Baidu’s food delivery service Baidu Waimai has accused the company of making them lose thousands if not millions of RMB when promised subsidies never came through as well as misleading them about future prospects of the service. Baidu Waimai published a letter today saying that more than 90% of its contractors suffered serious losses (in Chinese).

More than 95% of Baidu Waimai’s operations are contracted out to exclusive agents within cities, while Baidu runs a few of its own operators outside of the cities. The agents are responsible for handling city logistics and covering staff wages, welfare, clothing and equipment, and even traffic accident risks. Some agents pay up to 20% commission to use the Baidu Waimai platform.

In the letter, Baidu Waimai stated difficulties with its parent started in the second half of 2016 when Baidu started gradually reducing promised investments. Baidu said that promised investments will be resumed as soon as possible but that agents will be required to subsidize themselves for a while. Agents were also asked to renegotiate terms with merchants.

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Masha Borak

Masha Borak is a technology reporter based in Beijing. Write to her at masha.borak [at] technode.com. Pitches with the word "disruptive" will be ignored. Read a good book - learn some more adjectives.