Chinese short video giant Kuaishou pledges massive subsidies to fight Douyin, Meituan in local services race
- The Beijing-based company says it is offering incentives amounting to tens of millions of yuan for influencers to sell group-buying deals on its platform
- Local services offer a new source of growth for Chinese tech companies as some of their bread-and-butter businesses have plateaued, analysts say
The Beijing-based company said it was offering tens of millions of yuan in subsidies to help influencers boost their sales of group-buying deals on the platform.
The programme, announced at a corporate event in Shanghai on Thursday, is part of Kuaishou’s Flying Bird project, which aims to lift sales of its local services by tapping into its vast pool of popular short-video influencers.
Other support to be offered includes commission incentives, online traffic diversion, training sessions and upgraded online tools to help manage sales.
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“Through a series of investments, we hope to make it easy for influencers to operate, and motivate more short-video creators to join as influencers,” said Shi Chunxiao, an executive of Kuaishou’s local services business.
In China, local services describe the use of online platforms to offer offline consumer services, such as restaurant and hotel bookings, to internet users.
Local services revenue at Alibaba, owner of the South China Morning Post, surged 30 per cent year on year to US$1.9 billion, partly on the back of strong growth in orders made on its food delivery service Ele.me, according to the company’s latest earnings report.
Transactional users and gross merchandise value of Kuaishou’s local services surged by 498 per cent and 848 per cent in the first six months of 2023, Shi said at the company event on Thursday, without elaborating on exact numbers.
The already competitive local services market is set to become more crowded, as Tencent’s WeChat Video Channel and Shanghai-based lifestyle social media app Xiaohongshu have also made recent inroads into the sector.
Local services offer a new source of growth for Chinese technology companies as some of their bread-and-butter businesses have plateaued, according to analysts.
The live-streaming e-commerce businesses of both Kuaishou and Douyin have touched a ceiling, prompting them to dive into the growth market of local services, especially after China lifted its Covid-19 restrictions, said Li Chengdong, founder and chief analyst at market consultancy Dolphin.
China’s on-demand local services market is expected to reach 2.5 trillion yuan in 2025, according to a report by research firm iiMedia. As more companies enter the market, the local services industry will become a multi-platform competition in future, the report said.
Short video apps like Kuaishou and Douyin could challenge Meituan’s dominance in the sector, thanks to their deeper reach in smaller towns and cities, Li said.
“Meituan’s strength lies in first- to fourth-tier cities rather than the smaller counties where demand for food delivery is almost non-existent,” he said. “But Kuaishou and Douyin are popular even in those counties.”
