Zhong Shanshan Slams Pinduoduo's Low-Price Strategy: Who's Paying for E-commerce Price Wars?

Zhong Shanshan Slams Pinduoduo's Low-Price Strategy: Who's Paying for E-commerce Price Wars?Recently, Nongfu Spring chairman Zhong Shanshan, during an inspection trip to Ganzhou, Jiangxi province, sharply criticized the price wars prevalent in e-commerce platforms, particularly Pinduoduo's "hundreds of billions subsidy" strategy. He believes this low-price tactic is not only a case of "bad money driving out good," but also significantly harms Chinese brands and industries, reflecting deeper underlying issues in industrial development

Zhong Shanshan Slams Pinduoduo's Low-Price Strategy: Who's Paying for E-commerce Price Wars?

Recently, Nongfu Spring chairman Zhong Shanshan, during an inspection trip to Ganzhou, Jiangxi province, sharply criticized the price wars prevalent in e-commerce platforms, particularly Pinduoduo's "hundreds of billions subsidy" strategy. He believes this low-price tactic is not only a case of "bad money driving out good," but also significantly harms Chinese brands and industries, reflecting deeper underlying issues in industrial development. This statement has sparked widespread attention, prompting a re-evaluation of the impact of low-price strategies, exemplified by Pinduoduo, on China's industrial development.

Pinduoduo and other e-commerce platforms have undoubtedly achieved commercial success with their low-price strategies. In a saturated e-commerce market, "hundreds of billions subsidies" and similar tactics have secured them massive market share and user bases. This model's success has been rapidly imitated by other platforms, making "hundreds of billions subsidies" almost standard practice and turning low-price competition into the industry norm. However, beneath this apparent prosperity lie significant concerns. The essence of this low-price strategy is leveraging platform traffic and channel advantages to shift cost pressures onto downstream manufacturers.

As powerful players controlling traffic and channels, e-commerce platforms dominate product pricing. With an increasing number of sales channels shifting online and becoming monopolized by a few large platforms, manufacturers' pricing power is steadily weakening. Fierce price competition forces many factories into a vicious cycle of "involution": to avoid losing orders, they are compelled to cut profits or even sell at a loss to survive. This price war directly results in significantly reduced or negative profits, impacting cash flow and potentially leading to business closures. Factories that manage to stay afloat often compromise product quality to compensate for lost profits, creating a vicious cycle.

The negative impact of this e-commerce-driven low-price competition model on China's industrial development is multifaceted. First, it stifles innovation and growth. To survive, companies must focus exclusively on price competition, lacking the funds and time for technological innovation and product upgrades, hindering overall industrial upgrading and transformation. Second, it exacerbates the fragility of the industrial chain. Low-profit margins reduce risk tolerance; businesses are easily vulnerable to market fluctuations. This fragility also directly affects employment and social stability. Low profits translate to low wages, impacting workers' income and living standards.

Furthermore, e-commerce platforms' low-price strategies harm brand building and consumer rights. Low prices often equate to low quality, potentially damaging consumer trust in Chinese products and hindering the internationalization of Chinese brands. While platforms often claim to eliminate middlemen markups, they have, in reality, become the largest "middlemen" in the supply chain, often profiting more than traditional wholesalers and retailers.

Of course, the difficulties facing small and medium-sized manufacturers are multifaceted, including factors such as low product value-added and high substitutability. However, e-commerce platforms' relentless pursuit of low prices is undeniably a key factor exacerbating these issues. It intensifies industry involution, hinders manufacturers' transformation and upgrading, and ultimately harms the health of the real economy.

In recent years, the Chinese government's regulation of the platform economy has shifted from strong regulation to normalized supervision. Previously, some internet giants were penalized for monopolistic practices, effectively curbing the unrestrained expansion of the platform economy. The Central Economic Work Conference explicitly stated the need to vigorously develop the digital economy while enhancing normalized supervision and supporting the healthy development of platform enterprises. This indicates the government aims to support the platform economy's growth while preventing disorderly competition.

Zhong Shanshan's remarks come against this backdrop. They prompt us to reconsider whether e-commerce platforms' low-price strategies truly benefit the long-term health of Chinese industries. While low-price competition may yield short-term market share gains, this unsustainable approach ultimately harms the real economy and can lead to the collapse of the entire industrial chain.

We hope e-commerce platforms will shift their focus from pure price competition to prioritizing product quality, brand building, and innovation. Only then can we achieve a positive interaction between the platform economy and the real economy, creating a fair, transparent, and predictable market environment that promotes the healthy and sustainable development of Chinese industries. Low-price strategies are not the only path to business success and should not come at the cost of the real economy. E-commerce platforms need to find sustainable business models instead of relying on unrestrained low-price competition for short-term gains. Only in a fair competitive environment can more excellent Chinese brands emerge and drive the prosperity of the Chinese economy. We hope Zhong Shanshan's statement will encourage greater attention and reflection, prompting e-commerce platforms and relevant departments to take proactive measures to safeguard the healthy development of Chinese industries.

Disclaimer: The content of this article is sourced from the internet. The copyright of the text, images, and other materials belongs to the original author. The platform reprints the materials for the purpose of conveying more information. The content of the article is for reference and learning only, and should not be used for commercial purposes. If it infringes on your legitimate rights and interests, please contact us promptly and we will handle it as soon as possible! We respect copyright and are committed to protecting it. Thank you for sharing.(Email:[email protected])