Prepare for a wave of mega-mergers in China’s food delivery apps, the last major holdout in that country’s subsidy-fueled on-demand services.
The market is dominated by just three players: Ele.me, Meituan Waimai, and Baidu Waimai. Like Cold War proxy states, each one is backed by one of China’s Big Three technology titans: Tencent, Alibaba and Baidu. Only one will remain by the end of 2017. Our bet is that Tencent and Alibaba will engineer a partnership to drive out Baidu. These frenemies already coexist as investors in Didi Chuxing.