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.
However, the subsidies from Baidu never came. Quite the opposite, at the end of August the company sold its takeaway business to its rival Ele.me in a deal reportedly valued at around $800 million. On November 20th, Baidu Waimai confirmed that all of its partners will continue operating under the same conditions and that Ele.me will help integrate them into its own service.
Baidu Waimai added in its letter that agents have communicated with the Baidu Group several times in hopes to achieve a reasonable solution but with to no avail. Baidu claims there is no legal basis for their claims. The exact amounts in question are still undisclosed due to confidentiality agreements.
Baidu said in a statement forwarded to TechNode that the merger of Baidu Waimai is entirely compliant with the law. Baidu Waimai is currently engaged in the process of negotiation with Baidu’s Beijing Xiaodu Xinxi Technology Ltd. and Ele.me’s Shanghai Lazasi Xinxi Technology Ltd.
“We hope to solve the dispute properly and protect the legitimate rights and interests of the partners to the maximum extent under the premise of legality and rationality.”
Baidu thanked its partners for their hard work and its customers for their trust and support and promised to continue providing its services to customers.
Updated, 28 Nov 2017: Now includes a statement from the company.