Major players in China’s on-demand delivery sector have burned over US$4 billion in the second quarter of 2025, according to estimates from Nomura, as they put priority on winning or consolidating market share while making profitability a secondary consideration for now.

The competition heats up further in a market that is expected to exceed 810 billion yuan ( US$113 billion ) by 2028.

The incumbent leader is Meituan, which commands over 65% of the food delivery business as of 2024, followed by Alibaba, owner of the platform Ele.me with a market share of about 30%. Jingdong ( JD ) jumped into the fray this February with a high-profile strategy of grabbing market share through generous subsidies.

Refusing to be threatened by an aggressive newcomer, both Meituan and Alibaba doubled down on their subsidies in a classic tit-for-tat strategy. From all this, a full-blown and protracted price war is likely to emerge.

“Based on our preliminary estimates, we think the whole industry likely burned over US$4 billion in Q2 due to competition in the food delivery segments,” says Shi Jialong, head of China internet and media research at Nomura, during a media briefing in Hong Kong.

Stock prices suffer

As the players continue to burn cash, their share prices have suffered. Meituan’s stock price has plunged by over 25% since February while that of JD has dropped by 23%.

Alibaba shares have stayed relatively flat as its more conglomerate business model has been able to absorb shocks from the price war. Also, the group decided to merge Ele.me with its Taobao and Tmall businesses in June, a sign that the food delivery business is gaining rising importance in its corporate strategy.

The ferocious rivalry may already be affecting Meituan, although it has remained the leader in terms of market share so far. Circumstances are pushing it to make some strategic business overhauls both domestically and internationally.

On the domestic front, Meituan has recently restructured one of its online grocery initiatives, Meituan Select, by shutting down its operations in most parts of the country and maintaining a presence in a few cities where it is profitable.

“This move was unexpected in our view since Meituan has invested over 70 billion yuan since 2021 in Meituan Select, only to almost wind it down entirely now,” shares Shi. “We believe this decision might have been partly prompted by the ongoing competition in food delivery.”

Also, Meituan’s overseas expansion is likely to take a back seat in view of the ruthless competition domestically. It is the only one among the three rivals that has an overseas footprint in food delivery. Its brand Keeta has proved a success in Hong Kong, and it’s seeking further growth in the Middle East and even Brazil.

 “We expect some of the financial resources and management energy reserved for overseas expansion will now be shifted back to cope with the domestic competition,” Shi says, when asked about the outlook of Meituan’s overseas franchise.