China’s market regulator is preparing to crack down on illegal pricing, including online platforms that charge different prices based on customer buying patterns.
As Reuters reported Friday (July 2), the draft rules are the latest example of the State Administration for Market Regulation’s (SAMR) attempt to crack down on China’s “free-wheeling platform economy” in the form of fines, investigations and warnings.
“The pricing practices have been widespread among online platforms and it is a hidden problem to ordinary consumers because it’s not very easy to notice,” Lu Zhenwang, chief executive officer of Shanghai-based Wanqing Consultancy, told the news outlet.
The move comes after years of consumer complaints on social media that eCommerce sites aren’t consistent in charging the same price for the same offerings. The rules proposed Friday would ban subsidies that cut the price of a product to below costs.
According to Reuters, violating these rules could lead to a fine of 0.1 to 0.5 percent of a businesses’ yearly sales. Companies could also see their operation suspended.
This move comes less than four months after the SAMR upped its scrutiny of livestreaming eCommerce platforms, citing concerns about poor product quality and misleading ads. The agency met with several platforms who presented their own disciplinary measures.
As PYMNTS reported at the time, the SAMR said all eCommerce livestreamers should “quickly conduct self-control and comprehensive inspections” on product quality, and should punish platforms that sell below-par goods.
Livestream eCommerce has become increasingly popular in China, thanks in part to platforms overeen by tech giants like Alibaba’s Taobao, ByteDance’s short video app Douyin and Kuaishou, which offers a short video and social media platform.
Earlier this year, the SAMR published new rules to bolster anti-monopoly guidelines for Big Tech platforms. These new rules are designed to prevent companies from price fixing, using algorithms to manipulate markets and restricting technologies.