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It is understood that today, the State Administration for Market Regulation (SAMR) imposed administrative penalties on five community group buying companies, including Orange Heart优选 (Beijing) Technology Development Co., Ltd., Shanghai Yucan Information Technology Co., Ltd., Shenzhen Meituan优选 Technology Co., Ltd., Beijing Shihui Technology Co., Ltd., and Wuhan Qizhong Meiwei Technology Co., Ltd., for unfair pricing practices.
Specifically, Orange Heart优选 (Beijing) Technology Development Co., Ltd., Shanghai Yucan Information Technology Co., Ltd., Shenzhen Meituan优选 Technology Co., Ltd., and Beijing Shihui Technology Co., Ltd. were each fined 1.5 million yuan, while Wuhan Qizhong Meiwei Technology Co., Ltd. was fined 500,000 yuan.
In the second half of 2020, some community group buying companies used their financial advantages to heavily subsidize prices, disrupting market order and drawing widespread social attention.
Based on price monitoring clues, the SAMR filed cases against the five companies for suspected unfair pricing practices: Orange Heart优选 (Beijing) Technology Development Co., Ltd. (Orange Heart优选), Shanghai Yucan Information Technology Co., Ltd. (Duoduo Maicai), Shenzhen Meituan优选 Technology Co., Ltd. (Meituan优选), Beijing Shihui Technology Co., Ltd. (Shihui Tuan), and Wuhan Qizhong Meiwei Technology Co., Ltd. (Shixiang Hui).
Upon investigation, the four companies—Orange Heart优选, Duoduo Maicai, Meituan优选, and Shihui Tuan—were found to have sold goods below cost to exclude competitors or monopolize the market, disrupting normal production and operation order, and harming the legitimate rights and interests of other operators, in violation of Article 14(2) of the Price Law of the People's Republic of China.
All five companies were found to have used false or misleading pricing methods to induce consumers to transact with them, violating Article 14(4) of the Price Law.
-01- 1.5 Million: Too Much or Too Little?
As soon as the news broke, industries that had been forced into the community group buying quagmire and had long suffered from it couldn't help but pound their chests and shout "Karma!" The People's Daily had warned earlier, and the "Nine No's" policy followed as a warning, yet they still blatantly engaged in "shady business." As the saying goes, "Justice has a long arm!"
However, when emotions cooled down and we carefully considered the SAMR announcement, there seemed to be more to it:
Fines of 500,000 or 1.5 million yuan for unfair pricing are not small amounts. For small and medium-sized private enterprises, such a fine could be a heavy blow. But in the community group buying arena, companies burn through hundreds of millions of yuan daily on manpower, materials, and finances just to maintain their current operations.
For the giants, such fines are just a drop in the bucket. "You fine yours, I burn mine, we don't interfere with each other."
Therefore, the SAMR held a press conference specifically on this administrative penalty, emphasizing three key points:
First, the impact on normal market competition order is significant. Using unfair means to squeeze the offline community economy can easily lead to chaos and affect social stability. It has a considerable impact on the normal operations of farmers' markets, bazaars, and small vendors.
Second, the social harm is severe. Large internet platforms have significant influence in the industry, with huge user bases and market influence. Their illegal actions are rapidly amplified by the internet's scale and network effects.
Third, the circumstances are egregious. After the SAMR's administrative guidance meeting to regulate community group buying order, these companies reduced subsidies somewhat but did not fully rectify their practices.
Furthermore, it was specifically noted that in the next step, the SAMR will actively respond to social concerns, strengthen research and investigation, and monitor community group buying market dynamics. It will innovate regulatory methods, increase law enforcement efforts, and legally regulate the community group buying market order to protect the legitimate interests of other operators and the lawful rights of the people, creating a fair and orderly market environment.
In this light, regardless of whether the "Nine No's" were implemented before, under the "might" of the SAMR's maximum fines under the Price Law, they must now be enforced. After all, fines are never the goal; they are just a means.
Therefore, industry insiders joked: "This amount, neither big nor small, is low damage but high insult to the giants."
-02- The Biggest Fish That Got Away?
So why did Xingsheng (Xingsheng优选) escape unscathed? We agreed to fight together, but after the fight, you stand out? The author interviewed Chen Haichao, an expert in the new retail industry, and his views are as follows:
First, whether in terms of scale or the timing of entering community group buying, Xingsheng优选 is the undisputed veteran. In the entire development of community group buying, it was the entry of internet giants that distorted the track, not the competition itself that led it astray. The burning of capital artificially accelerated the growth of community group buying.
