Chinese Authorities Issue Recent Warning Over Fierce Competition Among Delivery Platforms
It has been revealed that a former high-ranking executive at a Chinese delivery platform company was arrested on charges of receiving tens of billions of won in bribes. This measure comes as Chinese authorities are seeking to rectify the cutthroat competition in the food delivery industry.
Chinese yuan banknotes filled in a travel bag. Screenshot of WeChat from the Shanghai Public Security Bureau Economic Crime Investigation Unit. Photo by Yonhap News.
According to Yonhap News on the 25th (local time), citing the Shanghai Public Security Bureau's Economic Crime Investigation Division, authorities announced that three individuals, including Han Liu, the former CEO of the delivery platform Ele.me, were arrested last month on suspicion of receiving more than 40 million yuan (approximately 7.7 billion won) in bribes from partner companies.
Han, who was head of logistics at Ele.me, the second-largest delivery platform in China, and others allegedly used their authority over logistics management and partner selection. They received bribes from suppliers on more than 30 occasions from July 2023.
Authorities also released photos showing bundles of cash found in a car trunk and a suitcase packed with 100-yuan bills (about 19,000 won per bill).
This arrest took place last month, before authorities officially began to crack down on competition in the delivery platform industry. Authorities stated that further investigations are currently underway.
The Gupa Newspaper reported, "Ele.me previously stated that it discovered Han's criminal activities through an internal investigation and voluntarily reported them to the public security authorities."
The Chinese food delivery platform market has long been dominated by Meituan and Ele.me, but with JD.com joining in February this year, the three companies have engaged in all-out competition, not only cutting product prices but also competing to attract delivery workers. There have even been cases of "zero-yuan delivery," where not only delivery fees but also food are provided for free.
As a result, Chinese food and beverage associations and local media have voiced opposition to this cutthroat competition.
It has been pointed out that such overheated competition is fueling deflation (falling prices amid economic stagnation) in China and making it difficult to improve working conditions.
The State Administration for Market Regulation, China's market watchdog, held a meeting on the 18th with Ele.me, Meituan, and JD.com, warning them to compete fairly.
On the day the arrest was made public, the National Development and Reform Commission and the State Administration for Market Regulation released a draft amendment to the "Price Law of the People's Republic of China." Public comments will be accepted until the 23rd.
The draft includes a provision prohibiting platforms from engaging in below-cost dumping sales or forcing other businesses to do so, in order to drive out competitors or monopolize the market.
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