Meituan plunges 14% into China Tech Selloff after new crackdown

(Bloomberg) — Meituan plunged 14%, its worst ever, after Beijing authorities implemented a series of sweeping reforms for private sector companies.

China launched a comprehensive overhaul of its online education sector this weekend, triggering a wide sell-off of Chinese internet stocks. On Monday, the government posted reports that online food platforms must respect the rights of delivery people and ensure that those workers earn at least the local minimum income, according to guidelines released by seven agencies, including the powerful State Administration for Market Regulation. Meituan is the largest food delivery service in the country.

The by Tencent Holdings Ltd. sponsored company is already grappling with an investigation into alleged monopolistic behavior. The food industry regulations, in line with previous warnings, came days after China unveiled a wide-ranging set of reforms for private and online education companies, aiming to reduce workloads for students and overhaul an industry it says it has been “capitalised”. hyjacked”.

The crackdown on one of the country’s fastest-growing and best-funded sectors sent chills to tech investors, who sold Chinese internet stocks in Hong Kong on Monday.

Read More: China Crackdown Makes Hong Kong Index World’s Biggest Tech Loser

Meituan’s stock is down nearly 50% from its February peak as the company struggles with control on multiple fronts.

Beijing announced in April an investigation into whether Meituan has violated anti-monopoly laws through practices such as forced exclusivity arrangements. The company has also been criticized this year for the way it treats hundreds of thousands of low-income delivery drivers, who were put to the test during the pandemic. And Chief Executive Officer Wang Xing himself has been warned not to profile himself, Bloomberg News reports, after the founder posted a controversial poem that shocked markets and caused a stir on social media.

Wang has detailed plans to address government concerns about its business practices. Among other things, the company’s commitments to proactively work with regulators and improve compliance standards. It also pledged to insure millions of its deliverers – many of whom work as part-time staff and lack good benefits – and has begun reforming its commission scheme in an effort to lower fees for partner restaurants.

Read More: Meituan Rises as CEO Moves to Address Antitrust Issues

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