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Exclusive | ‘Made in China, sold on Amazon’ merchants scramble to minimise losses after US platform closes over 50,000 Chinese shops

  • Several Chinese merchants failed to agree to a legal strategy to challenge Amazon’s ban of their shops for alleged fake reviews
  • Amazon, whose terms do not allow for class-action lawsuits, is holding onto millions of dollars in assets belonging to the e-commerce sellers, lawyers say

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In this photo illustration a woman looks through a webpage of the online retail giant Amazon displaying Chinese-made doormats with the Sri Lankan flag design for sale in Colombo on March 12. Amazon has been cracking down on Chinese merchants this year, banning those that violate its rules like paying for positive reviews. Photo: AFP
Iris Deng
Chinese merchants locked out of selling on Amazon.com are weighing their legal options and looking to Beijing for help after the world’s largest e-commerce platform shut down more than 50,000 stores from the country over banned practices such as commissioning fake reviews.

A group of more than 20 mid-sized and large companies operating in the “made in China, sold on Amazon” market explored the possibility of teaming up in a jointly filed lawsuit against the Seattle-based online retailer, but the plan was aborted last week after the sellers failed to reach an agreement about their strategy and demands, said Yang Zongqiang, the lawyer who represented the group for Shenzhen-based Daxin Legal Service.

“While [Amazon] has the right to suspend the stores’ operations, it has no right to hold their goods and capital, which will lead to further damage to the merchants,” Yang said. “Many of the merchants started to pin their hopes on the [Chinese] government solving the problem for them, which is quite unreasonable.”

It is not known whether the affected merchants have directly reached out to the national government, but there has been some acknowledgement of their troubles. Last week, Li Xingqian, director of the Foreign Trade Department at the Ministry of Commerce, said the cross-border e-commerce industry is “going through some growing pains” as a result of Amazon’s decision, but he added that China would help its companies comply with international standards and protect their “legitimate rights and interests”.
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Amazon’s crackdown on review abuse and other violations has hit some of the biggest Chinese sellers on the platform.

While Amazon officially banned “incentivised reviews” in 2016 and has regularly taken action against such violations, the scale of the recent crackdown is unprecedented. The ban on tens of thousands of seller accounts has resulted in the loss of more than 100 billion yuan (US$15.4 billion) for the industry, according to a report released last week by the Shenzhen Cross-Border E-commerce Association.

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Since May, Amazon has banned some of the biggest Chinese brands on its platform, including Aukey, Mpow and 340 stores owned by Shenzhen Youkeshu Technology Co. Youkeshu said more than 130 million yuan of its funds have been frozen by the e-commerce giant.
Shenzhen-based Sunvalley also disclosed at the end of June that three of its brands – RAVPower power banks, Taotronics earphones and VAVA cameras – were suspended for offering gift cards to customers willing to write positive reviews about their purchases.
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