As a veteran player, Xingsheng优选 is relatively more cautious and compliant in adhering to laws and regulations. In fact, not just Xingsheng优选, but in a sense, all the old players in the track are victims of the community group buying war.
Second, Xingsheng优选 originated from Furong Xingsheng. In recent years, offline businesses have been severely impacted, and the headquarters lacked the substantial funds and energy to invest in new business expansions. As a result, the Xingsheng优选 project was even halted internally several times during its exploration.
According to Qichacha data, before JD.com's investment, Xingsheng优选's total financing was only about $1 billion. Its own capital and energy were insufficient to engage in "illegal" operations.
Third, Hunan Province now has three calling cards: Wenheyou, Chayanyuese, and Xingsheng优选. Xingsheng has become a label for Hunan...
Additionally, according to industry media Kaiman:
On Duoduo Maicai's mini-program, each product's price is marked with "Direct reduction of XX yuan" in a large red box, and above it, a flame progress bar shows "XX% claimed."
On Meituan优选's mini-program, each product price has labels like "XX% discount" and "New customer price," and above it shows the product's ranking on the hot-selling list or "XXXX people nearby have ordered."
In contrast, Xingsheng优选's prices have corresponding explanations at the bottom, with the original price box on the right noting "Reference online mall" or "Reference manufacturer pricing" to remind consumers.
This administrative penalty by the SAMR against the giants further confirms the saying in the track: "You can't avoid the pitfalls you're destined to encounter."
-03- What Manufacturers Think
Beyond the voices within the community group buying track, the author also spoke with Wang Hua (pseudonym), a distributor for a well-known milk brand, to get a frontline perspective on this penalty. Wang Hua got straight to the point: "The penalty was inevitable, even later than I expected."
As early as the end of last year, his company issued a "Notice on Prohibiting Supply to E-commerce Platform Community Group Buying," explicitly banning the brand from supplying to community group buying channels.
Distributors received internal messages that violators would be fined 100,000 yuan. Even if goods leaked through secondary distributors, they would "trace the batch number, not the person."
Community group buying operates on traffic logic and bestseller thinking, requiring rapid volume. This is why fresh produce and frozen goods, being non-standard products, are popular on platforms—they lack clear pricing benchmarks.
Conversely, users don't have a clear price concept for non-standard products, so sensitive standard products like Jindian, Telunsu, and Red Bull are needed to hit users' pain points and drive large-scale traffic.
But such low-price dumping inevitably disrupts the existing price system. In previous exchanges with other distributors, they also said, "The market is in a mess. If this continues, community group buying will become as hated as a rat crossing the street."
So, if manufacturers and distributors work together, why is the market still chaotic?
Wang Hua gave an example: "Mengniu and Yili have both explicitly notified their agents to prohibit supplying platforms, and we haven't supplied them for a long time. But their products keep appearing on the platforms in small quantities, continuously.
After investigation, we found that platform buyers were posing as secondary distributors to purchase from primary wholesale markets. They wouldn't admit they were from platforms; they'd say they were from restaurants. They bought at high prices and sold at discounted prices to attract traffic. It's impossible to guard against."
Many manufacturers have shifted from a "keep in touch" wait-and-see attitude to explicit resistance. Some brands that "actively embrace" community channels are those that never intended to sell offline in the first place; they've always been online businesses.
For first-line brands like Coca-Cola, Weilong, and Arawana, whose capillaries are deeply rooted in distribution channels, community group buying is a headache.
Wang Hua added, "I previously cooperated with community group buying, intending to put lesser-known sub-brands or slow-moving goods on the platform to try. But this kind of new product promotion is something we wouldn't even do ourselves, and platforms are even less willing to do the hard work. Platforms want to sell your first-line products—whatever sells well—so it eventually fell through."
Now that the "Nine No's" rules are formally implemented, the community group buying track will gradually return to a healthy state, at least not as blatant or crude as before. I believe more manufacturers will gradually be willing to cooperate with community group buying.
However, most offline first-line brands will remain wait-and-see until the track truly matures and stabilizes. And if these leading brands don't participate, platforms alone burning money won't make the track big.
As for the voice of first-line distributors, Wang Hua said, "I'm a businessman, but these internet platforms don't seem like business people. From their labor costs, logistics costs, operational costs, and product gross margins, I can tell they're not doing business; they want to grow quickly and then get acquired by capital. Their original intention is impure."
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