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Competition in usage duration intensified due to the increasing media demand and decreasing usage duration

Due to effective prevention and domestic circulation strategy, China economy has showed a strong recovery since Q3 2020. Despite the restriction of homecoming, total retail sales of consumer goods in Jan and Feb 2021 nominally increased by 33.8% and 6.4% respectively compared with that during the same period in 2020 and 2019.

Media demand is related to economic prosperity. For example, in 2020, the total consumption and media spending show a highly correlated trend, with the correlation coefficient of 0.87. With further consumption recovery, media demand will be greater.

The average weekly net citizen duration in December (26.2h) has decreased by 4.6 hours and is even shorter than that before the epidemic, showing that the traffic dividend has come to an end. In addition, 2021 is the beginning of 14th five-year plan and the 100th anniversary of the foundation of CPC, hence a relatively stricter content control. Therefore, competition in usage duration will intensify due to the increasing media demand and decreasing usage duration.

Consumer’s emotion toward platforms has changed, requiring for a better image of platforms

Due to a series of vicious incidents such as rental department, P2P and data abuse, consumer’s emotion towards Internet companies gradually turns negative. In the past year, Delivery Riders, Stuck in the System, eCommerce platforms set varied prices for same product on different consumers and other news make consumers notice that abuse of algorithms and big data will eventually hurt everyone more or less. These incidents and social buzz indirectly led to the tightening regulations on Internet companies.

To clearly show how Internet companies conduct their business in the complex macro environment in 2020, we divide the major Internet companies into four categories: Star, Unicorns, Cash Cow and Pressed.

**Meituan is currently entering a new investment cycle. When analyzing it, we split its core business from the other businesses to avoid misjudgment of the overall value of Meituan

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