China e-commerce stocks sink as Beijing cracks down on “618” discount wars
China’s online retailers are experiencing a market drop after Beijing regulators cracked down on “618” promotional practices for what it called misleading advertising and unclear promotion rules.
Shares of Chinese e-commerce companies including JD.com and PDD Holdings are falling after Beijing regulators criticized major online platforms for aggressive discount campaigns ahead of China’s annual June 18 shopping festival, referred to as “618.” The drop follows a multiday sell-off triggered by fears of aggressive government-backed AI competition.
The Beijing Municipal Administration for Market Regulation said in an official statement that it had summoned representatives from Alibaba’s Taobao and Tmall, JD.com, PDD Holdings, Douyin, and Xiaohongshu to discuss a range of promotional practices tied to the country’s biggest midyear shopping event.
Among the issues cited were misleading advertising, unclear promotion rules, and insufficient disclosure surrounding the increasingly popular “100 billion yuan subsidy” campaigns tied to the 100 billion yuan ($15.4 billion) in central government spending intended to bolster domestic demand by subsidizing consumer purchases.
These campaigns are heavily marketed discount programs run by platforms such as Alibaba, JD.com, and PDD, and suggest platforms are collectively spending billions of yuan to lower prices on popular products. Regulators argued that several platforms failed to clearly disclose how much money was actually being contributed by the platforms themselves versus merchants.
The criticism comes as China’s e-commerce giants have spent the past two years engaged in an increasingly aggressive battle for market share. Companies have rolled out ever-larger subsidy programs, discounts, and coupons in an effort to attract consumers amid a sluggish economic recovery and weaker household spending.
This fresh e-commerce regulatory pain builds upon a market sell-off that began on Monday. Beijing was reportedly considering spending roughly $295 billion (2 trillion yuan) over the next five years building a nationwide network of AI-focused computing hubs. The plan would prioritize domestic technology suppliers and expand access to computing power across the country.
The report sparked concerns that a large-scale, state-backed build-out of computing capacity would crowd out commercial operators and trigger pricing pressure across the sector. Alibaba shares had already dropped around 4% over the past two trading sessions.
