China’s Big Tech firms set for fierce price wars as business lines blur, with JD taking on PDD while Douyin squares up to Meituan
- From JD to ByteDance, Chinese Big Tech firms are squaring up for price wars as they seek to eke out more growth in crowded markets
- Consumers expected to benefit from increased tech competition as lines between business segments blur
Just as the dust settles on the end of a long regulatory crackdown, analysts say China’s Big Tech firms now face a new challenge – a period of brutal price wars in a sector with increasingly blurred business lines, pointing to thinner profits and a tough outlook ahead.
JD.com, the e-commerce giant controlled by its billionaire founder Richard Liu Qiangdong, is lumbering up for the first round of these price wars after setting aside 10 billion yuan (US$1.45 billion) in subsidies for consumers starting from March, according to people familiar with the matter.
Under this programme, JD customers will be entitled to receive “compensation” if they can find the same product on sale at a lower price on competitor platforms such as Alibaba Group Holding’s Tmall or Pinduoduo, the budget shopping app owned by Nasdaq-listed PDD Holdings.
JD’s aggressive promotion – spurred on by Liu himself who has castigated senior executives for not focusing on business basics – will be the Beijing-based company’s second attempt to gain a bigger slice of the country’s lower-tier markets, a stronghold for Shanghai-based Pinduoduo.
JD.com and PDD did not immediately respond to requests for comment.