Meituan, China’s dominant on-demand delivery giant, has unveiled a stark set of annual results that underscore the brutal cost of defending market share in an increasingly saturated domestic economy. Despite an 8% increase in total revenue to 364.9 billion RMB ($50.5 billion), the company reported a massive net loss of 23.4 billion RMB for 2025. This represents a dramatic reversal from the 35.8 billion RMB profit recorded just one year prior, highlighting how quickly the tide has turned for China’s internet titans.
The primary culprit for this fiscal bleeding is 'involution'—a term used locally to describe hyper-competitive environments where companies exhaust themselves for diminishing returns. Meituan’s core local commerce division, traditionally its cash cow, swung to an operating loss of 6.9 billion RMB. Aggressive subsidies and price wars, fueled by the entry of short-video giant Douyin into the local services space, have forced Meituan to sacrifice margins to maintain its 60% market share.
CEO Wang Xing has attempted to frame this period of turmoil as a necessary strategic pivot. During the earnings call, Wang emphasized a commitment to 'anti-involution,' suggesting the company will move away from mindless subsidy-driven growth toward high-quality development and technological innovation. This shift is reflected in the company's research and development spending, which surged 23% to 26 billion RMB as it explores AI-driven logistics and automated delivery solutions.
To find a path back to profitability, Meituan is looking beyond China’s borders. Its international arm, Keeta, has rapidly expanded from Hong Kong into the Middle East and Brazil. While these new ventures contributed to a 10.1 billion RMB operating loss for the new business segment, there are signs of hope; the Hong Kong operations reached unit economy break-even in the fourth quarter, suggesting the Meituan model can be exported successfully to higher-margin markets.
Investors remain cautious as the company navigates this transition. Following the announcement, Meituan’s shares fell 3.67% in Hong Kong trading. While government regulators have recently signaled they may intervene to curb the 'malicious competition' that has gutted the sector's profitability, Meituan must prove it can thrive in a landscape where the easy growth of the past decade has been replaced by a grueling battle for efficiency.