China’s top regulator launches probe into e-commerce platform Vipshop over alleged ‘improper competition behaviour’
- The State Administration for Market Regulation announced the probe in a one-line statement on its website without providing further details
- Vipshop, JD.com and Tmall were fined in December by SAMR for ‘pricing irregularities’
China’s top market regulator has launched an investigation into e-commerce platform Vipshop Holdings over “alleged improper competition behaviour”, as Beijing continues to tighten antitrust regulation in the country’s tech sector.
However, SAMR also posted a statement on its official WeChat account: “From internet giants with complex business categories to relatively small and vertical e-commerce platforms, the recent moves of the national regulatory authorities have sent a clear message: no matter whether it is a large or small business, they will be treated equally under market supervision rules.”
Vipshop, which counts Tencent Holdings and JD.com as investors and is based in the southern Chinese city of Guangzhou, is an online discount retailer founded in 2008 that offers branded products to consumers through flash sales. As of the third quarter of 2020, it had daily active users of 43 million and a quarterly order volume of 172 million.
“Vipshop will actively cooperate with the regulator on the investigation,” the New York-listed company said on Weibo, China’s equivalent of Twitter, on Thursday. The company did not immediately respond to a request for further comment.
The probe is the latest step in an ongoing regulatory crackdown by Beijing aimed at reigning in China’s tech giants, which have expanded their role in China’s economy in recent years, amid increasing digitisation and as the pandemic accelerates online shopping, entertainment and working from home. SAMR has said its priority in 2021 and beyond is to “enhance anti-monopoly [rules] and prevent the disorderly expansion of capital”.
In December SAMR said it had fined the operators of Vipshop, along with Alibaba Group Holding’s Tmall and JD.com 500,000 yuan (US$77,000) each for “pricing irregularities” – the maximum penalties for such an offence under the country’s current regulations.
Vipshop, which runs the Vip.com e-commerce platform, was found to have seven price irregularities where the company could not prove that the product sold, as claimed, had the “lowest price” on the internet.
Chinese internet giant Tencent and the country’s second-largest e-commerce platform JD.com invested around US$863 million in Vipshop in December 2017.
At the same time, both companies entered a strategic agreement with Vipshop under which Tencent granted it access to its payment tool WeChat Pay, and JD.com granted it access to JD.com’s mobile app and shopping application on WeChat. By the end of 2019, Tencent and JD.com held 9.6 and 7.5 per cent of the US-listed company respectively.
Alibaba is the owner of the South China Morning Post.
