(Yicai) Feb. 2 -- Chinese on-demand services giant Meituan has announced a new organizational reshuffle that integrated multiple core local life service businesses to tackle the challenges brought by short-video platform Douyin.

Meituan merged its take-away, group-buying, Meituan platform, and basic research and development businesses, Chief Executive Officer Wang Xing said in an internal letter today, Yicai learned. The new local service segment will be placed under Vice President Wang Puzhong’s management.

Moreover, the autonomous vehicle delivery, drone, and overseas businesses will report directly to Wang, who already manages Meituan’s internationalization and technology exploratory business. The Beijing-based firm’s Senior VP Zhang Chuan will be responsible for the Dianping, Software-as-a-Service, shared bike, and power bank businesses.

The integration came as no surprise, as the group-buying and take-out businesses use different fulfillment methods to meet similar consumer needs, a source close to Meituan told Yicai. Integrating these two core businesses with R&D reflects Meituan’s determination to improve organizational efficiency and upgrade user experience, the source added.

Meituan’s merger of its core business segments is mainly due to the intense competition from Douyin, TikTok’s sister app in China.

Douyin’s registered service providers soared 2.8-fold last year from the year before, with the number of partner merchants and total turnover also jumping three- and nine-fold, respectively, in the period, according to data released by the platform’s operator ByteDance. Moreover, Douyin gourmet store exploration helped offline merchants increase revenue by CNY94.6 billion (USD13.2 billion).

To tackle the competition, Meituan adopted several defensive tactics, including lowering commission rates, providing the same product packages as Douyin, and giving more discounts to its exclusive merchants.​

Meituan’s shares [HKG: 3690] fell 1.4 percent to HKD63.20 (USD8.08) in Hong Kong today. The stock has plunged nearly 63 percent since the beginning of last year.

Editor: Futura Costaglione