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Asia News Network
3 days ago
- Business
- Asia News Network
23-cent bubble tea, US$7.7k EVs: China updates law to curb cutthroat price wars
June 30, 2025 SINGAPORE – China has introduced legal measures to halt businesses' race to the bottom, as it continues to crack down on price-cutting practices that are hurting the economy. The country's top legislative body on June 27 passed amendments to a law against 'unfair competition', including one that prohibits platform operators from compelling their vendors to sell items at below cost price. The amended law, state broadcaster CCTV said on June 28, will regulate 'involutional competition' such as the 'frenzied lowering of prices' on e-commerce platforms, and food delivery platforms' use of hefty subsidies to wrest a share of the market. Coffee and bubble tea, for instance, can sell for as little as 1.68 yuan (30 Singapore cents) after discounts on on the 18th day of each month, as the retail giant doles out 10 billion yuan in subsidies to muscle into the food delivery business. Platform operators found to have compelled vendors to sell items at less than cost price could now be fined as much as 2 million yuan in serious cases. 'Involution', or neijuan in Chinese, refers to unproductive competition in a crowded field that results in diminishing returns – in this case the vicious circle of lowering prices and product quality, which the authorities aim to curb. Instead, industry players will be guided towards upgrading their services, CCTV said. 'A major economic challenge China faces is the risk of sustained deflation, which is exacerbated by neijuan,' said economics professor Hu Guangzhou of the China Europe International Business School in Shanghai. Macquarie economists said in a note in June that China is contending with its longest deflationary streak in the past four decades. This reflects cautious consumer spending and how factories have been churning out more goods than are needed. The country's gross domestic product deflator, which measures broad changes in prices of goods and services across the economy, has fallen for eight consecutive quarters. Prices of goods leaving factories have been dropping for more than two years. Aside from deflation, Prof Hu said that weak demand and price competition resulting from involution were forcing firms to live with lower profit margins. This, in turn, deprives companies of the resources needed to innovate, and to pay their workers adequately. In the fiercely competitive electric vehicle sector, for instance, Chinese automakers have been slashing prices to vie for a slice of the domestic market. The latest round of price cuts was sparked in May by industry leader BYD, which reduced prices by as much as 34 per cent. Its cheapest model now costs just 55,800 yuan (S$9,900). In Prof Hu's view, platform operators have been singled out in the revised law because their market dominance can give them an unfair advantage in dealing with vendors. Most of these vendors are small or micro enterprises that generate many jobs, he said. 'When their profit margins are squeezed by the platform operators, it generates a detrimental knock-on effect on the economy.' The new regulations, reported by the Xinhua news agency on June 27, include a provision mandating that big companies avoid setting unreasonable payment terms and methods for smaller players. Local media outlet Yicai reported in June that small companies serving the car industry have been facing significant delays in receiving payments from the large firms they work with. According to the outlet's research, it took eight listed battery manufacturers an average of 255 days to pay their suppliers, even though they themselves got paid in an average of 103 days. Prof Hu believes that the new law, which takes effect in October, will help make China's economy more efficient, but adds that more will need to be done to combat involution and break the deflationary cycle. 'Greater fiscal stimulus and higher household income are necessary to raise the levels of consumption and start the reflation process,' he said.
Asia News Network
3 days ago
- Business
- Asia News Network
30-cent bubble tea, US$7.7k EVs: China updates law to curb cutthroat price wars
June 30, 2025 SINGAPORE – China has introduced legal measures to halt businesses' race to the bottom, as it continues to crack down on price-cutting practices that are hurting the economy. The country's top legislative body on June 27 passed amendments to a law against 'unfair competition', including one that prohibits platform operators from compelling their vendors to sell items at below cost price. The amended law, state broadcaster CCTV said on June 28, will regulate 'involutional competition' such as the 'frenzied lowering of prices' on e-commerce platforms, and food delivery platforms' use of hefty subsidies to wrest a share of the market. Coffee and bubble tea, for instance, can sell for as little as 1.68 yuan (30 Singapore cents) after discounts on on the 18th day of each month, as the retail giant doles out 10 billion yuan in subsidies to muscle into the food delivery business. Platform operators found to have compelled vendors to sell items at less than cost price could now be fined as much as 2 million yuan in serious cases. 'Involution', or neijuan in Chinese, refers to unproductive competition in a crowded field that results in diminishing returns – in this case the vicious circle of lowering prices and product quality, which the authorities aim to curb. Instead, industry players will be guided towards upgrading their services, CCTV said. 'A major economic challenge China faces is the risk of sustained deflation, which is exacerbated by neijuan,' said economics professor Hu Guangzhou of the China Europe International Business School in Shanghai. Macquarie economists said in a note in June that China is contending with its longest deflationary streak in the past four decades. This reflects cautious consumer spending and how factories have been churning out more goods than are needed. The country's gross domestic product deflator, which measures broad changes in prices of goods and services across the economy, has fallen for eight consecutive quarters. Prices of goods leaving factories have been dropping for more than two years. Aside from deflation, Prof Hu said that weak demand and price competition resulting from involution were forcing firms to live with lower profit margins. This, in turn, deprives companies of the resources needed to innovate, and to pay their workers adequately. In the fiercely competitive electric vehicle sector, for instance, Chinese automakers have been slashing prices to vie for a slice of the domestic market. The latest round of price cuts was sparked in May by industry leader BYD, which reduced prices by as much as 34 per cent. Its cheapest model now costs just 55,800 yuan (S$9,900). In Prof Hu's view, platform operators have been singled out in the revised law because their market dominance can give them an unfair advantage in dealing with vendors. Most of these vendors are small or micro enterprises that generate many jobs, he said. 'When their profit margins are squeezed by the platform operators, it generates a detrimental knock-on effect on the economy.' The new regulations, reported by the Xinhua news agency on June 27, include a provision mandating that big companies avoid setting unreasonable payment terms and methods for smaller players. Local media outlet Yicai reported in June that small companies serving the car industry have been facing significant delays in receiving payments from the large firms they work with. According to the outlet's research, it took eight listed battery manufacturers an average of 255 days to pay their suppliers, even though they themselves got paid in an average of 103 days. Prof Hu believes that the new law, which takes effect in October, will help make China's economy more efficient, but adds that more will need to be done to combat involution and break the deflationary cycle. 'Greater fiscal stimulus and higher household income are necessary to raise the levels of consumption and start the reflation process,' he said.
