Community group buying: Chinese regulators fine businesses tied to Big Tech for price dumping

The State Administration for Market Regulation accuses tech giants involved in community group buying of price dumping in a bid to dominate the market. The latest crackdown on Big Tech comes ahead of Beijing’s key political meeting known as the ‘two sessions’. — SCMP

China’s market regulator has fined some of the country’s largest tech players involved in a fast-growing e-commerce model for slashing prices to edge out competitors, in Beijing’s latest move to rein in China’s Big Tech.

Alibaba Group Holding-backed startup Nice Tuan and the community group buying units under e-commerce platform Pinduoduo, ride-hailing firm Didi Chuxing and online delivery company Meituan were each fined 1.5mil yuan (RM940,227) for breaching the country’s price law, while a startup backed by Tencent Holdings, Shixianghui, was fined 500,000 yuan (RM313,292), the State Administration for Market Regulation (SAMR) said in a statement on Wednesday. (Alibaba owns the South China Morning Post.)

“During the second half of 2020, some community group buying businesses used their capital advantage to launch substantial price subsidies, disturbing market price order and arousing widespread concerns from society,” authorities said.

Representative from Pinduoduo, Meituan, and Didi Chuxing’s community group buying units confirmed that they have been notified about the punishment.

“The company attaches great importance to the issue and will rectify according to the requirements of relevant regulatory authorities,” a Pinduoduo spokesman said.

“We attach great importance to and sincerely accept the punishment. We will strengthen rectification,” a Meituan spokesman said.

“We will strictly abide by relevant laws and regulations, and make every effort to protect the legitimate rights and interests of consumers,” a Didi spokeswoman said.

A representative from Nice Tuan also said the company is working to address the issue.

“We have formed a special team immediately to conduct self-examination and comprehensive rectification on the issues involved,” the spokesman said. “We will strictly implement relevant laws and regulations, and while providing users with a high-quality service experience, we will do our best to protect the legitimate rights and interests of consumers.”

Shixianghui did not immediately respond to requests for comment.

Community group buying is an emerging business model that enables residents in a community to purchase groceries and other daily essentials in bulk through a leader appointed by e-commerce platforms. The large-volume purchases allow merchants to offer steep discounts, which have attracted deal-seeking consumers across China. Tech giants and startups alike have flocked to introduce their own services.

The new trend, however, has been accused of hurting the livelihoods of millions of people working in China’s traditional wholesale and retail networks.

In December, the Communist Party mouthpiece People’s Daily published an opinion piece questioning whether it was “morally sound” for China’s Big Tech to chase profits by “selling a few cabbages”. Soon after, antitrust regulators summoned Alibaba, Tencent, Meituan, Pinduoduo, Didi Chuxing and JD.com to warn them on the issue of “low price dumping and squeezing jobs” in community group buying.

On Wednesday, the SAMR accused Didi Chuxing’s Chengxin Youxuan, Pinduoduo’s Duoduo Maicai, Meituan’s Youxuan, Nice Tuan and Shixianghui of using false or misleading price methods to trick consumers into buying from them.

In December, SAMR fined a subsidiary of e-commerce giant Alibaba Group Holding, a unit of social-media and gaming juggernaut Tencent Holdings, and an affiliate of express delivery company SF Holding 500,000 yuan (RM313,292) each for a breach of China’s anti-monopoly law. – South China Morning Post