China Tightens the Screws on E-commerce Platform Pricing Practices
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The Chinese government recently introduced new regulations targeting e-commerce platforms, explicitly prohibiting abusive practices such as the excessive use of algorithms to impose the lowest prices. These measures, jointly issued by the National Development and Reform Commission, the State Administration for Market Regulation, and the Cyberspace Administration of China, are set to take effect in 2026 and aim to address several long-standing issues, as competition among internet giants has often been detrimental to both consumers and merchants. These new regulations, compiled in a 29-article document, curb platforms’ ability to exploit their dominant scale and demand “lowest price” agreements from merchants. This readjustment is intended as a direct response to the relentless pressureexerted by certain platforms on sellers, forcing them to lower their prices at the risk of losing visibility, for example through traffic reminders or algorithm penalties. The main objective is to restore a degree of autonomy for merchants, particularly regarding setting the prices they wish to charge. China prohibits e-commerce platforms from imposing minimum prices and manipulating algorithms, strengthening regulation for a fairer market.Innovative and ambitious, the regulation also aims to redefine price transparency. Platforms will no longer be able to set
Consequences of the ban on abusive pricing practices With this ban, China
algorithms
. The end of these practices could well shake up industry leaders like Alibaba, JD.com, or Alibaba , who must now rethink their strategy and adapt to a rapidly changing economic landscape. These changes are occurring within a context of ongoing price wars, where platforms are vying to remain competitive. The goal is to retain customers by offering increasingly attractive prices, but often at the cost of squeezed margins for small retailers. Platforms will now have to consider alternative strategies to maintain their appeal, perhaps by improving complementary services or fostering innovation rather than imposing mandatory price reductions. As a result, retailers will be able to freely adjust their pricing without undue pressure to offer the lowest prices. This promises to transform the e-commerce platform market in China, encouraging both greater diversity of offerings and competition free from unfair practices.International Repercussions: Focus on France and Europe
Chinese regulations could have an impact beyond its borders, particularly in Europe, where several countries, including France, are concerned about the expansion of e-commerce giants. Faced with this influx of low-cost products, France recently decided to tax these imports, imposing “handling fees” on packages from Chinese platforms such as Temu, Shein, and AliExpress.
This tax aims to balance the competitiveness between local businesses and e-commerce giants from China.
Furthermore, the European Union itself, through its regulatory measures, seeks to strengthen its control over imports in order to ensure fair market conditions for local sellers. However, implementing such measures remains complex, as it must balance the protection of domestic businesses with respect for free trade.
Analysis of the measures taken by the European UnionThe EU is considering introducing a €3 tax on each shipment in response to the overabundance of low-cost parcels crossing its borders. China believes these measures are a covert way to curb the growth of its businesses globally. https://www.youtube.com/watch?v=U8kphONY1hg
Challenges surrounding the implementation of these new regulations
The long-term effectiveness of the ban on price fixing and algorithm abuse will depend primarily on the authorities’ ability to enforce these new rules. Monitoring and applying sanctions for non-compliance will be crucial to ensuring their effectiveness.
In parallel, platforms will need to invest in new technologies to comply with these requirements while continuing to optimize their value chain. It will be interesting to see how e-commerce platforms adapt and leverage alternative business models to compensate for the limitations imposed on some of their aggressive business practices. Finally, the balance between promoting fair trade and maintaining competitiveness in the international market remains to be found. While China is leading the way in terms of regulation, other regions of the world are expected to follow suit, also seeking to protect both consumers and local businesses, while avoiding protectionism that could harm global trade.
Region
Recent Measures Expected Impact China
Ban on low-price pricing and algorithm abuse
Reduction of unfair practices, empowerment of merchants
| France | Tax on parcels from China | Strengthening the competitiveness of local merchants |
|---|---|---|
| EU | Proposal for a tax on e-commerce parcels | Protection of internal markets while preserving free trade |
| Reduction of price gouging on platforms | Restoration of fairness in pricing strategies | Strengthening of international trade regulations |
| Adaptation of strategies by e-commerce platforms |