China Targets Food Delivery Subsidy Battles With New Rules on Platform Competition

According to the Bangkok Post, citing Reuters reporting by Ethan Wang and Ryan Woo, China’s State Administration for Market Regulation (SAMR) has released draft regulations that would limit the use of large-scale subsidies by food delivery companies and prohibit practices deemed harmful to market order.

The proposed rules, which were opened for public consultation through July 17, would prevent delivery platforms from compelling restaurants to participate in promotional campaigns or forcing merchants to absorb subsidy costs. Regulators also said platforms would be barred from using financial strength to engage in monopolistic conduct, unfair competition, or selling products below cost.

Chinese authorities have increasingly expressed concern over prolonged price wars in sectors ranging from food delivery to e-commerce and electric vehicles, arguing that intense competition has contributed to downward pressure on prices and weakened business profitability.

The food delivery market has become a key battleground among major technology groups including food delivery leader Meituan, Alibaba’s delivery operations, and services linked to JD.com. Fierce competition among these firms has led to extensive consumer discounts and incentive campaigns designed to attract users and expand market share.

SAMR said the sector has exhibited problems including the use of capital advantages to seize market share and practices that have triggered what regulators describe as “irrational competition.” The agency argued that such behavior can harm merchants, delivery workers and consumers over the long term.

The draft framework would also require companies to disclose information surrounding subsidy campaigns before they are launched and after they conclude, increasing transparency around promotional activities.

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Major industry participants have publicly expressed support for the proposals. Reuters reported that Meituan said the measures would help define compliance standards for subsidy practices, while Alibaba stated that it would cooperate with industry stakeholders to maintain an orderly competitive environment.

The regulatory initiative comes amid broader efforts by Beijing to address so-called “involution-style” competition — a term increasingly used by Chinese policymakers to describe excessive rivalry that erodes profits without generating sustainable economic gains.

Chinese authorities have previously taken antitrust action against large internet platforms, including imposing a record fine on Alibaba in 2021 over abuses related to market dominance and ordering changes to exclusive business practices among technology companies. Regulators have since shifted toward promoting what they describe as fair and orderly competition while seeking to support consumption and economic growth.

In recent months, SAMR has also launched inspection campaigns targeting excessive price competition in industries such as live-streaming commerce and online retail. State media have warned that persistent subsidy battles risk creating unsustainable business models and placing additional pressure on merchants and workers.

The food delivery sector remains an important component of China’s consumer economy, employing millions of couriers and serving a vast network of restaurants and retailers. However, analysts and policymakers have increasingly raised concerns that prolonged discount wars could contribute to market concentration by favoring larger companies with substantial financial resources while squeezing smaller competitors and merchants.

The proposed rules remain in draft form and may be revised following public consultation. Chinese regulators have not announced a timetable for final implementation, but the measures signal continued scrutiny of competition practices in the country’s rapidly evolving platform economy.

Source: Bangkok Post