China Policy Push to Lower Delivery Platform Merchant Fees Sends Meituan Shares Down

This is an English adaptation of a FoodBud historical article originally published on February 18, 2022.

On February 18, 2022, China’s National Development and Reform Commission issued the “Several Policies to Promote the Recovery and Development of Difficult Industries in the Service Sector.”

For restaurant operators, the key provision was aimed at delivery economics: the policy called for guiding internet platform companies, including food delivery platforms, to further reduce merchant service-fee standards for catering businesses, lowering operating costs for restaurants.

It also called for phased merchant service-fee concessions for catering businesses located in county-level administrative areas designated as medium- or high-risk for COVID-19.

After the policy was released, Meituan’s share price fell more than 15%, dropping below HK$190.

Other Service-Sector Support Measures

The policy also extended several relief measures for service businesses in 2022:

• VAT super-deduction policies for service-sector taxpayers were extended. For 2022, eligible production and consumer-service taxpayers could continue to deduct an additional 10% and 15%, respectively, of current deductible input VAT against VAT payable.
• Local governments were encouraged, within regulatory authorization and local conditions, to grant property-tax and urban land-use-tax reductions or exemptions in 2022 to taxpayers facing genuine difficulty.
• China continued the phased reduction of unemployment-insurance and work-injury-insurance contribution rates in 2022.
• Companies that avoided or minimized layoffs remained eligible for broad-based unemployment-insurance stabilization refunds. In 2022, the refund ratio for small, medium, and micro enterprises was raised from 60% to as high as 90%.

Retail, Tourism, Rail, and Aviation

For retail businesses, the policy included free regular nucleic-acid testing for employees and subsidy support for epidemic-prevention and disinfection expenses. Provinces with larger unemployment-insurance and work-injury-insurance fund balances were also allowed to temporarily defer those insurance contributions for retail enterprises, with implementation details set by provincial governments.

For tourism, China continued the temporary refund policy for travel-agency tourism-service quality deposits in 2022. Eligible travel agencies could maintain an 80% temporary refund ratio, while localities with the capacity to do so were encouraged to raise the ratio further. The policy also called for accelerating and expanding pilot programs that allow insurance to replace deposits.

The NDRC and other departments also introduced support for rail transport and civil aviation. In 2022, rail and air transport companies were allowed to suspend prepaid VAT for one year.

Note: all policy targets, share-price moves, and 2022 figures above are historical.