Beijing to crack down on Chinese tech firms using price wars to gain market share

Source: CryptoNewsNet Original Title: Beijing to crack down on Chinese tech firms using price wars to gain market share Original Link: China’s government is moving to stop tech companies from engaging in destructive price wars to capture market share. The main watchdog, SAMR (State Administration for Market Regulation), is cracking down on what regulators call “involution” — when companies slash prices and launch aggressive discounts without long-term strategy, just to stay competitive.

Ctrip under investigation

Ctrip, China’s largest travel booking platform, is now under official investigation following earlier probes into food delivery services. SAMR announced the investigation this week, following earlier actions against Meituan and Alibaba’s delivery businesses. Trip.com, Ctrip’s Hong Kong-listed parent company, dropped over 20% in the past week.

This trend isn’t limited to travel booking. Price wars are raging across multiple sectors — from tech to electric vehicles to solar panels. Regulators are trying to break this cycle, which they view as economically damaging, especially with deflation pressuring the economy for over three years.

Food delivery sector triggers enforcement

The food delivery space exemplifies the problem. Last year, Alibaba and JD.com crowded into Meituan’s territory, triggering an all-out subsidy war. Platforms bled money while restaurants were forced to slash prices. Regulators called in the platforms for a warning in July, but subsidies continued flowing throughout the summer.

Enforcement has intensified recently. Last month, SAMR staff visited PDD Group’s Shanghai office to investigate pricing practices and supplier treatment. According to local media, a physical altercation broke out between employees and regulators during the inspection — a sign of escalating tensions between tech companies and authorities.

Why now?

After the 2021 tech crackdown, enforcement had slowed, giving companies breathing room. But SAMR is now ramping up efforts again, showing more confidence despite being understaffed. Rather than launching complex legal cases, regulators are calling in executives for warnings and seeking public support from the State Council.

However, officials are treading carefully. These tech platforms employ millions of workers and serve thousands of restaurants, making regulators cautious during a weak job market. While price war intensity appears to be slowing, experts say the relationship between tech and regulators remains tense.