China targets online commerce battles in latest regulatory salvo

China unveiled broad regulations on Wednesday (Jan 7) that ban major platforms such as Alibaba Group Holding from coercing online merchants into promotions, one of a raft of new measures intended to cool rapidly intensifying e-commerce competition.

The guidelines take effect February and follow a series of notices from Beijing warning Alibaba and rivals including Meituan and JD.com against pressuring merchants into discounts and other measures accused of disrupting market order.

A separate set of regulations, also published by the State Administration for Market Regulation and Cyberspace Administration of China, also bar online influencers from making false claims.

Alibaba’s shares slid as much as 4.2 per cent in Hong Kong, leading losses in peers such as AI video platform Kuaishou, JD and Meituan.

Beijing has since 2025 heightened scrutiny of the country’s vast retail arena, particularly after Alibaba, JD and Meituan began spending billions of US dollars on subsidies and incentives to try and dominate meal delivery. Its watchdogs have over the past year singled out practices such as no-questions-asked refunds and exclusivity arrangements that they say hurt smaller merchants.

China already has an e-commerce law to govern the sector. Some of the new regulations are designed to specifically target misbehaviours of platforms, the online tech companies that connect buyers with sellers.

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The new rules also require them to protect consumers and user data, and violations can lead to warnings and fines.

Rampant discounting and subsidies have also eroded margins across the e-commerce industry. In November, Meituan blamed “irrational competition” for its first loss in almost three years, reflecting the toll of its three-way battle with Alibaba and JD in a weak Chinese consumer environment. BLOOMBERG

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