30-Cent Bubble Tea, $9.9k EVs: China Acts to Curb Price Wars

Law Amended to Regulate Price-Slashing Practices That Are Detrimental to Economy

- Joyce ZK Lim

China has introduced legal measures to halt businesses' race to the bottom, as it continues to crack down on price-cutting practices that are hurting the economy.

The country's top legislative body on June 27 passed amendments to a law against "unfair competition," including one that prohibits platform operators from compelling their vendors to sell items at below cost price.

The amended law, state broadcaster CCTV said on June 28, will regulate "involutional competition" such as the "frenzied lowering of prices" on e-commerce platforms, and food delivery platforms' use of hefty subsidies to wrest a share of the market.

Coffee and bubble tea, for instance, can sell for as little as 1.68 yuan (30 Singapore cents) after discounts on JD.com on the 18th day of each month, as the retail giant doles out 10 billion yuan in subsidies to muscle into the food delivery business.

Platform operators found to have compelled vendors to sell items at less than cost price could now be fined as much as 2 million yuan in serious cases.

"Involution," or