China's regulators must act quickly to stamp out price wars: People's Daily
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Chinese authorities have repeatedly vowed to clamp down on
neijuan – a term referring to a self-defeating cycle of excessive competition – in recent months, as businesses in a slew of industries launch intense price wars to win orders amid an economic slowdown.
The trend has been most obvious in the food delivery sector, where the entry of tech giant JD.com
has triggered a fierce battle for market share with incumbents Meituan and Ele.me that is leading all three companies to invest huge sums to lure customers with heavy discounts and other special offers.
Though these incentives can provide short-term benefits to consumers, the state-run People's Daily warned on Monday that such neijuan-style tactics ultimately harm a market's long-term development by squeezing profits and creating instability across the supply chain.
The commentary said it was crucial for regulators to intervene in a timely manner to prevent such practices, noting with approval that China's State Administration for Market Regulation (SAMR)
had recently summoned JD.com, Meituan and Ele.me to discuss problems in the food delivery sector.
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'To strike a balance between market forces and government oversight, regulators need to step in decisively when necessary,' the article stated.
'Regulators stepping in to restore fair competition is not about preventing rivalries, but guiding platforms away from destructive price wars so they pursue innovation, focus on product differentiation, and return to healthy, value-driven competition – the key to high-quality industry growth.'
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