In early July, platforms like Alibaba’s Taobao Flash Sale, Ele.me, Meituan, and JD.com rolled out deep discounts to grab market share, with Taobao throwing in a jaw-dropping RMB 50 billion (US$7 billion) in subsidies.
RMB 20 (US$2.80) meal deals? Free milk tea? Even "0 yuan" order cards? It’s happening. Subsidies have led to a massive surge in transactions. According to a report in the South China Morning Post, 30-minute deliveries have increased by over 150% this year. Meituan reported a daily record of 150 million orders, compared to Alibaba’s 80 million and JD.com’s 25 million.
But while these offers have sent digital traffic soaring, not everyone’s cheering.
State media and industry observers are already waving red flags. A recent commentary warned that while all this may seem like a win for consumers and merchants right now, it could backfire. Profit margins are getting crushed. Service is slipping. And shoppers are being trained to chase deals, not value.
“There are no winners in a price war,” the article warns, urging platforms to stop racing to the bottom and focus on building something more sustainable.
The hype is real. During the ‘0 Yuan Milk Tea’ rush, customers piled in, and restaurants and tea shops were flooded with orders. The frontline staff struggled to keep up. The chaos, driven largely by Meituan and Taobao Flash Sale, was a result of one strategy: flood the zone with aggressive subsidies and flash promotions to win market share, and do it fast.
But the question remains: once the discounts dry up, will the customers stay?
Bryce Whitwam, co-host of the Shanghai Zhan podcast and a long-time China marketing strategist, doesn’t think so.
“From a consumer standpoint, I’ve seen firsthand how stickiness and laziness—not loyalty—drive platform choice in China,” he says.
“I used Ele.me almost exclusively, not because Meituan is worse, but because I couldn’t be bothered to juggle two apps. That inertia is powerful, and platforms know it.”
Whitwam warns that while price wars may lead to short-term trials, they can also condition consumers to focus solely on discounts rather than build meaningful brand relationships. "So yes, a price war might move the needle in the short term by triggering trial, but it risks conditioning consumers to only respond to discounts. And once the discounts vanish, so too might the volume. "
Elisa Harca, CEO of Red Ant Asia, sees the same pattern.
“When it comes to utility marketing, performance matters,” she says. “Sure, price can lure people in, but if service quality drops, it’s the brand that suffers. Not everyone can afford to slash prices and keep standards up.”
She adds, “As a consumer and a marketer, I’m honestly frustrated by this ongoing race to the bottom. It’s not sustainable. It negatively impacts people, whether it's employees facing harsh working conditions or customers receiving poor service."
Whitwam points out the bigger issue: there’s not much to tell these platforms apart.
“The fundamental problem with competing on price in a category with low perceived differentiation and habitual behaviour,” he explained, “is that over time, it erodes brand equity and trains users to chase promotions. We’ve seen this pattern before across Chinese e-commerce platforms. It's a race to the bottom that very few win, and even fewer survive with margins intact. "
Strategy lead at Publicis Media Malaysia, Saw Gin Toh, draws a contrast with Southeast Asia.
Platforms in Southeast Asia are playing a longer, more strategic game. "They invest in building brand experiences by cultivating long-term usage habits, strive towards positive customer experiences and embed themselves into localised strategy," says Toh.
Whitwam agrees the real win won’t come from cheaper food, but from smarter thinking. He points to what Meituan is already doing: moving beyond food into ‘instant retail’, offering groceries, pharmacy, and more in one seamless app.
“Loyalty points across categories, VIP perks, exclusive deals, these are the things that make people stay beyond short-term RMB savings,” he says.
He also sees big potential in using AI to personalise the experience.
"Imagine getting a phone notification at 4:30 pm, right after your weekly meeting—offering a limited-edition snack from your hometown, just when you need a pick-me-up. Intelligent, emotionally timed nudges [will] build deeper engagement and habit—something price cuts alone can’t replicate."
