After fishy price war, Chinese ecommerce giants subject to government investigation

After fishy price war, Chinese ecommerce giants subject to government investigation

China’s National Development and Reform Commission (NDRC) has initiated a probe against three of the country’s largest online retailers: Jingdong Mall, Suning Appliance and Gome, after suspicious tactics were detected in a public price war between the stores, China Daily reports.

The NDRC is tasked with coordinating and regulating China’s economic development. It also has authority to “deal with price monopoly and activities that breaches the price regulations, according to its website.

The three retailers were caught up in tense price competition last month after the companies declared on Sina Weibo that they would beat each other’s prices. With multiple parties promising to have the best prices, an impossible situation arose.

Suning said late last month that it is engaged in a “long war of attrition” with Jingdong and has gained momentum as a result of the face-off.

The NDRC subsequently found evidence that some of the shops had misled customers by raising prices before the discount campaigns. The involved companies have been ordered to fall in line and provide self-examination and reform during the investigation.

Jingdong, which is believed to have started the kerfuffle, has agreed to “actively cooperate” with the investigation, while a Suning vice president admitted the company is examining what happened internally.

While the trick of raising prices ahead of a sale is widely known to consumers in China, the high-profile nature of last month’s price war might be enough to attract regulators. Shortly after the fiasco erupted, the country’s Ministry of Commerce promised to take an active role in guiding the growing ecommerce market.

Image via Flickr / pixieclipx

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