On Wednesday, Chinese regulators announced a set of broad rules aimed at curbing intense competition within the country's e-commerce market. The new guidelines prohibit dominant platforms, such as Alibaba Group Holding Ltd., JD.com Inc., and Meituan, from forcing merchants to participate in steep discount promotions or sales campaigns. This regulatory intervention seeks to mitigate aggressive pricing tactics considered disruptive to market order.
These regulations will officially take effect in February and follow a series of prior admonitions from Beijing directed at China’s e-commerce giants, urging them to halt their current promotional pressures on online sellers. The government’s increased oversight aligns with efforts to stabilize the retail market, which has been characterized by margin erosion and pricing battles.
In addition to rules focused on merchant pricing conduct, Chinese authorities have introduced measures targeting online influencers, prohibiting them from disseminating false or deceptive information. This development marks another step in the broader regulatory tightening of digital commerce and social media influence within the retail ecosystem.
The announcement immediately affected market sentiments, with Alibaba and JD.com experiencing share price declines during trading on Wednesday. Investors are assessing the potential impact of these heightened regulatory constraints on the business models and profitability of major e-commerce operators.
Pressure on Margins Triggers Policy Shift
Regulatory scrutiny over China's retail sector has intensified since 2025 amid concerns regarding unsustainable discounting and reliance on subsidies that compress profit margins. The challenge of competing through lower prices and promotional incentives has visibly affected industry players, manifesting in financial performance disturbances.
For example, Meituan recently reported its first net loss in nearly three years, attributing the result to what it described as "irrational competition" stemming from ongoing price wars with Alibaba and JD.com compounded by a backdrop of subdued consumer spending.
Alibaba Revises Business Strategy Amid Competitive Pressures
Confronted with fierce rivalry in China's food delivery market and broader retail space, Alibaba has undertaken organizational restructuring and operational adjustments. Notably, the company has discontinued its long-standing food-delivery brand Ele.me, integrating its services into a unified instant retail approach.
In December, Alibaba retired the Ele.me brand after 16 years and relaunched the application under the name "Taobao Shangou," combining food delivery functionalities directly within the Taobao marketplace interface. Furthermore, in 2025, Alibaba consolidated Ele.me and the travel platform Fliggy into its core e-commerce framework, signaling a strategic alignment under a centralized operational model.
Strengthening its logistical capabilities is a key focus for Alibaba, which is accelerating delivery times on Taobao and consolidating multiple brands—including Taobao, Tmall, Alipay, Freshippo, Fliggy, and Alibaba Cloud—under a coordinated delivery workforce. The company is also introducing a unified membership program designed to enhance customer loyalty by linking shopping, dining, and travel services.
This strategic shift coincides with leadership choices following the abandonment of plans to split Alibaba into independent units, centralizing operations under CEO Jiang Fan's directive.
Market Reaction and Stock Performance
Following the regulatory announcement, Alibaba's shares declined by 1.15%, trading at approximately $149.16 during premarket hours. JD.com's stock similarly dropped by around 1.11%. Meituan's shares also experienced a modest reduction, closing down about 0.73%.
These market movements indicate investor concern regarding the repercussions of intensified governmental control over e-commerce promotional strategies and their potential effects on revenue streams and competitive positioning.