China's Regulator Calls for End to Price War in Food Delivery Sector

China's State Administration for Market Regulation (SAMR) has urged Alibaba's Ele.me, Meituan, and JD.com to adopt "rational" competitive practices and curb excessive discounting amidst an escalating price war in the food delivery sector. The regulator emphasized the need for fair competition and compliance with existing regulations. The companies have been criticized for their aggressive discounting and potential losses, with JPMorgan Chase analysts warning that shares could remain under pressure for three to six months.

China's State Administration for Market Regulation (SAMR) has urged Alibaba's Ele.me, Meituan, and JD.com to adopt "rational" competitive practices and curb excessive discounting amidst an escalating price war in the food delivery sector. The regulator emphasized the need for fair competition and compliance with existing regulations. The companies have been criticized for their aggressive discounting and potential losses, with JPMorgan Chase analysts warning that shares could remain under pressure for three to six months [1].

The price war, which began in February 2025, has seen the three companies invest heavily in subsidies to boost market share. JD.com committed 10 billion yuan to enhance restaurant quality, while Alibaba invested 50 billion yuan across its Taobao Shangou platform, including 100 days of "Super Saturdays" sales. Meituan also joined the competition, reducing fees and expanding its rapid delivery services to encompass a wider range of products [2].

The aggressive discounting has significantly boosted daily order volumes, which surged from around 100 million earlier this year to over 250 million last weekend. However, the sustainability of this strategy remains a concern. Wang Puzhong, head of local commerce at Meituan, openly criticized the trend, describing it as "irrational" and warning of potential significant losses for the companies involved [3].

The SAMR's intervention comes as Chinese regulators take a firm stance against anti-competitive practices. The regulator has summoned the companies to address these issues, emphasizing the need for fair competition and compliance with existing laws. The 2025 revision of the Anti-Unfair Competition Law (AUCL) introduces extraterritorial jurisdiction and harsher penalties for violations, signaling a regulatory shift toward stricter enforcement [1].

For investors, the key is to balance short-term growth with long-term resilience. Meituan's entrenched position in food delivery offers defensive advantages, but its narrow margins and regulatory risks make it a high-volatility bet. JD.com's logistics expertise is valuable, but its financial dependence on core retail profits could limit its flexibility. Alibaba's diversified ecosystem and cash reserves position it as a safer long-term play, though its ability to innovate profitably in instant commerce remains critical [1].

The outcome of this war will likely hinge not just on financial muscle but on the ability to align with China's evolving regulatory priorities. Companies that can pivot from volume-centric strategies to value-driven ecosystems—while navigating regulatory headwinds—will emerge stronger. For investors, prioritizing firms with diversified revenue streams, robust balance sheets, and proactive compliance frameworks is essential.

References:
[1] https://www.ainvest.com/news/china-food-delivery-price-war-regulatory-clampdowns-implications-commerce-giants-2507/
[2] https://finance.yahoo.com/news/chinese-regulator-urges-major-food-091048799.html
[3] https://www.benzinga.com/markets/tech/25/07/46513732/partys-over-china-tells-alibaba-meituan-jd-to-stop-bleeding