Core Viewpoint - The fierce subsidy war among major platforms like JD.com, Meituan, and Alibaba in the second quarter has led to significant profit declines, revealing the adverse effects of irrational competition despite prior warnings from regulatory authorities [1] Performance Decline - JD.com reported a revenue of 356.7 billion yuan in Q2 2025, a year-on-year increase of 22.4%, but its net profit fell by 50.8% to 6.2 billion yuan, with an operating profit margin dropping to -0.2% from 3.6% in Q2 2024, attributed to increased strategic investments in new businesses like food delivery [2] - Meituan's revenue grew by 11.7% to 91.8 billion yuan in Q2 2025, but its adjusted net profit plummeted by 89% to 1.49 billion yuan, with operating profit down 75.6% to 3.7 billion yuan and a significant decline in operating profit margin by 19.4 percentage points to 5.7% due to intense competition [2] - Alibaba's revenue for Q2 2025 was 247.65 billion yuan, a 2% year-on-year increase, with a non-GAAP net profit of 33.51 billion yuan, down 18% from 40.69 billion yuan in Q2 2024, with limited impact from its food delivery initiatives due to the timing of its subsidy launch [3] Rising Costs - JD.com's marketing expenses surged by 127.6% to 27 billion yuan in Q2 2025, accounting for 7.6% of revenue, up from 4.1% in Q2 2024, primarily due to increased spending on new business promotions [4] - Meituan's sales and marketing expenses rose by 51.8% to 22.5 billion yuan, with the expense ratio increasing by 6.5 percentage points to 24.5%, driven by business development and competitive adjustments in food delivery and real-time retail [4] - Alibaba's sales and marketing expenses also increased, with an 8 percentage point rise in expense ratio, reflecting investments in enhancing user experience and acquisition for its new initiatives [4] Stock Price Decline - The stock prices of the three platforms have been adversely affected, with JD.com down approximately 25%, Meituan down about 34%, and Alibaba down around 8% since April, while the Hang Seng Tech Index has risen over 5% in the same period [6] - Market analysts predict intensified competition in Q3, with Meituan announcing a peak daily order volume exceeding 150 million, but expect a 6% year-on-year decline in instant delivery revenue due to subsidies and strategic adjustments, with losses potentially exceeding 15 billion yuan [6]

Core Insights - The article highlights the negative impact of aggressive subsidy strategies by food delivery platforms on restaurant profitability and market dynamics [1][2][3] - It emphasizes the call from industry leaders and associations for platforms to stop coercing merchants into participating in price subsidies and to ensure fair competition [3] Group 1: Impact on Restaurants - Restaurants are being forced or indirectly coerced to participate in price subsidies, with their share of the subsidy ranging from 30% to over 70%, leading to a decline in average profit margins by 10% to 30% per order [1] - Industry leaders express concerns that the current subsidy model primarily benefits consumers while severely harming merchants, who bear the brunt of the costs [1][2] - The competitive landscape is causing significant pressure on small and mid-sized businesses, forcing them to lower prices and compromising service quality and food safety [2][3] Group 2: Industry Response - Over ten provincial and municipal restaurant associations have issued a joint statement criticizing the platforms' subsidy strategies for creating a vicious cycle that harms both merchants and consumers [2] - The State Administration for Market Regulation has intervened, urging platforms to adhere to responsible promotional practices and to foster a win-win ecosystem for consumers, merchants, and delivery personnel [2] - The China Chain Store & Franchise Association has called for an end to coercive practices by platforms and emphasized the need for merchants to maintain reasonable profit margins to avoid a detrimental cycle of quality decline and customer loss [3]

Investment Rating - The report maintains an "Outperform" rating for the social services industry, expecting it to perform better than the benchmark index in the next 6-12 months [2][48]. Core Insights - The social services sector saw a 3.18% increase in the last two trading weeks, ranking 9th among 31 sectors in the Shenwan classification, outperforming the CSI 300 index by 1.26 percentage points [2][13]. - The competitive "involution" in the food delivery market has negatively impacted retail sales in June, but the summer travel market is expected to remain robust, indicating potential for growth in related industries [2][5]. - The report highlights the significant impact of visa-free policies on inbound tourism, with a notable increase in inbound travel expected during the summer season [5][41]. Market Review & Industry Dynamics - The social services sector's performance was strong, with sub-sectors like professional services (+7.53%) and tourism retail (+2.85%) leading the gains, while hotel and catering services saw a slight decline of -0.17% [17][20]. - The report notes that from July 1 to August 31, the national railway is expected to send 953 million passengers, a year-on-year increase of 5.8% [5][30]. - The inbound tourism market has shown a strong recovery, with 33.3 million inbound travelers in the first half of 2025, a 15.8% increase year-on-year [5][30]. Investment Recommendations - The report suggests focusing on companies with strong growth potential in the travel and related industries, including Huangshan Tourism, Lijiang Co., Songcheng Performance, and others [5][41]. - It also recommends monitoring hotel brands like Junting Hotel and Jinjiang Hotel, which are expected to benefit from the recovery in business travel [5][41]. - Companies involved in the recovery of the duty-free market, such as China Duty Free Group and Wangfujing, are also highlighted as potential investment opportunities [5][41].

