As its trading debut looms, China’s Meituan locked in battle of super-apps

BEIJING/SHANGHAI: Meituan Dianping, which raised $4.2 billion in its Hong Kong IPO, is one of China’s super-apps, with 340 million users ordering groceries, paying bills, renting bikes and booking hotels - but it is far from alone.

The delivery-to-ticketing platform, backed by internet giant Tencent Holdings Ltd, is squaring off with Alibaba Group Holding Ltd-backed rivals including Alipay, Ele.me and Koubei as well as Tencent’s own WeChat.

This battle of the super apps - which offer users a plethora of disparate services - creates a challenge for the company ahead of its public float this month. On Thursday it set an aggressive valuation of $52.8 billion.

To justify its price tag, Meituan will need to lure in cost-conscious consumers like Wu Lingli, 22, a student in Wuxi. “Generally it’s all about price,” said Wu, who jumps between Meituan and rivals Ele.me, Didi, Taobao and others when shopping online. “If the product is the same then I’m definitely just looking at price; I’ll go wherever is cheaper.”

The company is coming to market as China’s tech sector faces something of a downturn, with investors questioning sky-high valuations. Tencent and Alibaba, along with recent listings like Xiaomi Corp, have seen their shares sink this year.

Meituan Dianping, like many of China’s fast-growing tech firms, has had to burn cash to keep ahead of rivals, both to subsidize shoppers and add new services. It bought bike-sharing firm Mobike for $2.7 billion this year, an expensive acquisition that is straining its margins.

Its wide variety of services has attracted users, but crimped profits. The company lost 22.8 billion yuan ($3.33 billion) in the first third of this year, despite a big jump in revenue. It lost about $2.8 billion in 2017. Alibaba, meanwhile, has been beefing up its offerings, snapping up food delivery service Ele.me and Baidu Waimai, which it plans to roll together with its lifestyle services app Koubei. Its affiliated payment app, Alipay, which has more than 500 million users, already bundles shopping and travel.

WeChat also offers shopping, ticketing and food delivery, while Meituan’s push into hotel booking and ride sharing has pitted it against firms like Ctrip and Didi Chuxing, both dominant in their fields.