The story of Meituan is the story of two Wangs: founder Wang Xing, and his old college mate Wang Huiwen. They used the nicknames Brother Xing and Old Wang in the office to avoid confusion. But from December 2020, according to an internal letter to Meituan’s S-team (the senior leadership group), Senior VP Old Wang won’t be confusing his colleagues any more, having decided to quit active management “for a better work-life balance.” (The full text of this announcement appears at the end of this article).
Wang Huiwen will stay on as an honorary consultant on the board, lecturer at Meituan’s “Internet+ University” internal training program, and strategist focused on talent and organizational transition. He said he was determined to “go all out in my work at Meituan, while ensuring an orderly handover.” Meituan is believed to be reshuffling senior talent in preparation for the next ten years.
According to Wang Xing, they had been working on Wang Huiwen’s retirement for a while already, and the company is fully prepared. The CEO said, “I understand Wang’s move, and thank him for all his hard work. He will continue to help in strategic planning, organizational transfer, and talent development, and we wish him well in an exciting new chapter in life.”
Meituan announced a number of new appointments. Guo Qing and Li Shubin were promoted to the S-team. Guo Qing joined Meituan in 2014, responsible for the Meituan accommodation division. Li Shubin joined in 2019 as head of the Meituan platform.
Classmates, business partners… and best friends
Old Wang was at the heart of Meituan, not just as the man behind Wang Xing, but also as his roommate from university days.
On his first day at Tsinghua University in 1997, Wang Huiwen bumped into Wang Xing, a boy from the southern city of Longyan, who had been sent to study radio engineering. The two became roommates. They became friends while resolutely staying at the bottom of the class. With a computer they saved up to buy together, Wang Haiwen got hooked on gaming. Wang Xing got hooked on business. After graduating in 2001, Wang Xing began a PhD at the University of Delaware but his friend didn’t have the grades to take his studies further.
In the US for two years, the future Meituan founder felt the reverberations of the first internet boom. Facebook was online. Dropping out of his PhD at the end of 2003, Wang Xing started his own business, with two trusted friends, Lai Binqiang—from high school—and Wang Huiwen.
The three of them worked on around 10 projects over two years, from social network sites to input methods, finally deciding to focus on campus social media. The Chinese internet was a barren land, just waiting to be connected to a world of treasures. Put in a bit of hard work and all this new territory would be theirs.
On Dec 8, 2005, the team launched the Xiaonei campus intranet, China’s answer to Facebook, later renamed Renren.com. It took three months for the student startup to secure 30,000 users, many at on-campus events where recruiters handed out chicken drumsticks to new users. But with no money for servers and extra bandwidth, the company was sold. Entrepreneur Chen Yizhou bought it for $2 million.
Wang Huiwen bought a house in Beijing, a house in Dalian, and traveled around Europe and Southeast Asia with Lai Binqiang for a year. Returning to Beijing, they brought on Chen Liang, another secondary school classmate of Wang Xing who would later become a senior Meituan executive.
The team set up Taofang.com, a site that offered second-hand real estate sales and rentals. The site offered space for comments on agents, an innovation at the time. A forerunner of Taobao in a number of ways, the Taofang venture did not go perfectly. During its life, Wang Xing stayed in China, hiring his wife Guo Wanhuai, and more school and Tsinghua friends: Yang Jun, Fu Dongping, Mu Rongjun. With their help, he built two more copy-to-China social media platforms: Twitter-like Fanfo and and Facebook-like Hainei. Fanfo soon closed, so to make work for the newly expanded team, they set up Meituan.com.
Wang Xing gave Wang Huiwen a call in December 2010. “We’re growing fast and I need people. You should come back.” So Wang Huiwen and his group joined Meituan.
He joined during a storm. Group buying fever was at its fiercest. Wang Huiwen led the strategy of “cutting losses while pursuing growth,” using the classic guerrilla tactic of “encircling the cities.” This was crucial to Meituan’s later success.
Meituan broke even at the end of 2012, and went looking for new growth points. It was Wang Huiwen who led the way into the takeaway food market. Competition was no less fierce than in group buying, however. Wang Huiwen put a tight rein on investment, dropping loss-making locations, including Wang Xing’s hometown Longyan, as well as several other fifth tier cities like Yulin and Chifeng. When Baidu Takeaway was bought out by Eleme, the scene was set for a duel.
A key player in expansion
After Meituan and Dazhong merged they began to integrate structurally. In July 2016, Meituan Dianping established a catering platform for restaurants, takeaway distributers, and catering professionals. Wang Huiwen was instrumental in bringing them all under one wing.
In December 2017, Meituan shook up its structure again. Wang Huiwen would lead retail building a team to coordinate fresh food, takeaway, distribution, catering B2B and related sectors. He was also made responsible for travel, bringing Meituan into direct competition with Didi.
