Three Major Business Departments of Meituan Reportedly to Conduct Layoffs

Reports have surfaced in Chinese media lately alleging that local e-commerce and services platform Meituan has initiated a round of layoffs covering its online ride-hailing department, its grocery e-commerce platform Youxuan, and its hotel and travel division.

“All the conference rooms have been booked by the human resources department last Friday. Another two rounds of layoffs will start soon. The whole process will be completed by the end of April,” Caixin reported on Monday, quoting Meituan insiders.

According to the firm’s financial report, its revenue was 179.1 billion yuan ($28.1 billion) in 2021, up 56.0% year-on-year. The net loss and adjusted net losses reached 23.5 billion yuan and 15.6 billion yuan respectively, mainly due to the bad performance of new businesses. The financial report shows that the new business lost 38.4 billion yuan last year, and the operating loss rate increased by 36.6% year-on-year.

Previously, due to the unsatisfactory performance of its community group buying industry, rumors of layoffs at Meituan Youxuan surfaced. However, this is the first time that the layoffs have spread to online ride-hailing, and the hotel and travel department.

In July last year, domestic ride-hailing giant Didi’s 25 apps were removed from digital shelves, leading to fierce competition among new players. Meituan also restarted its online ride-hailing business. However, according to data from China’s Ministry of Transport, compared with other platforms such as T3 Go and CaoCao Mobility, the order volume of Meituan didn’t increase much.

The hotel and travel division is still the biggest profit source for Meituan. In 2021, its income reached 32.53 billion yuan, up 53.1% year-on-year, while the operating profit was 14.093 billion yuan, up 72.3% year-on-year. The operating profit rate also increased from 38.5% to 43.3% in 2021. However, the recent COVID-19 outbreak may bring a negative impact to the division.

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Recently, many Chinese internet companies have been reported to be conducting internal layoffs. The Cyberspace Administration of China (CAC) said on April 8 that, according to interviews with 12 companies in the industry including Tencent, Alibaba, Meituan and JD.com, the combined number of departed employees and new employees at these 12 firms was 216,800 and 295,900 from July 2021 to mid-March 2022. Surprisingly, 11 of these firms hired more new employees than they parted ways with.