other, precisely because of the insurmountable barriers of these competitors, and because of this strong market control, Meituan followed BABA and became an enterprise at the forefront of the anti-monopoly game.

Neck position

Meituan became the "neck" between hundreds of millions of consumers and tens of millions of offline service providers.

Around 2009, a number of online service projects emerged in the entrepreneurial market at that time, and entrepreneurs tried to move a variety of offline services online for users to choose from.

This kind of entrepreneurship was often despised by venture capitalists at that time. Some investors once complained in the column, to the effect that "I often receive too many proposals for projects like 'eat, drink, play, search', which are too numerous and nothing new. Entrepreneurs have no evidence that they are capable of doing these things."

A few years later, this ability to "prove that he can make a big search for eating, drinking and making merry" was gradually discovered by Wang Xing:The most important thing to do the Internet networking of offline services is the ability to push and integrate services.

The author had an exclusive interview with Wang Xing in 2015, when Meituan won the Thousand Regiment War and soon entered the takeout market, valued at US $7 billion, with an annual turnover of 46 billion yuan, on the eve of the business explosion.

Wang Xing greatly raised the target of next year's transaction volume to 130 billion yuan, and told the author in an exclusive interview:

The Internet networking process of the service industry is accelerating, and we basically occupy the best position in the Internet platform of the service industry. This is a huge market of trillions or trillions. From this point of view, the proportion of our transaction volume of 46 billion yuan last year is very small, and it is still very small to double it.

Time has proved that Meituan and Wang Xing have indeed completed such a radical plan. The continuous expansion and infiltration of subdivided service areas such as movies, hotel accommodation and even travel services and sharing portable battery has helped Meituan achieve income growth.

According to statistics, Meituan's income was 4 billion yuan in 2015 and 12.988 billion yuan in 2016, an increase of 223.17%. By 2020, his income has exceeded 100 billion yuan. AndWhile earning income, Meituan did not get fat, but realized the rapid growth of gross profit.

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Meituan's growth in operating income from 2016 to 2020

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The growth of Meituan's gross profit from 2016 to 2020

Meituan is indeed very close to Amazon.Com Inc's "borderless model". He earns gross profits through the existing profit-making departments-- out-selling and Dianping, and then uses gross profits to further invest in new business. expand service capacity and content barriers.

This model can integrate more and more services into Meituan APP. The more abundant the type and number of services, the more frequent the use of users.

But as the article said at the beginning, on the one hand, these competitive advantages and barriers can help Meituan establish his own competitive advantage; on the other hand, a strong market position, in turn, will form control over the industry: the consumer terminal only needs a Meituan, thenMeituan became the "neck" between hundreds of millions of consumers and tens of millions of offline service providers.

Meituan is a commercial organization, so commercial organizations must expand and make profits. AndThe competition in the offline service industry represented by external sales is fierce enough, and the profits left to this "neck" will not be very large.Therefore, the operational efficiency of this business machine is even more important.

Some people commented that Meituan takeout profits "as sharp as a blade", need to rely on high frequency, a large number of large-scale profits. However, capital has a sustained demand for the growth of Meituan's earnings, especially when it is necessary to maintain high valuations and high price-to-earnings ratios.

Because of its special market positionMeituan's performance pressure can be transmitted more smoothly downward.Become the performance pressure of all offline service merchants.

Under pressure

What kind of profit growth can sustain and deserve such a share price to continue to rise?

"choosing one of the two" has become the most troublesome thing for big platform giants.

This is most directly related to the matter of "antitrust". According to the definition of the Anti-monopoly Law of the people's Republic of China, the monopoly behaviors stipulated in this law include: operators reaching monopoly agreements; operators abusing their dominant market position; concentration of operators that have or may have the effect of excluding or restricting competition.

The most important and crucial point is the second point: "operators abuse their dominant position in the market".In other words, the so-called anti-monopoly mainly depends on whether the enterprise has abused the dominant position in the market, not that as long as the enterprise has the dominant position in the market, it constitutes "anti-monopoly".

This is clearly reflected in the antitrust judgment on BABA. Several businesses under BABA have a dominant position in the industry, including Aliyun's dominant position in the industry and the exclusive position of Cainiao network in China, which have not been affected by antitrust regulation.

But in the end, the heavy hammer of regulation fell on the infamous "choose one of two".BABA's case is like conducting an anti-monopoly popular science education in the domestic financial circles.Let all enterprises know under what circumstances antitrust regulation will be triggered and under what circumstances will not be triggered.

It is not a unique instance, but has its counterpart. In December 2020, Sherpa's, an English-language delivery platform similar to Meituan, was also fined by the Shanghai Municipal Market Supervision Administration for forcing merchants to "choose one of the two" and abusing its dominant market position.

Meituan has the most powerful push ability in Internet enterprises, and it is inevitable to push the atmosphere of rivers and lakes, especially in local branches, because the quality of personnel (especially the quality of regional managers) is uneven, it is easy to partially cross the legal boundary.

For example, in April this year, Meituan was asked for compensation in Jiangsu for forcing merchants to "choose one of the two" between them and ele.me platform. A similar matter has been punished by the people's Court of Jinhua City, Zhejiang Province.

