Beijing Cracks Down on Chinese Tech Firms Using Price Wars to Gain Market Share
China's tech giants are facing a new regulatory reckoning. Beijing is taking aim at one of the industry's oldest tactics: the price war.
The End of the Discount Era?
For years, deep-pocketed platforms have slashed prices to zero—or even paid users—to crush competition and lock in market dominance. It's a playbook that built empires in ride-hailing, food delivery, and e-commerce. Now, regulators are calling time on what they see as anti-competitive behavior that stifles innovation and hurts consumers in the long run.
Regulatory Recalibration
The move signals a shift from targeting sheer size to scrutinizing specific market behaviors. The message is clear: growth at any cost is no longer acceptable. Firms must compete on service quality, technology, and real innovation—not just their war chest's depth. Expect tighter scrutiny on user acquisition campaigns, loss-leading strategies, and merger approvals.
Market Fallout and Future Bets
Short-term pain for some hyper-growth stocks is likely as investor models factor in higher customer acquisition costs. But it could level the playing field for smaller, nimbler players with better tech. The cynical finance take? Another reminder that in China, the ultimate market maker isn't on the trading floor—it's in a government office drafting the next rulebook.
Ctrip joins food delivery groups under investigation
Ctrip is now under official investigation, which SAMR made public on Wednesday, saying that it came right after earlier probes into Meituan and Alibaba’s delivery businesses.
Regulators are trying to stop what’s being called “involution;” basically, when companies go all-in on cutting prices and launching discounts just to stay relevant, without any real long-term plan. It’s a problem across China, from tech to electric cars to solar panels.
Trip.com, Ctrip’s parent company listed in Hong Kong, dropped over 20% in the past week. Ctrip put out a statement saying it’ll cooperate with the probe and that its operations are still running like normal.
SAMR’s new energy isn’t coming out of nowhere. For years after the 2021 tech crackdown, enforcement slowed down. Companies had room to breathe. But now, things are ramping up again. Experts say SAMR feels more confident now, but it’s still understaffed.
So instead of launching complex cases, it’s calling in execs for warnings and asking the State Council (China’s top government body) to support its efforts publicly.
Price war in food delivery pushes regulators to act
The food delivery space is where this really exploded. Last year, Alibaba and JD.com started crowding into Meituan’s territory. Everyone started throwing money at discounts; cheap burgers, free drinks, whatever it took. Platforms bled money. Restaurants had to slash prices too.
Regulators called in the platforms for a meeting in July and told them to chill. But the battle didn’t stop. Subsidies kept flowing all summer. One executive said it’s tough to end the fight unless the government starts handing out real fines. But officials are nervous. These companies hire millions of workers and feed thousands of restaurants, so they’re treading lightly during a weak job market.
Chelsey Tam at Morningstar said the big discounts seem to be slowing down now, but it took too long. And that lag showed how bad the relationship between tech and the regulators has gotten. Tensions are high.
Last month, things got physical. SAMR staff showed up at PDD Group’s Shanghai office. They were there to gather info on pricing and how suppliers were being treated.
According to local media, a fight broke out between employees and regulators during the inspection.
One source allegedly said SAMR saw PDD’s behavior as arrogant. That kind of reaction could lead to even harsher action later. So far, no fine’s been announced. But if PDD keeps acting like this, it’s probably next in line.
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