Caixin
Jun 18, 2019 07:49 PM
BUSINESS & TECH

Home Appliance Firm Claims Alibaba Hid Its Products After Pinduoduo Partnership

A Tmall shipping warehouse in Hangzhou, East China’s Zhejiang province, on Nov. 11. Photo: VCG
A Tmall shipping warehouse in Hangzhou, East China’s Zhejiang province, on Nov. 11. Photo: VCG

One of China’s leading microwave manufacturers has accused Alibaba Group Holding Ltd. of blocking traffic to its products and demanding it choose between the e-commerce giant and up-and-coming rival Pinduoduo Inc.

The claims made by Guangdong Galanz Group Co. Ltd. come around two months after Pinduoduo’s founder complained of a practice in the sector that he described as “forced exclusivity.”

Galanz said Monday in a series of social media posts that over the last three weeks some of its products have seemingly vanished from Alibaba’s two domestic e-commerce platforms — Tmall and Taobao. In one, Galanz posted footage dated June 6 that seemed to show that several of its Tmall stores could not be found on the platform’s search function at that time.

“A Tmall manager in charge of the platform’s merchants’ business told us that we need to choose between Alibaba and Pinduoduo,” Wu Yi, who is in charge of Galanz’s domestic sales, told Caixin.

Galanz claimed that this seriously affected its sales in the run-up to the annual “618” online shopping festival on Tuesday. According to a report from brokerage TF Securities, Galanz was one of the top ten sellers of home appliances during Alibaba’s most recent “Singles Day” shopping bonanza in November.

The company said it has demanded an explanation from Alibaba.

A spokesperson from Tmall told Caixin that searches for keywords related to Galanz return results as normal. Galanz’s flagship Tmall store was discoverable through the platform’s search function as of the time of publication.

A request for comment sent to Alibaba was not met with an immediate response.

Late last month, during a visit by the microwave-maker’s chairman to the e-commerce firm’s headquarters, Galanz and Pinduoduo announced a long-term strategic partnership. Galanz had previously partnered with Pinduoduo to sell products on the latter’s platform, but Galanz alleges that last month’s visit was the spark that prompted Alibaba to move against it.

The incident came as China’s dominant e-commerce company is facing a challenge from an increasing competitive Pinduoduo, which has become China’s third largest e-commerce player just four years after its establishment. The company — which listed in the U.S. last year — gained prominence largely due to its group buying model, under which shoppers are encouraged to buy in bulk alongside their friends and relatives in order to access discounts.

In April, Pinduoduo’s founder and CEO Colin Zheng Huang lashed out at the sector’s unspoken rule of “forced exclusivity,” in which merchants are forced to choose only one e-commerce company to work with. Though he didn’t name any names, his comments were widely seen as a swipe at Alibaba.

Founded in 1978 in Foshan, South China’s Guangdong province, Galanz is one of China’s leading home-appliance makers and one of the world’s largest suppliers of microwaves. The company also sells appliances including refrigerators, washing machines and air conditioners.

Contact reporter Mo Yelin (yelinmo@caixin.com)

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