The realm of eCommerce has reached a point of change. It seems that this online space won’t be a monarchy anymore… the tech giant Alibaba is under attack. The king of the realm, Alibaba’s e-commerce platform Tmall, which occupies 50% of the market, has in fact been targeted by the government. On December 24, China started regulating the competitive practices of the biggest eCommerce platform in the country.
Why is China investigating Tmall and Alibaba?
There are not many details about the matter. China opened an investigation, accusing Alibaba of forced exclusivity”. Also, it summoned the executives of Alibaba’s financial sister Ant Group. Four financial regulatory agencies attended the meeting with Ant Group.
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What is “forced exclusivity”?
The term is used to indicate bad practices inheriting the competitive behaviors of companies when force their stakeholders to have only one platform as an intermediary. In this case, Alibaba has been accused of forcing its merchants to only sell on its platform.
PDD, Meituan, and JD have argued a lot about this topic with their rival, but Alibaba’s PR head Wang Shuai accused the competitors to make use of such bad charges for influencing public opinion.
How does China want to regulate the online market?
According to the Made in China 2025 Masterplan, the China Standards 2035, and the Internet Plus policy initiatives, the application of the internet will facilitate every aspect of Chinese work and daily life. In this technologically advanced system, e-commerce platforms have a key role, especially the biggest ones.
However, even if well-known e-commerce giants have made a large contribution to the digital development of the country, their uncontrolled powers are disturbing the government, which wants to increase penalties for monopolies and unfair competition.
China’s State Administration for Market Regulation indeed released the draft of the Guidelines for Anti-monopoly on November 10, a document that refers to the currently under revision Anti-Monopoly Law.
What are the Alibaba and market reactions?
Alibaba said to collaborate with the regulators, but it has also specified that there will not be any variation of its business operation. Market reaction to the news was quite negative: Hong Kong’s share decreased by 8,1% on December 24.
But who are the titans of the online market in China?
While China was keeping its eyes close, more than one technology company has been able to become extremely big. Besides Alibaba, there are JD and Pinduoduo in the digital e-commerce field, while social media and mobile payment are under the Tencent domain. Meituan is the king of the food delivery and Didi Chuxing of the ride-hailing.
All these characters have changed the Chinese market, build high barriers to their direct competitors, and, at the same time, created millions of opportunities for entrepreneurs and an easier life for Chinese citizens. Open a business in China is a stimulating challenge for companies since they should be present on the different digital platforms in order to be competitive.
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