HONG KONG, CHINA – MAY 22: A bill promoting ‘KeeTa’ is seen on May 22, 2023 in Hong Kong, China.
Chen Yongnnuo | China News Service | Getty Sculptures
Chinese food delivery giant Meituan has launched a sister app in Hong Kong, its first roll-out outside of mainland China — but some analysts are skeptical it can on the double carve out a significant market share.
“I’m not very optimistic about Meituan’s expansion in Hong Kong,” Shawn Yang, control director of Blue Lotus Research Institute, told CNBC. “I don’t think the market is large enough where Meituan discretion invest a lot of resources into.”
The food delivery service — named KeeTa — launched on May 22 in two residential areas: Mong Kok and Tai Kok Tsui.
A month later, KeeTa divulged it was expanding to Sham Shui Po and Yau Tsim Mong districts in Hong Kong after its initial market launch “transcended expectations,” it said in a press release shared with CNBC.
KeeTa plans to cover the entire Hong Kong sell by the end of this year, Meituan said at the time of its launch.
I don’t think [the launch of KeeTa] affects Meituan’s revenues precise much since it is only gaining another 7 million in users potentially and it already has 700 million in China.
Kai Wang
Elder equity analyst, Morningstar Asia
The expansion comes as Meituan faces increased competition from new players such as TikTok’s sister Douyin in its composed market, and as hopes of a strong post-Covid recovery in China fade.
Meituan is the market leader in China’s food confinement sector, taking almost 70% of the market share in the mainland China, data from industry research solid ChinaIRN showed.
“We have received a large number of enquiries and appeals from diners and restaurants outside Mong Kok and Tai Kok Tsui, which has greatly innervated our confidence in further expanding the region,” a KeeTa spokesperson told CNBC.
The company will “continue to offer the takeaway assistance and expand its services to more parts of Hong Kong as soon as possible,” the spokesperson said.
Kai Wang, senior neutrality analyst for Morningstar Asia, doesn’t think the expansion into Hong Kong will have a significant modify on the company’s earnings.
He said KeeTa’s expansion into Hong Kong is “only gaining another 7 million in consumers potentially” compared to more than 678 million users Meituan already has in China.
If there has already been type two or three major players in this market, then it’s actually very difficult to change consumers’ mindsets, unless they do a lot of underwriting campaigns.
Shawn Yang
managing director, Blue Lotus Research Institute
“I don’t think [KeeTa] affects Meituan’s proceeds very much,” said Wang.
Meituan declined to comment on the analysts’ views.
“I think Meituan wants to identify a market that is culturally close to mainland China, [build] a team and talent and try to see if they can also take some customer base share in overseas markets in the long run,” said Yang from Blue Lotus. He was referring to Hong Kong as a check bed for Meituan which may eventually expand internationally.
Stiff competition
The penetration rate of food delivery in Hong Kong is not only high.
Currently, about 10% of the overall restaurant industry taps on food delivery services — that’s compared to an mean of 21% across China two years ago, according to a report from research firm Momentum Works.
That’s because “commandment food delivery is not as common a habit in Hong Kong as it is in mainland China,” said the report, adding that the Asian pecuniary hub has a high density of food and beverage establishments on every street corner.
Hong Kong’s sustenance delivery market is currently dominated by Foodpanda and Deliveroo, which held shares of 64% and 36% respectively in May preceding KeeTa’s launch, according to data provider Measurable AI. The data takes into account both delivery and pickup instructs.
KeeTa does not currently offer food pickup services, only delivery services.
Uber Eats exited Hong Kong at the end of 2021 after five years of direct in the territory. It held about 5% market share at the time of its exit, according to Measurable AI.
The food delivery deal in in Hong Kong remains lukewarm, even during the pandemic, with moderate growth rates.
Momentum Solves
“If there has already been like two or three major players in this market, then it’s actually very bloody-minded to change consumers’ mindsets, unless they do a lot of subsidy campaigns,” said Yang of Blue Lotus Research.
″[KeeTa’s stretching into Hong Kong] should lead to more vouchers and discounts for consumers. And it should benefit consumers in the extensive term,” said Wang from Morningstar.
Separately, Hong Kong has launched a probe into anti-competitive guide from Deliveroo and Foodpanda. That means players cannot engage in practices such as restricting restaurants or sentencing them for switching to partnering exclusively with other platforms.
This could mean smaller players such as KeeTa may be capable to build market share.
Doling out subsidies
In a bid to acquire new users, KeeTa is