Meituan learns limits of poetic licence

Wang Xing, co-founder, chairman and chief executive officer of China’s Meituan Dianping hits the gong during the debut of the company at the Hong Kong Exchanges in Hong Kong, China September 20, 2018. REUTERS/Tyrone Siu – RC2CUF9YK4PY

That degree in Classical Chinese poetry may finally come in handy for financiers. Food-delivery giant Meituan (3690.HK) lost $16 billion of its equity value after an ancient verse posted by boss Wang Xing was construed to be criticism of Beijing. Even if this is just a literary misunderstanding, though, regulators will be forcing the business model to be less creative.

It’s easy to see how Wang’s now-deleted social media post could be inflammatory. Written more than a millennium ago, the poem the billionaire shared without comment takes aim at the tyrannical and ruthless Qin emperor who persecuted scholars and burned books. Against the backdrop of President Xi Jinping’s campaign to rein in bosses like Alibaba (9988.HK) and Ant founder Jack Ma, jittery investors could be forgiven their literary interpretations.

Known for his prolific Fanfou musings on everything from Charlie Munger to sweet potatoes, Wang says he was making a broader point about e-commerce: the book-burning poem ironically concludes that the Qin emperor was ultimately overthrown not by educated scholars, but by rebels who did not read. Similarly, Meituan’s competition in food delivery may not be its top rival Ele.me, but an unexpected company or business model.

Wang is only half-right about his company’s biggest threat, though. After levying a record $2.8 billion fine on Alibaba earlier this year, Chinese trustbusters are now circling Meituan. The company’s treatment of its drivers is also under scrutiny after a government official posed as one for a TV programme. And on Monday, consumer protection officials in Shanghai hauled in representatives from Meituan and e-commerce company Pinduoduo (PDD.O) to blast the duo for misleading customers and other practices, local media reported. That sent Meituan shares down another 8%.

The $206 billion company has lost nearly half its market value from a February peak. Wang and Meituan are quickly learning the limits in China of poetic licence.

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CONTEXT NEWS

– Meituan shares closed down 7% on May 10 to HK$262.80 after the Chinese food-delivery company’s chairman, Wang Xing, posted an ancient poem on social media that triggered speculation that he was criticising the government.

– Wang deleted the poem and said that he had been using it to make a broader point about the company’s rivals.

– Separately, the Shanghai Consumer Council on May 10 summoned Meituan and e-commerce company Pinduoduo to single out problems in their protection of consumer rights and to urge them to better protect the legitimate rights and interests of consumers.