Meituan names new tech executive, as weak demand weighs on stock

Chinese online food delivery giant Meituan has replaced the head of its foundational research and development team, as the company seeks to innovate its business amid slower growth and an anaemic economy.

Han Jian, former head of the platform technology team, will succeed Zhang Jinmao, according to an announcement via internal email. Zhang will remain as chairman of the technology committee, a position he has held for three years.

The changes, effective immediately, are aimed partly at improving the operational efficiency of Meituan’s retail businesses through the use of technologies, including autonomous vehicles, drones, artificial intelligence and large language models, according to an employee, who confirmed the authenticity of the email and asked not to be named discussing internal matters.

Under the guidance of the technology committee, Meituan will set up a “technology governance preparatory group” to sort out the future scope, goals, operations and sources of support for its technology governance structure.

Meituan did not immediately respond to a request for comment about the reshuffle, which was first reported by Chinese tech media outlet 36Kr.

Meituan, which has seen its stock price plunge 80 per cent from its peak in early 2021, runs one of the largest gig economy platforms in China, consisting of nearly 7 million delivery drivers. The company has been under constant public pressure to improve the welfare coverage and labour conditions of its workers.

In 2021, Meituan was ordered by seven government agencies to pay its delivery riders more than the country’s minimum wage and free them from unreasonable demands made by algorithms dictating the number and timing of deliveries.

In response, Meituan published its delivery algorithms and promised to better protect its workers.

Later that year, China’s antitrust authority fined the company US$533 million for abusing its dominant market position.

Besides regulatory pressure, Meituan also faces growing competition from Douyin, TikTok’s Chinese sibling owned by ByteDance, which is pushing into on-demand local services such as food delivery through partnerships with an array of third-party couriers.

While Meituan posted a better-than-expected 22 per cent revenue growth in the third quarter, some investors are doubtful about its prospects.

At least 30 brokers cut their 12-month price targets for Meituan by as much as 49 per cent last week, after the company’s chief financial officer Chen Shaohui said sales growth for its core business is expected to slow this quarter owing to uncommonly warm weather that is likely to reduce meal orders.

“We anticipate a revenue slowdown because management expects consumers to be more cautious and value-oriented,” Morningstar senior equity analyst Kai Wang said in a research note. He cut the price target by 30 per cent to HK$102 and downgraded the stock to hold from buy.

JPMorgan nearly halved its price target to HK$100 and downgraded its rating to neutral from overweight, while Morgan Stanley slashed its target by a third to HK$120 and downgraded its recommendation to in-line from equal-weight.

Still, most analysts maintained their buy call on Meituan, as fundamentals remain intact.

Additional reporting by Jiaxing Li