(Bloomberg) — Meituan plummeted 14%, its worst on record, after Beijing authorities issued a series of sweeping reforms for private-sector companies.
China launched an extensive overhaul of its online education sector over the weekend, sparking a broad selloff in Chinese internet stocks. Then Monday, the government posted notices that online food platforms must respect the rights of delivery staff and ensure that those workers earn at least the local minimum income, according to guidelines released by seven agencies including the powerful State Administration for Market Regulation. Meituan is the largest food-delivery service in the country.
The Tencent Holdings Ltd.-backed company is already grappling with an investigation into alleged monopolistic behavior. The food industry regulations, which echo previous warnings, came days after China unveiled a broad set of reforms for private and online education companies, seeking to decrease workloads for students and overhaul a sector it says has been “hijacked by capital.”
The crackdown on one of the country’s fastest-growing and best-funded sectors sent a chill through tech investors, who sold off Chinese internet stocks in Hong Kong Monday.
Read more: China Crackdown Makes Hong Kong Index World’s Biggest Tech Loser
Meituan’s stock has tumbled almost 50% from its peak in February as the company grapples with scrutiny from multiple fronts.
Beijing announced an investigation in April into whether Meituan violated anti-monopoly laws through practices such as forced exclusivity arrangements. The company’s also drawn scrutiny this year over the way it treats hundreds of thousands of low-income delivery riders, who were put to the test during the pandemic. And Chief Executive Officer Wang Xing himself has been warned to keep a low profile, Bloomberg News has reported, after the founder posted a controversial poem that convulsed markets and sparked a social media furor.
Wang has detailed plans to address government concerns about its business practices. Among other things, the company has pledged to proactively work with regulators and improve its compliance standards. It also promised to provide insurance for millions of its delivery drivers — many of them work as part-time personnel and lack proper employee benefits — and has started to reform its commissions scheme in a move to cut fees for partner restaurants.
Read more: Meituan Surges as CEO Moves to Address Antitrust Concerns
(Updates with shares’ close from the first paragraph)
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