(Bloomberg) — Meituan is planning to launch its international food-delivery platform in Saudi Arabia’s capital, making its first move outside of greater China as growth slows in its home market.
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The Beijing-based firm is working to debut its KeeTa app in the Middle East with Riyadh as the first stop, according to people familiar with the matter. Meituan has explored an expansion into the Middle East for months, the people said, asking not to be identified discussing private information. That launch could come as early as in coming months, one of the people said.
Meituan’s global expansion is emblematic of a push by Chinese companies abroad, seeking growth as local competition intensifies even while consumption wanes. The move into Riyadh, one of the wealthiest cities in the region, follows a successful Hong Kong foray in 2023.
It will pit Meituan against local rivals including Jahez International Co., Delivery Hero SE’s Talabat and HungerStation and Uber Technologies Inc.-backed Careem. The move comes as Saudi Arabia, already the region’s biggest economy, devises plans to invest trillions of dollars to become a tourism and commercial hub.
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A Riyadh debut could mark a broader foray into a friendlier region that Chinese companies have warmed towards as their home economy buckles.
Meituan’s Middle Eastern approach will likely rely on a familiar subsidy-heavy strategy to draw in users and delivery workers at the outset. As with Hong Kong, It’s likely to roll Keeta out in phases and target certain districts to begin with. The company’s already posted at least a dozen Keeta job openings for Riyadh on LinkedIn and its own website, including for user acquisition and business development.
While Meituan has spent months devising a blueprint for entry, plans could still change and the company could decide to hit pause on any expansion. The company has explored other Middle Eastern markets in the meantime. Representatives for Meituan didn’t respond to an email seeking comment.
KeeTa — a nod to the fast-moving cheetah — launched in May and took just months to vault to the No. 2 spot in Hong Kong ahead of Deliveroo, according to independent research. That business was regarded as a trial run for a broader global expansion over the long run, as Meituan seeks growth at a time rivals like ByteDance Ltd.’s Douyin are undercutting its margins.
What Bloomberg Intelligence Says
The slide in Meituan’s 4Q core local-commerce margin, which fell below 15% for the first time in seven quarters, could persist through December if the firm aims to lift revenue by more than 20% year over year. Rivalry could intensify, not just from Douyin but also Alibaba’s Ele.me, where leadership change on March 31 may prompt new measures to gain delivery market share.
– Catherine Lim and Trini Tan, analysts
Click here for the research.
The company’s latest expansion comes as Chief Executive Officer Wang Xing from February took direct control of its overseas businesses, a decision that elevates the importance of its international ambitions.
Wang said during the company’s earnings call in March that Meituan was actively exploring international expansion, and that the firm’s cash reserves and cash flow from its domestic business would help it break into new markets.
Like its peers, the company has been looking outside its home turf for growth during China’s severe economic downturn, including at one point considering an acquisition of Delivery Hero’s business in Southeast Asia.
A growing number of Chinese tech firms have explored a deeper presence in the Middle East in particular, anticipating less political scrutiny compared to places like the US and Europe. Apart from global sensations TikTok and Shein, Chinese-origin social apps like Yalla Group Ltd. and Joyy Inc.’s Bigo Live have also built a strong following in the region.
–With assistance from Pei Li and Zheping Huang.
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