Yahoo
25-06-2025
- Business
- Yahoo
JD.com (JD) Launches Zero-Commission Hotel Program, Disrupting Travel Sector
Inc. (NASDAQ:JD) is one of the 10 best AI stocks to buy according to billionaire David Tepper. On June 18, issued an announcement that sent ripples through China's online travel and services industry. In the announcement, the company said that hotel merchants joining its JD Hotel PLUS Membership Program will enjoy up to three years of zero commission. A close-up of a customer using the company's e-commerce platform whilst shopping online. The open letter to hotel merchants was way of launching a deeper foray into China's hotel and travel industry. stated it will focus on providing supply-chain services to lower operational costs and enhance guest experiences. The company's founder, Richard Liu, has emphasized that the core logic is 'supply chain optimization' to compress backend costs. This announcement dealt a blow to major players in the sector. For instance, Group, China's leading online travel agency, saw its shares plunge approximately 5% in Hong Kong trading. Similarly, Meituan, which offers food delivery and travel-booking services, saw its stock slide nearly 4%. Other online travel platforms like Tongcheng Travel also experienced significant drops, with some falling over 9%. Inc. (NASDAQ:JD) is a Chinese e-commerce and supply chain technology company. It operates through segments like JD Retail, JD Logistics, JD Health, JD Industrials, and JD Technology. The company sells various products, including electronics, home appliances, groceries, apparel, and healthcare items, through its online and offline platforms. JD also provides logistics and cloud- and AI-driven supply chain services. While we acknowledge the potential of JD as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: Goldman Sachs China Stocks: 10 Stocks to Buy and 10 Undervalued Blue Chip Stocks Analysts Recommend for Smart Investing. Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNBC
25-06-2025
- Business
- CNBC
China's Li urges not to turn trade into a political or security issue
TIANJIN, China — Chinese Premier Li Qiang on Wednesday called on other countries to collaborate on trade, despite rising tariffs and other barriers. "Globalization will not be reversed," he said through an official English translation, as he called on all sides to not to turn trade into political and security issues. Engaging in the international economy is a way of "reshaping the rules and order," Li added. Li did not comment specifically on U.S. tensions or the Israel-Iran conflict. He was speaking at the opening plenary of the World Economic Forum's annual conference in China, often dubbed "Summer Davos." Singapore's Prime Minister Lawrence Wong, Vietnam's Prime Minister Pham Minh Chinh and Ecuadorian President Daniel Noboa Azín were among the top political leaders attending this year, according to a forum press release. Founder and Chairman Liu Qiangdong and TCL Founder and Chairman Li Dongsheng were among the listed conference attendees. In the last week, Li has met with the leaders of Singapore, Vietnam, New Zealand, Ecuador and Kyrgyzstan, according to Chinese state media.
Yahoo
24-06-2025
- Business
- Yahoo
JD.com (JD) Expands into Saudi Arabia with JoyExpress
Inc. (NASDAQ:JD) is one of Goldman Sachs' top Chinese stock picks. On June 18, JD Logistics, the logistics arm of Chinese e-commerce giant announced the launch of JoyExpress in Saudi Arabia—its first direct-to-consumer express delivery service outside China. This milestone marks a key step in global logistics expansion. Copyright: kzenon / 123RF Stock Photo JoyExpress is to offer delivery services as fast as the same day in Saudi Arabia, affirming push for growth on the international scene. Expansion abroad comes as the company faces stiff competition back at home. In addition, Chinese consumer confidence has dropped significantly amid wage growth concerns. The company's visionary leader, Richard Liu, has already emphasized the need for international expansion to safeguard the company's future growth. 'We have been working in Europe for three years, and the logistics infrastructure there is now basically in place. However, it's still not enough,' he said, according to local media reports. By leveraging robust logistic network and tapping innovative ventures like food delivery, Liu hopes to challenge industry leaders across various sectors. The plan is to enhance its competitive edge by offering enticing incentives and attractive delivery benefits. Inc. (NASDAQ:JD) is a major Chinese tech and service company operating through JD Retail, JD Logistics, and New Businesses, offering a broad range of products and services—from consumer goods to healthcare. It supports third-party merchants with marketplace tools, provides omni-channel and online healthcare solutions, and delivers advanced logistics and supply chain services through its robust infrastructure. While we acknowledge the potential of JD as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 10 Biotech Stocks Screaming a Buy and 13 Best Software Stocks to Buy Now. Disclosure: None. Sign in to access your portfolio
