China’s leading technology companies continue to be the target of anti-monopoly regulation by the authorities. The regulator summoned a number of online giants that provide community group buying services to attend an administrative guidance session and demanded strict compliance, including no monopoly agreements, raising questions again about whether the authorities are deliberately targeting private companies.
The six Internet platforms summoned by the Ministry of Commerce together with the General Administration of Market Regulation include Alibaba, Tencent, Jingdong, Meituan, Jindoduo and Drip.
The administrative guidance will emphasize that in order to strictly regulate the operation of community group buying, online platform enterprises are required to strictly comply with the “nine no’s”, including not to abuse their pricing power through low price dumping, price collusion and price fraud, not to reach any form of monopoly agreement in violation of the law, and not to abuse their dominant market position through predatory pricing.
The authorities also prohibit community group-buying operators from endangering the fair competitive market environment with unfair competition, from using big data to their advantage to make familiar customers spend more money, from using technical means to harm the order of competition, from illegally collecting and using consumers’ personal data, and from selling counterfeit and shoddy goods.
Since last month, the authorities have repeatedly targeted online platforms with messages of enhanced anti-monopoly. On the eve of the double 11, the authorities issued a draft anti-monopoly guideline on the platform economy for comments. The Central Economic Work Conference, which concluded last week, also showed that one of the key tasks for next year will be to continue anti-monopoly and oppose improper competitive practices.
Financial scholar Commander believes that the booming community group buying in recent years has made the authorities wary.
Commander: “In fact, the Chinese central government’s nine-no-no policy is a bit premature, a bit of a rainy day. It believes that if it is allowed to develop, according to the speed of such a spurt in China’s e-commerce, it is likely that there will be only a few retail businesses left in the community, completely monopolized. This is a great concern for the Chinese government.”
The announcement of the Executive Steering Committee mentioned that the current community group buying has outstanding problems such as low price dumping and the resulting squeeze on employment.
The director: “(Community group buying) was originally carried out by many individual entrepreneurs in China who operate in a decentralized manner and cannot form price alliances with these individual operators. They actually provide a lot of jobs to China, supporting the end nerve of the Chinese economy half of the sky, to facilitate the life of the masses, in fact, many people are still happy to see this, especially in rural areas that are not covered by large stores.”
The so-called “community group purchase” is a community-based unit, the “head” to recommend goods to the community residents, and facilitate the transaction. Through the head of the operation of familiar customers and consumers to pick up goods, operators can reduce costs and increase customer base. When e-commerce giants have joined the ranks of business, it also raises concerns about whether capital monopoly will be formed.
The deputy director of the Beijing Tianzhi Economic Research Institute, Jiang Hao, thinks it’s too early to say.
The company’s operating system is very advanced, and its pricing is relatively high, forming a natural monopoly.
The company’s operating system is very advanced. The e-commerce platform poses a threat to Wal-Mart, Carrefour and other supermarkets in the traditional sense. This is a social development. It is normal to have price differences.”
Some people also asked why state-owned enterprises and state-owned banks are not subject to regulation.
Jiang Howe: “State-owned enterprises can directly serve the country well, while private enterprises can at best pay a tax, not good direct manipulation. Socialism is not entirely for the private economy, although the law now also protects private property rights, but there is a difference in the definition of the Constitution, common property rights are sacrosanct.”
The epidemic coupled with the impact of the U.S.-China trade war has left many private enterprises in China struggling to operate and even seeing a wave of closures, while central enterprises are in relatively good shape, which outsiders believe is related to the state-into-people effect. Jiang Howe, on the other hand, expects the authorities to revive reform and opening up and continue to push forward the reform of state-owned enterprises.
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