The Chinese government has finally signaled the end of a destructive era in its hyper-competitive tech sector. On June 17, the State Administration for Market Regulation (SAMR) released a draft of its "Ten Rules" designed to curb the aggressive subsidy tactics that have defined the food delivery industry for years. This move marks the first time the state has drawn a clear line around what constitutes fair competition in a sector where burning cash has long been a substitute for innovation.
The current crackdown follows a brutal cycle of irrational competition that escalated in early 2025. When JD.com aggressively entered the fray to challenge incumbents Meituan and Alibaba, it triggered a massive subsidy spree. Daily order volumes were artificially pushed toward 200 million, fueled by predatory pricing and zero-yuan deals that often ignored the underlying costs of logistics and labor.
The financial carnage resulting from this battle is staggering. Analysts estimate that Alibaba, JD.com, and Meituan collectively incinerated between 80 billion and 100 billion yuan in pursuit of market dominance. Despite these outsized losses, including Meituan’s 23.4 billion yuan net loss in 2025, the needle barely moved on market share. The three major players remain locked in a rigid distribution of power, proving that cash burns in a saturated market are often a zero-sum game.
Beyond the platforms' balance sheets, the true victims were the small merchants and consumers. To fund the deep discounts, platforms increasingly squeezed restaurant owners, forcing them to bear the brunt of subsidy costs which led to a predictable decline in food quality. The industry’s growth actually slowed as the delivery war dragged average transaction prices back to levels not seen in a decade, threatening the long-term health of the broader service economy.
The new regulations mandate that platforms build internal control mechanisms to prevent dumping and exclusive merchant deals. For the tech giants, the regulation is less a punishment and more a dignified exit from a costly stalemate. Industry leaders have begun echoing the government's rhetoric, calling for a shift toward supply-side innovation and quality-driven growth rather than the brute-force capital expansion of the past.