(Bloomberg) — Meituan plans to launch its international food delivery platform in the Saudi capital, making its first move outside greater China as growth slows in its domestic market.
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The Beijing-based company is working to launch its KeeTa app in the Middle East, with Riyadh as the first stop, according to sources familiar with the matter. Meituan has been studying an expansion into the Middle East for months, the sources said, asking not to be identified discussing private information. This launch could take place as soon as the coming months, one of the sources said.
Meituan’s global expansion is emblematic of Chinese companies’ desire to expand overseas, seeking growth as local competition intensifies even as consumption declines. The move to Riyadh, one of the region’s richest cities, follows a successful foray into Hong Kong in 2023.
It will pit Meituan against local rivals including Jahez International Co., Delivery Hero SE’s Talabat and HungerStation and Careem, backed by Uber Technologies Inc. The move comes as Saudi Arabia, already the region’s largest economy, considers to invest billions of dollars to become a tourist and commercial center.
Read more: Meituan revenue beats estimates after avoiding ByteDance
A first in Riyadh could mark a broader foray into a friendlier region to which Chinese businesses have flocked as their domestic economy collapses.
Meituan’s approach to the Middle East will likely rely on a familiar strategy of heavy subsidies to attract users and delivery people from the start. As in Hong Kong, it is likely that Keeta will be rolled out in stages and target certain districts to start. The company has already posted at least a dozen Keeta job openings for Riyadh on LinkedIn and its own website, including for user acquisition and business development.
Although Meituan has spent months developing an entry plan, plans could still change and the company could decide to pause any expansion. In the meantime, the company explored other Middle Eastern markets. Meituan representatives did not respond to an email seeking comment.
KeeTa – a nod to the speedy cheetah – launched in May and took just a few months to rise to second place in Hong Kong ahead of Deliveroo, according to an independent study. The business has been seen as a trial run for broader long-term global expansion, as Meituan seeks growth at a time when rivals like ByteDance Ltd.’s Douyin. reduce its margins.
What Bloomberg Intelligence says
Meituan’s fourth-quarter core local business margin decline, which fell below 15% for the first time in seven quarters, could persist through December if the company aims to increase its top line by more than 20% over one year. The rivalry could intensify, not only from Douyin but also from Alibaba’s Ele.me, where the leadership change on March 31 could result in new moves to gain share of the delivery market.
– Catherine Lim and Trini Tan, analysts
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