Continued elevated competition between major companies in China's on-demand delivery market raises the risk of a persistent price war amid a delay in subsidy reductions until 2028, S&P Global Ratings said in a recent release.

These create adverse conditions for all players, S&P said.

Major platform operators Meituan (HKG:3690), JD.com (HKG:9618), and Alibaba Group Holding (HKG:9988) have allocated significant spending to seize a share of the on-demand delivery markets, such as food and online retail, S&P senior analyst Jay Lau said.

These fast-paced segments account for more than 6% of China's retail sector, S&P said.

The negative impact of the price war will be greater than expected, continuing the negative trend on major players' EBITDA since 2025, Lau said.