Deliveroo wary of entering China’s competitive food delivery market
February 20, 2018 Category China News Round-up, Weekly
Online food delivery giant Deliveroo is reluctant to enter China because it sees it as a highly competitive market, according to its founder and CEO. “China is a very well served market already, with a lot of competition there,” said Will Shu, a former investment banker who founded the company in 2013, when asked if Deliveroo had any plans to take its business to China. A number of other foreign technology companies have previously tried and failed to get a foothold in China. They often face huge disadvantages against domestic competitors thriving in an environment geared to their success.
Uber sold its China operations to its main rival Didi Chuxing in 2016, having carved out a meagre 8% share of the ride-hailing market, compared with Didi’s 85%. Google, EBay, Amazon and Facebook have all attempted to tap China’s enormous potential, with disappointing results. The food delivery market in China is currently carved up largely between just two dominant providers, Meituan-Dianping and Ele.me. According to consultancy firm iiMedia, the former accounts for 55.3% of market share and the latter 41.3%. Tencent-backed Meituan-Dianping says that the country now has about 300 million people who use online delivery services. The market grew in value to about CNY204 billion last year, up 23% from 2016. iiMedia Research expects it to reach CNY243 billion this year.
In Hong Kong, on the other hand, Deliveroo claims to lead the sector with a 60% share. The UK-based start-up, which expanded into the city in November 2015. “Hong Kong is one of our fastest-growing markets,” said Shu. “Over the past year, we have doubled our supply of restaurants. We now partner with close to 3,000 individual restaurants which have contributed to our orders volume tripling in the past year.” Deliveroo’s global revenues were up by more than 600% to GBP128.6 million in 2016, but its losses also skyrocketed from GBP30.1 million to GBP129.1 million, the South China Morning Post reports.
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