In an effort to boost the economic recovery of food businesses across the country, the Chinese government instructed online food delivery platforms to lower their service fees—new rules that experts say might be a good idea to follow.
Ever since its emergence, the online meal delivery market has been on the rise in the world’s second-largest economy. In fact, there are over 400 million Chinese people who have ordered food online so far thanks to generous subsidies to both businesses and consumers.
Online food delivery platforms reached their pinnacle during the COVID-19 pandemic. Unfortunately, some of them are using their popularity to gain monopolistic influence in the countries they operate in.
This is why China’s National Development and Reform Commission decided to reduce the fees for food businesses, especially in areas heavily impacted by the coronavirus.
Following the announcement, two of the most popular Chinese delivery services—Meituan and Ele.me, lost a significant part of their stock market values. Meituan’s shares dropped by a whopping 15% and Ele.me’s by 4%.
Additionally, the platforms are now required to take better care of their workers’ safety and well-being. Their collaboration agreements will also be put under tight scrutiny.
A few months back, the State Administration for Market Regulation (SAMR) in China sanctioned Meituan for its monopolistic practices in violation of the free market. For example, the company demanded that food sellers stayed loyal to their services and spied on them for it.
So, should the US follow China’s example for the national meal delivery services and demand that platforms lower their fees?
Interestingly, last summer, San Francisco witnessed a similar initiative, capping abusive delivery fees of online platforms to accelerate economic recovery. However, a national-scale move would make a bigger difference.