China’s Meituan to start Brazil business with US$1 billion budget

[NEW YORK] Meituan will invest US$1 billion over five years to start and expand a food delivery service in Brazil, as Luiz Inacio Lula da Silva hopes to transform the country’s commodities-reliant economy with help from China.

Beijing-based Meituan said it will bring its food delivery app Keeta to Brazil within months after signing an investment pact at a forum of Brazilian and Chinese businesses on Monday (May 12). Lula and Meituan chief executive officer Wang Xing presided over the signing of a deal, the company said.

The agreement takes one of China’s largest tech corporations into South America, after a rapid expansion into first Hong Kong, then the Middle East.

It appeared to be part of 27 billion reais (S$6.2 billion) of investments in Brazil over coming years announced by Chinese businesses at Monday’s forum, including semiconductor factories from Shenzhen Longsys Electronics and the world’s largest fast food chain, Mixue Group. Lula and Chinese leader Xi Jinping are also expected to ink new trade-related agreements in Beijing on Tuesday.

Meituan is swiftly expanding outside of mainland China as it faces growing competition from JD.com at home. Its aggressive pricing strategy forced Deliveroo to retreat from Hong Kong after a decade of operating in the city. The company had considered venturing into Latin America, China’s LatePost previously reported.

Founded in 2010, Meituan initially built a business model with discount offerings such as Groupon. In 2013, the company ventured into food delivery and has since grown into the largest player anywhere. BLOOMBERG