China’s two largest e-commerce companies, Alibaba and JD.com, are involved in a big cat fight a week before the country’s biggest shopping event. JD.com has filed a complaint with the Chinese antitrust regulator State Administration for Industry and Commerce (SAIC), accusing its bigger rival of “forcing merchants” to exclusively deal with only one site during promotional activities.
Is Alibaba using its power to obstruct competition?
Alibaba commands about 80% of the Chinese e-commerce market. If it uses its might to pressure merchants to withdraw from JD.com during the Singles Day promotional event, it would be a big blow to the latter. Recently, the SAIC issued a new regulation that forbids, effective October 1, e-commerce companies restricting merchants from participating in promotional activities on other platforms.
In its letter, JD.com said it had learned from merchants that Alibaba was forcing them to choose only one e-commerce site for the Singles Day (Nov.11) event. If merchants participate in promotional activities on Alibaba’s Tmall, they “are not permitted to sell goods on other platforms.” Else, the Hangzhou-based company “will carry out punishments or sanctions,” alleged JD.com.
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Alibaba ‘strongly denies’ accusations
JD.com said Alibaba’s behavior obstructs market competition and harms consumers’ as well as merchants’ interests. The two companies are bitter rivals. They are aggressively trying to woo international brands and pushing them to sign exclusive deals, forbidding brands from setting up stores on the other platform. Singles Day is China’s biggest shopping event of the year. Last year, Alibaba recorded $9.34 billion of sales during the 24-hour long promotional event.
In response, Alibaba spokesman Rico Ngai “strongly” denied JD.com’s allegations. Ngai said Alibaba welcomed competition as it benefits merchants and consumers. JD.com was panicking because Alibaba wins with merchants and consumers by offering them a “superior experience.” Rico Ngai said JD.com’s accusations were like a “chicken accusing a duck of monopolizing the lake.” Unfortunately, the marketplace doesn’t believe in tears.
JD.com shares jumped 2.15% to $30 while Alibaba rose 1.28% to $84.49 in pre-market trading Wednesday.