Photo: ChinaFotoPress / Getty Images
Some of China’s largest retailers are facing an official investigation for deceptive sales practices after a recent price war spiraled out of control. At the Wall Street Journal, Laurie Burkitt reports that one company’s promotion drove a race to the bottom. From the piece:
Beijing Jingdong sparked the latest price war last month after Chief Executive Liu Qiangdong said on his microblogging site that he would dispatch 5,000 agents to check prices at rival outlets and would undercut their prices at least 10%. Suning and Gome responded by agreeing to offer consumers lower prices on the companies’ e-commerce sites.
It worked at first; Beijing Jingdong’s 360buy.com sold upwards of 250 million yuan worth of goods in three hours.
But then the competing offers spread to Chinese social media and snowballed to the point where companies were apparently unable to offer stated discounts and ran out of items, sparking widespread anger.
China has many consumers, but not much in the way of consumer protection. Pressure on these retailers from slumping demand and rising inflation mean they occasionally resort to dubious pricing practices.
It’s a sign what’s at times still an awkward hybrid economy, even as China moves towards surpassing the United States as the world’s largest economy.
Rapidly changing prices are becoming an inevitable part of online retail. Combining that with brick and mortar outlets and the sheer size of China’s burgeoning consumer class created a complete disaster.
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