• China’s food delivery companies ordered to pay higher wages
• Government insists on insurance for riders after public outcry
(AF) Beijing’s demand that food delivery companies in China guarantee workers an income above the minimum level wiped billions off the market value of the country’s top delivery firm on Tuesday.
Reforms announced by the market regulator on Monday were good news for riders and drivers, but they caused a deep plunge in the shares of Meituan – for a third day running. The new requirements also included providing worker insurance and relaxed delivery deadlines.
Meituan’s shares fell more than 16% in trading in Hong Kong on Tuesday, after a 14% slump the previous day. The State Administration for Market Regulation issued new “guidelines” with six other administrative departments, including the National Development and Reform Commission, the Cyberspace Administration of China and the Ministry of Public Security.
Food delivery platforms in China, including Meituan and Alibaba’s Ele.me, have attracted severe criticism on social media for their treatment of delivery workers, most of whom are not covered by basic social and medical insurance.
Meituan issued a statement later saying it would “resolutely implement” the guidelines and continue to “effectively enhance labour rights.” But Alibaba’s Ele.me did not respond to a Reuters request for comment.
Meituan has been working with the government to purchase employment injury insurance for its delivery drivers, the company’s chief executive, Wang Xing, said in a conference call in May.
Investors are worrying about the rising cost of employing riders by the platforms, Reuters has previously reported.
Hong Kong’ Hang Seng Index fell 4.57% on Tuesday, its third day of declines, and its Tech index is down 8.69% to its lowest since its inception in July 2020. It has fallen around 17% in three days and has lost 44% from a February peak.
The big decliners included Meituan and Alibaba, whose shares fell 5.5%. Alibaba was also down for the third successive day with investors also expecting its food delivery arm to be hit by new regulations.
Chinese bluechips dropped 3.53%, also hitting 2021 lows, thanks to regulatory crackdowns in the education and property sectors.
Reuters, AF.
ALSO SEE:
Meituan Dianping profit plummets amid coronavirus
Beijing out to kill abuses by its tech giants
