China antitrust: Alibaba’s home province vows to ‘supervise and guide’ the e-commerce giant to rectify violations

Minghe Hu
·3-min read

The Communist Party leadership in China’s eastern coastal province of Zhejiang, home to Alibaba Group Holding, has pledged to “supervise and guide” the e-commerce giant and its fintech affiliate Ant Group to complete “rectification” after months of scrutiny by the central government.

The Standing Committee of the Zhejiang Communist Party held a special meeting this week to declare their intention to implement Beijing’s order to tame the “platform economy”, an umbrella term that encompasses most of China’s internet giants, the party-owned Zhejiang Daily reported on Wednesday.

Provincial officials will also “promote the health and regulated development” of the industry, the report said.

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People walk outside the Alibaba headquarters in Hangzhou, China, on March 24, 2021. Photo: Bloomberg
People walk outside the Alibaba headquarters in Hangzhou, China, on March 24, 2021. Photo: Bloomberg

The meeting, chaired by Zhejiang party secretary Yuan Jiajun, was meant to show support for Beijing’s latest antitrust moves, including a record fine of US$2.8 billion imposed on Alibaba, the owner of the South China Morning Post, for forcing merchants to choose its platforms over others.

The State Administration for Market Regulation (SAMR), Cyberspace Administration of China (CAC), and China Taxation Administration on Tuesday urged 34 of the country’s largest technology companies to learn from Alibaba’s case, as the country widened the scope of its crackdown on malpractice by Big Tech.

Tencent Holdings, JD.com, Meituan and ByteDance were among the first internet behemoths to publicly disclose their pledge to be compliant after being told to conduct self-inspections in the coming month.

Jack Ma, billionaire founder of Alibaba, speaks to the South China Morning Post in Hangzhou, Zhejiang, on March 29, 2016. Photo: Sam Tsang
Jack Ma, billionaire founder of Alibaba, speaks to the South China Morning Post in Hangzhou, Zhejiang, on March 29, 2016. Photo: Sam Tsang

Zhejiang province is home to about 9 million online merchants, or nearly half of the national total, according to official provincial data. The local government is known for its supportive policy towards e-commerce development, which helped internet platforms like Alibaba grow.

In turn, the success of Alibaba, founded by Jack Ma and his team in a residential flat in Zhejiang’s capital Hangzhou in 1999, has helped transform its hometown into one of the most attractive destinations for China’s tech talent and venture capital funds.

The company remains the backbone of Zhejiang’s online economy, which boasts 310 platforms and nearly 70 per cent of China’s online turnover of consumer goods, according to local government data.

Officials in Zhejiang, where President Xi Jinping served as provincial party secretary from 2002 to 2007, have been highly attuned to the political winds in Beijing.

In December, Zhejiang authorities held a special meeting after the national market regulator announced an investigation into Alibaba over suspected monopolistic practices. At the time, the provincial leadership pledged to bring “progress” to the platform economy.

In January, after Xi said that China must raise antitrust scrutiny on Big Tech, Zhejiang’s authorities started to develop a digital system to regulate internet platforms. Called Zhejiang Fair Trade Online, it was designed to spot business malpractice, such as forcing merchants to “pick one from two” or selling products below cost.

The system, which has identified at least 590 offences across the seven platforms that it covers so far, has done a good job in unearthing misconduct, the Zhejiang leadership concluded at its meeting this week.

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