Chinese Regulators Demand Tech Giants End ‘Instant Retail’ Subsidy War
By Bao Yunhong and Han Wei
China’s market regulator has summoned three of the country’s top e-commerce platforms — Meituan, JD.com and Alibaba Group-backed Ele.me — in a bid to cool an escalating price war driven by aggressive subsidies.
The State Administration for Market Regulation (SAMR) issued a statement late Friday demanding the companies adhere to fair competition rules and engage in rational market behavior.
The warning is part of a broader crackdown on what regulators term “involution-style competition” — a cycle of unsustainable discounting that has distorted the market and weakened the industry’s overall health.
At the heart of the regulatory concern is the country’s rapidly growing “instant retail” sector, in which platforms battle to deliver everything from lunch to electronics within an hour. Although the sector has seen record-breaking order volumes, it is also facing mounting costs, shrinking profit margins and growing concerns over worker exploitation and food waste.
The tipping point came earlier this month when Alibaba’s Taobao Flash Sale, which uses Ele.me’s delivery infrastructure, unveiled a yearlong subsidy plan worth 50 billion yuan ($7 billion). On Saturdays, the platform handed out coupons worth up to 188 yuan per user, covering the cost of milk tea, snacks and more.
Meituan quickly fired back with equally aggressive giveaways. On the weekend of July 5, Meituan reported surpassing 120 million daily instant-retail orders for the first time, while Taobao and Ele.me said their joint orders exceeded 80 million.
The following Saturday, Meituan’s orders hit 150 million. The promotions, which included “0-yuan purchase” deals, drove a chaotic spike in demand that reportedly caused systems to crash and deliveries to be delayed.
This battle for dominance has quickly drawn a backlash from industry groups. The Dalian Food Industry Association issued a public appeal this week, calling the platforms’ behavior a “systemic crisis” for restaurants. The association said the companies were forcing merchants to absorb the cost of the subsidies, pushing their profit margins below sustainable levels. It also warned of food waste and an increasing strain on the delivery driver network.
The latest chapter of this subsidy war began in earnest when e-commerce powerhouse JD.com officially entered the food delivery market in February, directly challenging Meituan and Ele.me. JD.com reported rapid growth, hitting 25 million daily orders by June 1 before ceasing to publish further data.
This isn’t the first time regulators have intervened. In May, the SAMR and four other government bodies held similar talks with the same three companies, urging them to engage in “fair and orderly competition.”
The latest regulatory move aligns with a broader policy directive from Beijing. The State Council in its 2025 Government Work Report explicitly called for a “comprehensive rectification of ‘involution-style’ competition,” identifying e-commerce as a key sector. The SAMR has defined such practices as including predatory pricing, abuse of market dominance and other actions that disrupt the market and lead to low quality and poor industry-wide profitability.
Contact reporter Han Wei (weihan@caixin.com)
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