In addition to choosing one of the two, the rising commission for merchants is also one of the risk points that Meituan may encounter supervision. In April last year, Meituan had an open "confrontation" with the Guangdong Catering Service Industry Association on the issue of high commission, which aroused public concern and finally reached a consensus:

1. Meituan respects catering merchants' independent choice of all kinds of online platforms


two。 To support the multi-channel development of independent operation of private domain traffic by catering merchants, Meituan will fully open distribution platform services to dock.


3. On the basis of Meituan's "Spring Breeze Action", Meituan will increase the proportion of rebates to 3% of high-quality catering takeout merchants in Guangdong to 6%, expand the coverage, and extend the rebate time for at least 2 months (from the date of the announcement).

Judging from the content of the final settlement at that time, Meituan made obvious concessions.But if it were not for the provincial industry organizations to come forward to coordinate, I am afraid the follow-up development of things would be different.

The author believes that as the most successful entrepreneurs in China and as one of the best Internet companies in China, Wang Xing and Meituan understand antitrust issues far more deeply than the media. But we have no choice but to increase the commission and adopt a more aggressive competitive strategy.Because high valuations put too much pressure on performance growth and operating cash flow.

Observing Meituan's cash flow statement, we can see that the net cash flow generated by his investment activities has just become positive in the last two years-5.574 billion yuan in 2019 and 8.475 billion yuan in 2020. But in the capital markets, the return on operating cash flow over the past two years is a rise of more than 550 per cent in share prices.What kind of profit growth can sustain and deserve such a share price to continue to rise?

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Meituan operating Cash flow and Investment Cash flow from 2016 to 2020

However, behind the two-year operating cash flow is the continuous outflow of investment cash flow and financing supplement.Although Meituan has entered the ranks of giants with one foot, he has never been separated from the blood transfusion of capital.

The referee in the infinite game

If you want to expand your business and raise prices, you must start to face more restrictions from "referees".

On April 13, Hong Kong media said that data from the Stock Exchange's Central Clearing system shareholding record Enquiry Service (CCASS) showed that Goldman Sachs Group's or valet holdings increased from 132 million shares last week to 434 million shares this week, and the proportion of shares increased from 2.24% to 7.36%. "this means that some investors may transfer more than 300 million shares or 5.12% of their real-name shares to Goldman Sachs Group's positions. "

althoughThe matter has not been officially confirmed as a fact.But Meituan's share price also fell 7.44 per cent throughout the day.

It is reasonable for any capital to choose to sell after the company's share price has risen by more than 500%.But such rumors after BABA was fined will make investors feel more worried about potential antitrust.

Compared with Tencent, BABA and even Internet companies such as Baidu, Inc. and NetEase, Inc, Meituan is more vulnerable to the impact and disturbance of policy regulation on his business. This can be seen in its stock price performance in the past period of time: whenever there are anti-monopoly rumors, Meituan's stock price reacts most violently.

Investors are right to worry: Meituan has the thinnest foundation among the giants. If we look at the characteristics of the financial data and the market space of the industry, we can find outMeituan is still a start-up company today.

This identity and its hundreds of billions of yuan in revenue, trillion yuan market capitalization together seems a bit inconsistent, but the actual situation is indeed the case. Since Wang Xing is aiming at a huge market of trillions and trillions, then Meituan's career can only be said to have just started, and he needs to play this "infinite game" with the orientation and mentality of a start-up enterprise.

But there is one situation that was not so clear and clear before:Is there a referee in this infinite game?If so, do referees have the power to make more stringent rules of the game? Even, do you have the right to stop this unlimited game?

This is a variable that players can't control (or even see) in this infinite game, but it has taken up a bigger part of the game in the last year or two.

Wang Xing once said a word on the meal:

The death of a startup is nothing more than two things: one is that the money has been spent, and the other is that confidence has been exhausted.

In the early days of his business, he also expressed a point of view:

Make sure the company always has enough money, which is like air.

If we recall that during the Thousand Regiment War, Meituan defeated thousands of enemies such as Lashou net with the strategy of "not burning money", we will find that Wang Xing has put the safety of cash flow in a very important position for a long time.

So when normal business development can not bring more cash flow, what can enterprises do?Business expansion, price hikes and financing have become necessary actions. If you want to expand your business and raise prices, you must begin to face more restrictions from "referees".

In 2020, one of Meituan's biggest actions was group buying in the community, where two business groups made efforts at the same time, covering and sinking counties and cities across the country, upgraded to a first-level strategy, and fought fiercely with Pinduoduo, DiDi Global Inc. and Xingsheng. But as a result, since December 2020, community group buying began to encounter strong policy regulation, and the price reduction sticks of the giants were considered to be dumping and could not be swung.

In terms of price increases, Meituan's overall commission income has reached 58.6 billion yuan in 2020, and the rate is not low. If the commission of merchants is further raised, it will face stronger resistance from businessmen and industry organizations.

In this way, Meituan in front of the increase in cash flow, almost only to the capital market financing this way, the author expects that this is bound to happen.

If you want to get money from capital, you must make more promises to earn more money for capital one day in the future.But the question is, how can Meituan make more money "without abusing his dominant market position"?

This has become a big problem in front of Wang Xing.

Editor / Futu Information mia

The translation is provided by third-party software.


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