China fines e-commerce giants RM2b over ‘ghost’ food deliveries

BEIJING, April 17 — China has issued fines totalling 3.6 billion yuan (RM2.08 billion) to seven major e-commerce platforms for food safety violations, the State Administration for Market Regulation (SAMR) said on Friday.

The regulator said platforms, including Alibaba-owned Taobao, JD.com, Meituan, Temu-owner Pinduoduo and Douyin — China’s version of TikTok — had failed to check the licenses of stores on their apps and allowed “ghost food deliveries” from unverified vendors.

SAMR said in a statement it had “ordered seven e-commerce platforms to rectify their illegal activities… and imposed fines and confiscations totalling 3.597 billion yuan”.

The legal representatives of the companies were also fined a total of 19.7 million yuan, the market regulator said.

An investigation showed the platforms had “not strictly reviewed and checked the licenses of food operators entering their networks, and failed to fulfil the obligation of qualification review in accordance with the law,” SAMR said.

They had also signed agreements with order-transfer platforms, which infringed on consumers’ rights, SAMR said.

“Ghost shops” do not have physical dine-in restaurants and are accused of unsanitary conditions and bypassing food safety regulations while posing as regular restaurants online.

They often provide rented business licenses or use fake details to get listed on delivery platforms.

Order transfers see orders for one restaurant moved to another vendor to fulfil, normally without the customer knowing.

The companies had violated food safety and e-commerce laws, SAMR said.

They were also prohibited from adding new cake shops to their delivery platforms for periods ranging from three to nine months, suggesting the illicit practices are particularly rife in bakeries.

They had removed “ghost shops” and stopped cooperating with order-transfer platforms for food deliveries, SAMR said. — AFP