Meituan to invest $1.7 billion in push to digitize merchant partners

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Chinese lifestyle services giant Meituan announced this week that it would invest RMB 11 billion (around $1.7 billion) this year to help merchants upgrade their operations and drive the growth of China’s “Delivery Economy,” a term that refers to the country’s on-demand services boom.

The proceeds will be used to support merchants in their marketing efforts, digital upgrades, and supply chain services. The company will also provide awards and incentives for innovation, according to a statement provided to TechNode on Thursday.

“Ecosystem development is more important than market competition. As a delivery service platform, Meituan is willing to invest more resources to support the ecosystem growth, especially the merchants,” Wang Puzhong, senior vice president of Meituan, said in the statement.

The move is reminiscent of Alibaba’s recently launched “A100” program, which aims to help companies embrace digital transformation as more tech giants are shifting to enterprise-faced services. Alibaba rival Tencent upgraded its organizational structure to focus on enterprise services and cloud computing last year.

Meituan said it would provide comprehensive services for merchants, including marketing, delivery, IT, supply chain, operations, and finance, to meet merchants’ business upgrade needs, and to help improve the efficiency of its delivery ecosystem.

Similarly, Alibaba CEO Daniel Zhang is also looking to digitalize the industrial chain. Recently, he named 11 key elements for enterprises to realize transformation in the digital era, including product development, sales, marketing, channel management, manufacturing, customer services, finance, logistics, and supply chain.

The projects could be seen as an extension of the race among tech giants to lock business partners in their ecosystems. However, each of the companies is starting from their core business and want to pioneer by leveraging their current resources—Alibaba from e-commerce and new retail by powering their retail partners and Meituan from food delivery by supporting their online-to-offline merchants.