Meituan debuts in Riyadh as expansion beyond China accelerates

(Bloomberg) — Meituan is planning to launch its international food delivery platform in Saudi Arabia’s capital, taking its first step outside greater China as growth slows in its home market.

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The Beijing-based company is working to launch its KeeTa app in the Middle East, with Riyadh as its first stop, according to people familiar with the matter. Meituan has been exploring an expansion into the Middle East for months, said the people, who asked not to be identified to discuss private information. That launch could happen as early as the next few months, one of the people said.

Meituan’s global expansion is emblematic of a push by Chinese companies abroad, seeking to grow as local competition intensifies, even as consumption declines. The move to Riyadh, one of the region’s wealthiest cities, follows a successful foray into Hong Kong in 2023.

This 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 at a time when Saudi Arabia, already the region’s biggest economy, draws up plans to invest trillions of dollars to become a tourist and commercial center.

Read more: Meituan’s revenue beats estimates after avoiding ByteDance

A debut in Riyadh could mark a broader foray into a friendlier region that Chinese companies have warmed to as their domestic economy crumbles.

Meituan’s approach in the Middle East will likely rely on a familiar strategy of heavy subsidies to attract users and delivery workers from the start. As with Hong Kong, Keeta is likely to be rolled out in phases and target certain districts to begin with. The company has already posted at least a dozen Keeta to Riyadh job openings on LinkedIn and its own website, including for user acquisition and business development.

Although Meituan has spent months crafting an entry plan, plans could still change and the company could decide to halt any expansion. Meanwhile, the company explored other markets in the Middle East. Meituan representatives did not respond to an email seeking comment.

KeeTa – a tribute to the speedy cheetah – was launched in May and took just a few months to reach second place in Hong Kong, ahead of Deliveroo, according to independent research. That deal was seen as a test run for broader global expansion in the long term, as Meituan seeks to grow at a time when rivals such as ByteDance Ltd.’s Douyin are cutting into their margins.

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What Bloomberg Intelligence says

The drop in Meituan’s local commerce core margin in Q4, which fell below 15% for the first time in seven quarters, could persist until December if the company aims to increase revenue by more than 20% year over year. The rivalry could intensify, not just from Douyin, but also from Alibaba’s Ele.me, where the leadership change on March 31 could lead to new measures to gain delivery market share.

– Catherine Lim and Trini Tan, analysts

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The company’s latest expansion comes as CEO Wang Xing assumed direct control of its overseas business from February, 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 company’s cash reserves and cash flow from its domestic business would help it enter new markets.

Like its peers, the company has sought to grow outside its home territory during China’s severe economic crisis, including at one point considering the acquisition of Delivery Hero’s business in Southeast Asia.

A growing number of Chinese technology companies have been exploring a deeper presence in the Middle East in particular, anticipating less political scrutiny compared to places like the US and Europe. In addition to global sensations TikTok and Shein, Chinese-origin social apps such as Yalla Group Ltd. and Joyy Inc.’s Bigo Live have also gained strong followings in the region.

–With assistance from Pei Li and Zheping Huang.

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