Beijing Steps In To Stop Brutal Online Discount Wars

China rolled out sweeping new rules on Wednesday to rein in aggressive competition in e-commerce, banning major platforms such as Alibaba Group Holding Ltd. (NYSE:BABA) from forcing online merchants into promotions or deep discounts.

The regulations, which take effect in February, follow repeated warnings from Beijing to Alibaba, JD.com Inc. (NASDAQ:JD), and Meituan (OTC:MPNGY) to stop pressuring sellers with pricing tactics that regulators say disrupt market order.

Authorities also issued separate rules barring online influencers from making misleading or false claims, Bloomberg reported on Wednesday.

Alibaba and JD.com shares fell on Wednesday as investors weighed the impact of tighter oversight.

Margin Pressure Triggers Regulatory Action

Beijing has stepped up scrutiny of China's vast retail sector since 2025, as intense discounting and heavy subsidies squeeze profits.

The pressure has already taken a toll.

Meituan cited "irrational competition" when it posted its first loss in nearly three years in November, as a result of ongoing price wars with Alibaba and JD.com amid weak consumer demand.

Alibaba Reshapes Delivery and Retail Strategy

Alibaba has phased out its longtime food-delivery brand Ele.me and folded the service directly into its instant-retail strategy as competition heats up in China's delivery market.

It officially retired the 16-year-old Ele.me brand last December and rebranded the app as "Taobao Shangou," integrating food delivery into the Taobao marketplace.

In 2025, Alibaba merged Ele.me and travel platform Fliggy into its core e-commerce operations.

Alibaba is now strengthening its logistics network, speeding up delivery on Taobao, and unifying Taobao, Tmall, Alipay, Freshippo, Fliggy, and Alibaba Cloud under a coordinated delivery workforce.

It is also launching a unified membership program that ties shopping, food delivery, and travel to boost customer loyalty.

The shift reflects Alibaba's decision to centralize operations under CEO Jiang Fan after abandoning plans to split into separate units.

Price Action: Alibaba shares were down 1.15% at $149.16 during premarket trading on Wednesday, according to Benzinga Pro data. JD.com shares were down 1.11%.

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