Core Insights - The recent subsidy war in the food delivery market has intensified, with Meituan and Taobao Flash Sale engaging in aggressive promotions to stimulate order growth [1][3][5] Group 1: Subsidy Details - On July 12, Meituan's daily subsidy reached between 300 million to 400 million yuan, while Taobao Flash Sale's exceeded 1.2 billion yuan [1] - Since July 5, Meituan has been issuing "0 yuan delivery" coupons and various discount vouchers, distributing approximately 20 million free delivery coupons daily [3] - Taobao Flash Sale focuses on large discount coupons, such as "18.8 yuan off 18.8 yuan," allowing users to access food delivery at minimal costs [3] Group 2: Competitive Landscape - The food delivery competition was initially sparked by JD.com, which launched a 10 billion yuan subsidy in April, achieving a daily order volume of 10 million within days [5] - Following the subsidy war between Taobao Flash Sale and Meituan, JD.com has not significantly escalated its involvement, citing concerns over irrational competition [5] - The market share dynamics are shifting, with Meituan previously holding about 70% and Ele.me 30%, but Taobao Flash Sale is gradually closing the gap [5]

Core Viewpoint - A new round of intense competition in the food delivery sector has emerged, with major platforms like Meituan and Taobao Flash Sale issuing substantial discount coupons to attract consumers [11][12]. Group 1: Promotions and Discounts - On July 12, Meituan and Taobao Flash Sale launched significant promotional campaigns, with users reporting receiving 0 yuan drinks [1][4]. - Meituan's app displayed notifications for 0 yuan delivery offers, while Taobao Flash Sale offered various large discount coupons, with promotions starting as low as 1.9 yuan for popular brands [4][7]. - On July 11, Meituan teased a new wave of discounts, while Taobao Flash Sale announced a "188 yuan coupon package" valid over the weekend [8][9]. Group 2: Historical Order Volume - On July 5, Meituan reported a record-breaking day with over 1.2 billion orders, including more than 1 billion food orders [11]. - Taobao Flash Sale and Ele.me also reported significant activity, with Taobao Flash Sale achieving over 80 million daily orders and more than 2 billion active users [11]. Group 3: Competitive Strategies - Taobao Flash Sale initiated a massive subsidy plan worth 500 billion yuan aimed at providing direct discounts to consumers and merchants over the next 12 months [12]. - Reports indicated that July 5 was a critical day for Alibaba's food delivery service, aiming to surpass Meituan's order volume with a target of 90 to 100 million orders [13]. - In response to Alibaba's aggressive strategy, Meituan also rolled out numerous discount coupons to maintain its market position [14].

Group 1 - The new tea beverage market is entering a traditional consumption peak with significant benefits from the recent "subsidy war" among delivery platforms [1][2] - Tea Baidao launched a new lychee series, achieving over 50,000 cups sold within an hour and surpassing 100,000 cups by noon on the launch day, marking it as a summer hit [1] - Tea Baidao has improved its supply chain, with approximately 92% of stores achieving next-day delivery and 95% receiving multiple deliveries weekly [2] Group 2 - Bawang Chaji is expanding its presence in campus markets, with a new store at Tsinghua University achieving over 2,200 cups sold on its opening day, ranking first among its nationwide stores [2][3] - The classic products of Bawang Chaji account for nearly 60% of sales in campus stores, indicating strong demand among students [3] - The tea beverage industry is experiencing a price war, but recent reports suggest a stabilization in the market, benefiting brands through delivery platform subsidies [3]

Core Viewpoint - The article discusses the competitive landscape of the beverage industry, particularly focusing on the impact of delivery subsidies on companies like Mixue Ice City, which is positioned to benefit significantly from these market dynamics [4][5]. Group 1: Market Dynamics - The current delivery subsidy war initiated by JD.com has created a unique opportunity for Mixue Ice City to capitalize on the situation, as it can consume the most subsidies due to its extensive network of stores [4][5]. - The pricing strategy of Mixue Ice City, offering two cups for 3.9 yuan, is highlighted as a key factor in its ability to dominate the market, as it can leverage subsidies to maintain low prices [5][6]. Group 2: Competitive Advantage - Mixue Ice City operates primarily through franchise stores, allowing it to scale rapidly and efficiently consume subsidies compared to competitors who may not have the same operational scale [5][6]. - The article suggests that no other beverage brand can match Mixue Ice City's ability to absorb subsidies, as competitors with higher profit margins cannot sustain the same pricing strategy without risking their business [5][6]. Group 3: Global Implications - The competitive pressure created by the domestic delivery subsidy war is affecting the global beverage market, particularly in Southeast Asia, where other tea brands are struggling to compete with Mixue Ice City [6]. - The article posits that the scale and cost control of Mixue Ice City, combined with the aggressive subsidy strategy, positions it as a formidable player not just locally but also in international markets [6].