Just two months later, Meituan Dianping announced a third structural shift, creating a new “food and beverage (F&B) platform.” The original F&B group, takeaway distribution group, and catering professionals platform were melded into one. Meituan Dianping would have three core businesses: F&B, general (local services other than F&B), and hotels and travel. Wang Huiwen was made president of the F&B platform, and Meituan COO Gan Jiawei, who had led the platform, was put in charge of the newly established “internet plus” online university, gradually leaving the frame.
In October 2018, Meituan made another round of organizational upgrades. The company’s strategy would now focus on catering platform, with “eating” center place, and its user platform would have two business directions, to restaurant and to home. On the new business side, Kuailu and Xiaoxiang continued to conduct business exploration, establishing a location-based services (LBS) platform. Wang Huiwen was in charge of both the user platform and the LBS platform.
Where next for Meituan?
In hindsight, we can see the signs that Wang Huiwen might leave. On Dec 20, 2018, Wang Huiwen stepped down as legal representative, executive director, and manager of Mobike. Earlier, he had stepped down as legal representative of a number of Meituan companies, including ride hailing firm Shanghai Lutuan Technology Co., Ltd. and Shanghai Sankuai Technology Co., Ltd.
The departure of Old Wang will have a significant impact on the Meituan group, but founder Wang Xing is not unprepared. From his statement in the e-mail and rapid personnel changes, it can be seen that this is a long-planned change.
A veteran of e-commerce, Li Shubin, is taking over from Wang Huiwen. Li founded the well-known vertical e-commerce company Hale Buy and served as its CEO.
In the second half of 2019, Meituan achieved two single quarter profits, but a growth ceiling has already appeared. According to the third quarter 2019 financial report released by Meituan GMV growth (total platform transactions), users and merchants has slowed. In the third quarter of 2019, total transaction volume on Meituan Dianping was RMB 194.6 billion (about $28 billion), an increase of 33.6 percent year-on-year, lower than the 40 percent growth of 2018. For the 12 months ending on Sept 30, a total of 5.9 million active merchants were using Meituan, an increase of 8.8 percent year-on-year.
Food delivery, which accounts for 57 percent of Meituan’s quarterly revenue, is the company’s mainstay, and Meituan and Eleme’s rivalry is now entrenched. According to current market data, Meituan still has the advantage, just. For Meituan, hotel-to-shop business is second only to food delivery. Taobao has crowded the market, and the BAT giants have their fingers in many pies, directly or indirectly. In vertical travel, Ctrip and Tongcheng-Elong occupy their own positions. Tongcheng-Elong’s second-quarter revenue grew 21 percent, and net profit grew 60 percent year-on-year. Ctrip’s Q3 financial report shows revenue of RMB 10.5 billion, an increase of 12 percent year-on-year. Of this, international travel achieved a 50 percent year-on-year growth. Other businesses such as Mobike, Xiaoxiang Fresh Food, and online car rental are still at the exploration and development stage. They are not yet of a big help to Meituan.
While exhausting the demographic dividend and weathering a tough climate, Meituan Dianping is riding a slowing train. How to gather traffic and discover a new growth trajectory is the big question for Wang Xing and Wang Huiwen’s successors. Having launched an ambitious plan for the next ten years of the company, we wait expectantly to see what fruits will be borne.
Full text: the email announcing Wang Haiwen’s retirement:
We are about to celebrate the tenth birthday of Meituan. More importantly, we will usher in a new decade for the company. People are the most important asset of Meituan. In the next ten years, we must continue to fulfill the mission of “helping everyone eat and live well,” and grow our management team. To this end, the company has decided to launch a “Leadership Training Program” to promote talent inventory, rotation, and succession planning, to provide organizational and institutional guarantees for talent training, and to create more opportunities for everyone and good conditions for company growth.
After careful consideration, the company has decided to add Vice President Guo Qing and Vice President Li Shubin to the S-team. In the future, we will continue to strengthen the S-team to satisfy long-term development needs.
At the same time, co-founder, S-team member, and senior vice president Wang Huiwen (Old Wang) will withdraw from specific management affairs in December this year and start a new chapter in life. This year, Wang will continue to make every effort to promote the company’s business development, improve organizational capabilities, and will devote more energy to the cultivation of the talent team. Post 2020, he will continue to serve as a company director, and serve as a lifetime honorary consultant for Meituan, a lecturer at the “Internet+ University,” assist in strategic planning, organizational inheritance and talent development.
Elaine Liu, S-team member and senior vice president, will become a senior consultant for personal and family reasons. Elaine Liu will continue to invest time and energy to help the company’s development, especially the construction of human resources system.
The more ambitious the team, the longer it takes to make a contribution and pass on the energy. Ten years on, the S-team is driving this change. Thanks to Wang Huiwen and Elaine Liu for their outstanding contributions in the development of the company. I look forward to investing more in the “Leadership Training Program” in the coming period. I look forward to working with Guo Qing and Li Shubin for many years. The S-team will make an ever-greater contribution to the company’s development, and I look forward to seeing more managers growing into future leadership roles!
To the next ten years!
Wang Xing 2020.1.20