Chinese e-commerce leaders brush off regulatory risk to continue ‘instant retail' price war
Their fight in instant retail, where delivery can be as quick as 30-minutes, risks the wrath of authorities not averse to crackdowns and wary that aggressive price-cutting could entrench deflationary pressure in an economy under fire from US tariffs and restrictions on tech exports to China.
Alibaba, JD.com and Meituan have pledged almost 200bn yuan R496.5bn combined to subsidise one-hour delivery in recent months, leading to customers who order beverages, for instance, effectively receiving them for free.
So extreme is the strategy that the trio was summoned for the second time last week to the state administration of market regulation, which called for 'rational competition' aligned with the government agenda, said a person familiar with the matter.
'It's a battle that takes place now but is more related to the expectations for five to 10 years down the road. The platforms believe this is life or death. It might mean the future or ack of a future for their company,' said Ed Sander, tech analyst at Tech Buzz China.
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Chinese e-commerce leaders brush off regulatory risk to continue ‘instant retail' price war
China's largest e-commerce platforms show no signs of halting an 'instant retail' price war unusual in its resilience to state criticism, indicating the almost existential importance placed on instant retail as the future of e-commerce. Their fight in instant retail, where delivery can be as quick as 30-minutes, risks the wrath of authorities not averse to crackdowns and wary that aggressive price-cutting could entrench deflationary pressure in an economy under fire from US tariffs and restrictions on tech exports to China. Alibaba, and Meituan have pledged almost 200bn yuan R496.5bn combined to subsidise one-hour delivery in recent months, leading to customers who order beverages, for instance, effectively receiving them for free. So extreme is the strategy that the trio was summoned for the second time last week to the state administration of market regulation, which called for 'rational competition' aligned with the government agenda, said a person familiar with the matter. 'It's a battle that takes place now but is more related to the expectations for five to 10 years down the road. The platforms believe this is life or death. It might mean the future or ack of a future for their company,' said Ed Sander, tech analyst at Tech Buzz China.
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