Zhong Guo Jing Ying Bao·2025-08-22 10:06Core Viewpoint - The competition in the food delivery market is intensifying, particularly due to a subsidy war among platforms, raising questions about market expansion, protection of rights for riders, merchants, and consumers, and the future of the industry once subsidies decline [1][8]. Group 1: Market Structure and Issues - The food delivery market in China has been dominated by two platforms, Meituan and Ele.me, with Meituan holding a 70% market share, leading to various issues such as low profit margins for restaurants [2][3]. - Over 50% of food delivery businesses report profit margins below 5%, primarily due to high commission and marketing costs associated with the dominant market structure [3]. - The high costs force many merchants to cut expenses, leading to the emergence of "ghost kitchens," which operate without proper licenses and pose food safety risks [3][4]. Group 2: Impact of Competition - New entrants like JD's "Qixian Xiaochu" are emerging, which focus on quality and collaboration with established restaurants, potentially improving market dynamics and reducing the prevalence of "ghost kitchens" [5][6][7]. - JD's model allows partners to sell dishes without upfront investment, sharing profits while maintaining quality control, indicating a shift from cash subsidies to asset investment for long-term sustainability [6][7]. Group 3: Concerns Over Subsidy Wars - The ongoing subsidy wars may lead to unsustainable practices, with platforms potentially transferring costs to weaker entities in the supply chain, which could harm product quality and consumer welfare [9][10]. - The effectiveness of subsidies is diminishing, and the intense competition may negate the benefits of these subsidies for merchants, leading to further profit declines [10]. - There is a need for clearer rules regarding subsidy distribution and transparency in how platforms allocate resources to ensure fair competition and protect smaller merchants [10].