Caixin
May 28, 2021 07:45 AM
BUSINESS & TECH

Alibaba-Backed Grocer Nice Tuan Fined for Pricing Fraud

The market regulator also ordered Nice Tuan to suspend business operations in Jiangsu province for three days starting Friday
The market regulator also ordered Nice Tuan to suspend business operations in Jiangsu province for three days starting Friday

China’s market regulator slapped a 1.5 million yuan ($235,302) fine on Alibaba Group-backed community group-buying platform Nice Tuan, citing violations including product dumping and deceptive pricing.

The State Administration for Market Regulation (SAMR) also ordered Nice Tuan to suspend business operations in Jiangsu province for three days starting Friday for rectification. The penalty came about two months after the regulator fined Nice Tuan on similar charges in a broader crackdown on community group-buying sites’ anti-competitive practices.

Community group buying has exploded in popularity in China since last year. The services often involve bulk grocery orders coordinated by community leaders who collect neighbors’ shopping orders through group chats or mini-programs on the WeChat platform.

Tech giants from Alibaba to Pinduoduo to Meituan and Didi Chuxing have all dived headfirst into the sector to tap growing demand for door-to-door fresh food deliveries for people stuck at home during the pandemic.

To gain market share, platforms have engaged in fierce competition and price wars that caught the attention of regulators, which warned that such practices put small business owners and vegetable growers in unfair competition.

In December, the SAMR and the Ministry of Commerce summoned several major players in the market and issued a list of group-buying business restrictions. The regulators said the platforms should not sell below cost for the purpose of monopolizing the market, adding that a price war has “put pressure on employment.”

In early March, the SAMR fined five community group-buying platforms for “improper pricing behavior.” Nice Tuan, Didi’s Chengxin Youxuan, Pinduoduo’s Duo Duo Maicai, and Meituan Select all got the maximum penalty of 1.5 million yuan, while Tencent-backed Shixianghui was fined 500,000 yuan.

In the latest punishment issued to Nice Tuan, the market watchdog said Nice Tuan sold products below cost to squeeze out competitors and deceive customers with misleading pricing.

For instance, Nice Tuan offered a type of pear in March at 0.99 yuan per 250 grams, even though its cost was 3.89 yuan, according to SAMR.

Nice Tuan also advertised a liquor as being discounted from 2,999 yuan to 1,199 yuan to lure shoppers. However, the regulator said the original price of the liquor was 1,199 yuan.

Such practices “undermine the legitimate rights and interests of small and medium-sized enterprises,” said the SAMR, ordering Nice Tuan to make rectification.

Established in 2018, Nice Tuan raised $750 million in early April from investors led by Alibaba and DST Global. Alibaba also took part in the company’s previous two funding round in 2019 and 2020.

Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bobsimison@caixin.com)

Download our app to receive breaking news alerts and read the news on the go.

Follow the Chinese markets in real time with Caixin Global’s new stock database.

You've accessed an article available only to subscribers
VIEW OPTIONS
Share this article
Open WeChat and scan the QR code