Caixin
Jan 14, 2021 07:34 PM
BUSINESS & TECH

Online Retailer Vipshop Targeted by Regulator for Second Time in Two Weeks

Founded in 2008, New York-listed online retailer Vipshop is known for selling discounted goods from big brands.
Founded in 2008, New York-listed online retailer Vipshop is known for selling discounted goods from big brands.

Two weeks after it was fined for price manipulation, discount online retailer Vipshop Holdings Ltd. has found itself in the market watchdog’s crosshairs again as a campaign to rein in e-commerce players continues.

According to a report from the official Xinhua News Agency, the State Administration for Market Regulation (SAMR) is probing “unfair competitive behavior” by the company and Guangzhou VIP Information Technology Co. Ltd. — a Guangzhou-based firm owned by Vipshop’s co-founder Shen Ya. Neither the report nor the regulator offered any details as to the alleged anticompetitive actions.

The company will “actively cooperate with the regulator’s investigation,” a company representative told Caixin, and “all business is currently going on as usual.”

The watchdog in December handed out 500,000 yuan ($77,360) fines to Vipshop and its peers JD.com Inc. and Alibaba’s Tmall. The penalties came after the watchdog received complaints about manipulative behavior such as price hikes ahead of November’s “Double Eleven” shopping extravaganza, when discounts are used to drive consumer frenzy.

The new investigation comes as part of SAMR’s broader effort to clamp down on the booming e-commerce sector, to which end it issued antitrust draft rules in November last year that aim to rein in the dominance of online retailing goliaths.

The market regulator said the rules aim to stop monopolistic practices, lower compliance costs for law enforcement and business operators, protect market fairness, ensure the interests of consumers and society at large, and encourage the healthy and continuous development of the platform economy.

Founded in 2008, the New York-listed online retailer is known for selling discounted goods from big brands, including clothes, cosmetics, baby formula and home appliances. It claims to have 340 million registered members and said it had 60.5 million active users in 2018.

Internet giant Tencent Holdings Ltd., Vipshop’s second largest shareholder, increased its stake in Vipshop to 9.6% through a series of open-market purchases last year. Tencent and JD.com struck a deal with Vipshop in 2017 to jointly invest $863 million in the company. After the transaction, Tencent held 7% and JD.com owned 5.5%.

Over the past two years, Tencent has increased its holding in Vipshop three times. JD.com also increased its holding to 7.6% after two purchases.

China has more online shoppers than any other country, according to a September report from data provider Statista, with more than 710 million online shoppers and about 34.8 trillion yuan of goods were sold online in 2019.

Contact reporter Anniek Bao (yunxinbao@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)

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