In recent days, a scandal has erupted at the Shanghai office of the Chinese e-commerce giant Pinduoduo, with reports of at least two physical altercations between its employees and market supervision officials during a recent search operation. While the group promptly denied the existence of such incidents, concerns are growing among the public that Pinduoduo and other large e-commerce platforms may face stricter regulatory measures in the future.
As the Chinese Communist government continues to tighten control over various sectors, including commerce, tensions between frontline enforcement units, private entities, and the public are escalating.
Rumors circulating on Chinese social media claim that “multiple Pinduoduo executives engaged in physical altercations with officials from the State Administration for Market Regulation.” On a social platform primarily consisting of Chinese tech industry insiders, several well-known tech influencers have been discussing the matter.
Pinduoduo’s stock dropped over 2% after trading commenced on December 10, with pre-market trading experiencing a decline of more than 3%.
According to Bloomberg, sources familiar with the situation stated that when officials from the State Administration for Market Regulation received reports of parcel fraud and went to investigate Pinduoduo’s Shanghai office, at least two altercations occurred between Pinduoduo employees and the officials, leading to the subsequent arrest of several individuals by the police.
While the exact reasons behind the clashes remain unclear, the occurrence of a violent confrontation between employees of a major Chinese corporation and regulatory agency officials is exceedingly rare. Nevertheless, this incident is heightening concerns among investors about the possibility of increased stringent regulations for Pinduoduo in the future.
Following the spread of these reports, Pinduoduo issued a statement refuting the claims, asserting that the related rumors were “purely fictitious and have no connection to reality.” The State Administration for Market Regulation has yet to comment on the matter.
Pinduoduo Holdings, known for its Pinduoduo e-commerce platform and the Temu electronic shopping service launched overseas, has faced accusations of rampant counterfeit goods without facing penalties from the Chinese government, leading to allegations of deep-rooted connections. Pinduoduo, along with fast-fashion e-commerce platform Shein, has been aggressively marketing products to European and American markets, attracting significant scrutiny from regulatory authorities in Europe.
Sources revealed that the European Union’s antitrust agency conducted an unannounced search at the company’s European headquarters in Dublin last week due to suspicions that Temu may have received subsidies from Chinese authorities, resulting in unfair competition practices.