CHINA VOICES | Meituan’s master of ‘copy to China’

By Jordan Schneider
4 min read
Meituan founder Wang Xing (Image credit: Meituan Dianping)

A version of this first appeared in our members-only newsletter on June 15, 2019. Become a member and read it first.

“From a pile of dead men, he pushed himself forward,” said an anonymous investor.

Serial entrepreneur Wang Xing had over a dozen failed projects under his belt before striking it rich by founding Meituan. In a longform profile, author He Jiayan details Wang Xing’s failures in first imitating Twitter, then Facebook, and then finally finding success adapting the Groupon model to China. He is also known for picking fights with half of China’s internet companies. It remains to be seen just how far his ambition can take him. What follows is an extended paraphrase of the piece.

He Jiayan, The House of Startups (Chuanye Jia), May 25, 2019

Wang Xing’s family suffered greatly after the PRC took power. His grandfather was driven to suicide during the Cultural Revolution, and his father spent years forced to work in the countryside and unable to attend college on account of his family background. After China’s reform and opening-up, however, his dad made a fortune in construction.

Admitted to China’s prestigious Tsinghua University in 1997, Wang left an impression. For instance, during hot pot with classmates one night, the upperclassmen gave all the freshmen an opportunity to ask a question all the seniors would have to answer. They expected Wang to ask about secret crushes, but instead he said, “What do you think is the meaning of life?”

Wang Xing headed to the University of Delaware for his PhD, but got bored when his advisor went on sabbatical. After fumbling around with clones of Google Maps and Evite, he stumbled on success with a pixel-for-pixel Facebook copy called Xiaonei. But he suffered from a lack of investment—he lost his one-page business plan on the way to his meeting with Sequoia China, and tried to hand-write a proposal on the cab ride over—and was eventually forced to sell to a competitor for a paltry $2 million.

Xiaonei was a pixel-for-pixel copy of Facebook (Image credit: House of Startups)

Wang Xing’s next idea was yet another “Copy to China” endeavor. In April 2008, he launched a Twitter clone and quickly amassed over a million users. Out of the blue, the government blocked his site for nearly two years.

He writes, “The concrete reason for the ban is hard to pinpoint. But the root cause lies in the fact that during the site’s development, Wang Xing failed to realize that at a certain size, it takes on the attributes of media. Improper handling of certain information caused the site’s doom.”

Most of the employees from that time stuck around through the dark days of censorship purgatory. One of the few who did not was Zhang Yiming, who would go on to found Bytedance.

For his next move, Wang Xing drew yet again from American startups for inspiration. Meituan was one of over five thousand Groupon clones he launched it around 2011. So how did Wang pull ahead of the pack?

He decided to only launch one product a day, ensuring that the merchants really felt the benefits of working with him. Also, Meituan was the first to guarantee automatic refunds for customers whose purchases expired before they used them. Lastly, Wang also saved money on advertising, reckoning that other firms’ ad spend at the time would help educate the customer but not necessarily lead to loyalty. Winning the trust of major investors, he was able to raise a huge round, brag about it on social media, and in doing so scare off competitors—and spread the word about Meituan’s refund guarantee.

Starting in 2013, Meituan took on Baidu and Ele.me (now aligned with Alibaba) on food delivery, investing a cool RMB 1 billion (about $145 million) in an operation to “storm a beachhead.” Meituan has since grown to control over 60% of the market.

Since 2015, after Meituan’s merger with Dazhong Dianping (closest Western analogy: Yelp), Meituan has been engaged in “borderless competition.” It has picked fights with Ctrip on travel, adopting the Maoist strategy of “encircling the cities from the rural areas” by starting in lower-tier cities. By last year, Meituan had started to book more hotel rooms per night than the former industry leader.

Wang Xing met future Didi CEO Cheng Wei back in 2011, just as he was getting his firm up and running. For years, they maintained a friendship—Wang even gave him some tips on his app. In 2017, they had dinner together; later that night, Wang Xing launched his own ride-hailing service pilot in Nanjing. “That night, Cheng Wei certainly understood how Xi Jinping felt when during the day he was laughing with Trump at his private estate, but at night Trump was mulling over sanctions.” As Didi invested in bike ride-sharing startups Ofo and “Little Blue Bike,” Meituan bought out rival Mobike. Just this month, Meituan launched an API to bring all of Didi’s smaller competitors onto one platform.

He summarizes:

Wang Xing’s path as a founder is at once filled with thorns and flowers. His strengths are inseparable from his weaknesses. He has low EQ, he often offends, and he doesn’t have any partner to make up for this deficiency.

When he made a social network, the product was solid, but he couldn’t find an investor and was forced to sell.

Because he accepted Tencent’s investment, he and Jack Ma have had a falling out. In contrast, Cheng Wei was able to make it work and have both Tencent and Alibaba on his board of directors. 

In public, Wang Xing has called out Jack Ma at least three times. First he said that Alibaba would stoop to any low, that Jack was a liar, and that Taobao started out by selling fake and shoddy products.

He despises people who don’t do the hard work of thinking through strategy. He once said, “Most people are willing to do anything in order to avoid having to really think.”

He believes Meituan has three main weaknesses. First, having made so many enemies, Wang Xing may grow distracted from his core customers and get consumed with border fights. Second, Meituan has yet to really bring innovation to the market. Finally, although out-executing others has served Meituan well so far, it remains to be seen how this conservative strategy will fare during a period of dramatic technological change.