The State Administration for Market Regulation continues to strengthen supervision over competition and pricing in the field of the sharing economy.
On Monday afternoon, authorities announced that they were investigating an operator concentration case in the Jiedian and Soudian acquisition, and in Meituan‘s acquisition of Mobike, the failure to declare the case in accordance with the law. In addition, eight sharing economy enterprises were ordered to rectify prices.
On June 3 of this year, Chinese regulators held an administrative guidance meeting, requiring eight shared consumer enterprises, including Meituan, Hellobike, DiDi Bike and Smart Share (“Energy Monster”), to rectify their pricing rules and operate in accordance with the law.
After the initial rectification, the overall price of the power bank sharing industry has reportedly fallen slightly. The six firms being ordered to rectify operate a total of 4.26 million shared power bank rental stations, accounting for about 80% of the market share. The companies concerned further improved their pricing rules, communicated with their partner merchants, and lowered their prices. At present, the average price of each brand is 2.2 yuan ($0.34) to 3.3 yuan per hour, with 69% to 96% of rental power banks marked at 3 yuan per hour and below. The price of rental power banks in locations such as popular tourist attractions and busy commercial areas are still higher than the average.
The regulators will further strengthen their supervision of the sharing economy. Since the now-defunct bicycle rental company Ofo fell to competition within the bike-sharing industry, remaining enterprises have taken refuge in tech giants.
On April 4, 2018, tech giant Meituan announced that it had wholly acquired bike-sharing firm Mobike and subsequently renamed it as Meituan Bike. Some media outlet reported that Mobike was sold to Meituan for a total price of $3.7 billion, including an effective consideration of $2.7 billion ($1.2 billion in cash and $1.5 billion in equity) and $1 billion in debt.
Today’s sharing economy enterprises all seek profits by raising prices. Since 2019, Mobike, Hellobike and Didi Bike, the three major firms in the bike-sharing industry, have collectively raised prices.
Wang Xing, CEO of Meituan, said at Q2 Results – Earnings Call on Monday: “The goal of ‘common prosperity’ is deeply rooted in Meituan‘s genes, even reflected in our company name. In Chinese, ‘Mei’ means ‘good, prosperous’ and ‘Tuan’ means ‘together,’ so these two characters add up to ‘become good together’.”
“Recently, the government introduced a series of regulatory measures for Internet companies, involving antitrust, data security, community group buying and others, together with the public’s concern over food delivery merchants and riders, which is not only a warning but also a driving force for us. Regulatory measures are of great significance to the lasting prosperity and orderly development of the Internet industry, which can not only promote fair and orderly competition, but also promote development. This is true in China, and it is also true all over the world. Meituan promises to follow the policies and regulations, strengthen the internal management of the company, actively rectify and avoid risks,” Wang Xing said.
“Meituan has always strictly protected data security and user privacy. We respect the choice of merchants, pay attention to the working environment of employees and the welfare of food delivery practitioners. With the development of the retail industry, we will actively adjust our pricing strategy and develop our business with a long-term perspective,” he added.