Image Source: Visual China

BEIJING, February 18 (TMTPOST) — Lifestyle service provider Meituan (HKG: 3690)’s share price slumped after the Chinese government rolls out policies to prioritize the benefits of vendors in the takeout business.

Meituan lost over HK$200 billion in valuation as its share fell by 14.86% to HK$188 per share on Friday.

The National Development and Reform Commission of China and other 13 government departments rolled out 43 policies to support the development of the service sector in the country, focusing on supporting businesses overcome difficulties in the market and resume business development.

Takeout platforms, or food delivery platforms, will be heavily impacted by the new policies. It is stated in the policies that the state will work to guide online food delivery platforms to adjust their service fee for vendors to lower down business operation cost for catering businesses. Online food delivery platforms will be guided to provide temporary service fee discounts for vendors in areas of mid or high-pandemic-risk, according to the policies.

China has been seeing recurring waves of Covid-19 outbreaks. As of February 18, 2022, China has 65 areas of mid and high-pandemic-risk, including areas with high concentration of industrial production and other economic activities. The more contagious Omicron variant has made the Chinese government tighten up measures to curb the spread of the pandemic and protect itself from the global spread of the virus.

Restaurants and other catering businesses are heavily impacted by new waves of infections as China adopts a zero-Covid policy stance when faced with outbreaks. Strict pandemic control and prevention measures will be taken place when a transmission is detected. Entire residential communities can be locked down for quarantine when cases appear. In areas with a significant number of Covid cases, restaurants are forced to stop providing dine-in service and only provide catering services through takeout. This has made restaurants in areas of mid and high-pandemic- risk to increasingly rely on online food delivery platforms to conduct business.