How fastest-growing retail model in India has become a ‘pain point’ for China’s biggest online shopping companies and ‘worry’ for Chinese government

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India’s retail market is rapidly changing. One of the most significant changes in this market is the rise of quick commerce, a new model that has changed how people shop, how brands connect with customers, and how supply chains operate to meet the demand for immediate delivery. In India, Quick Commerce is transforming the grocery sector by creating new demand, altering purchasing habits, and opening up new opportunities for businesses and jobs. However, Quick Commerce segment though rapidly growing in China, it has also become a pain for both the online shopping industry and a worry for Chinese government.Reason is that major Chinese tech companies like Alibaba, Meituan, and JD.com are locked in a fierce “instant retail” war, with a focus on one-hour delivery, that is expected to continue hurting their profits and could worsen deflationary pressures in China, according to a Reuters report. The intense competition has led these companies to spend billions on discounts and coupons to gain market share, drawing concern from investors and regulators alike.

Chinese online companies costly battle for dominance

The battle has seen companies burn through massive amounts of cash, with Nomura analysts estimating industry-wide cash burn at over $4 billion in the second quarter alone. Executives have openly discussed the pressures. JD.com CEO Sandy Xu warned of “excessive competition,” while Meituan CEO Wang Xing noted a “new phase of competition.”The price war started earlier this year when JD.com launched a food-delivery app to compete directly with Meituan’s core business. Alibaba, which owns the Ele.me food-delivery app, quickly followed suit by increasing its own investments in the segment.Analysts believe this high-stakes competition will persist. Kenneth Fong, head of internet research for UBS Investment Bank in China, described the landscape as a “high-stakes ‘game of chicken’” and anticipates the competition will continue through at least the Singles’ Day shopping festival in November.

‘Worry’ for Chinese government

This downward pricing spiral is of particular concern to Chinese regulators, who are worried about a deflationary trend amid weak property prices and job instability. They have repeatedly warned platforms against a “race to the bottom” in pricing. As a result, Meituan, Alibaba, and JD.com released statements in July pledging to curb price wars. Ying Wang, a senior analyst at Moody’s Ratings, expects that these commitments will “gradually rationalize competitive dynamics.”

Impact on profits and broader Chinese economy

The financial toll is significant. S&P Global analysts predict that Meituan, JD.com, and Alibaba could spend at least 160 billion yuan ($22.37 billion) over the next 12 to 18 months. They anticipate “significant downward revisions” to profits and believe margins will not recover for at least another 12 to 24 months.Meituan is expected to be the most affected, as food delivery is its main revenue source. The Reuters report notes that JD.com’s food-delivery losses nearly erased its second-quarter profit.The competitive landscape is also impacting companies that have largely stayed out of the instant retail battle. PDD Holdings, which operates the Pinduoduo platform, is seeing its low-cost advantage eroded by rivals’ aggressive discounting.


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