Now this start-up may have touched USD 30 billion in terms of valuation, but the million dollar question is how many have really heard about China’s Meituan Dianping. Rated as world’s fourth-most valuable startup, it is even ahead of renowned firms like Space X. So the wider world does not know about it because this Beijing-based company, led by Wang Xing, delivers food to people’s homes, sells groceries and movie tickets, provides reviews of restaurants, and markets discounts to consumers who buy in groups. It’s been described as a sort of mashup of Groupon, Yelp, Foodpanda and Uber Eats. Meituan’s appeal for investors is its dominant position in a market of more than a billion people. It was formed through the 2015 merger of Meituan.com and Dianping.com, creating the leading player for internet-based services ordered via smartphone apps. It raised $4 billion in the latest round from Tencent Holdings Ltd., Sequoia Capital and U.S. travel giant Priceline Group Inc. “It’s a quasi-monopoly built on the stomachs of 1.4 billion people,” said Keith Pogson, global assurance leader for banking and capital markets in Hong Kong at consultant EY. Wang started Meituan.com in 2010 as a group-buying site similar to Groupon Inc., where people can get discounts by buying electronics or restaurant meals together. Dianping was founded in 2003 in Shanghai with reviews of restaurants and other local businesses, then diversified into group discounts. The companies were valued at $15 billion when they merged two years ago.
The combined companies have far surpassed their U.S. peers. Chicago-based Groupon, once a sensation in the U.S., has dropped to a market value of less than $3 billion. Yelp, based in San Francisco, has tumbled from its peak in 2014 to $3.6 billion. Meituan Dianping has expanded well beyond its original businesses. With a few taps to navigate its smartphone apps, Chinese customers can order up hot meals, groceries, massages, haircuts and manicures at home or in the office. One popular service: You can get your car washed while you’re at work and it’s parked on the street — the service sends a photo to your phone to verify the job. Meituan says it now has 280 million annual active users and works with 5 million merchants. The offerings, collectively known as online-to-offline or O2O services, may ultimately prove more successful in China than in the U.S. Labor costs are lower in China, cities are more densely populated and there are more people. The country’s O2O market surged 72 percent to 762 billion yuan ($115 billion) last year, according to estimates from consultant IResearch.
“China’s market is big enough for a company this size,” said Wang Ling, an analyst with IResearch. “After years of consolidation, Meituan is one of the few contenders in areas with gigantic revenue.” Meituan is facing increasingly stiff competition from China’s technology giants and their proxies. In particular, Alibaba Group Holding Ltd. has backed a rival service called Ele.me, which recently acquired Baidu Inc.’s business, Waimai. Alibaba, Tencent’s primary rival, is boosting its investment to bankroll expansions into more cities and businesses.