Beijing requires platforms to share algorithm data with regulators to promote fairer competition.
China is moving to strengthen regulation of algorithms used by online platforms in the retail sector. Under new guidelines issued by the Ministry of Commerce (Mofcom), the State Administration for Market Regulation and seven other agencies, platforms will be required to provide regulators with “necessary data” on their algorithms in order to make recommendation systems and traffic allocation more “fair and transparent.”
The guidelines stipulate that online platforms will no longer be allowed to use product prices as the sole core factor in recommendation algorithms. Instead, they will be encouraged to adopt “diversified” ranking criteria. The move is aimed at curbing price wars, which regulators say can squeeze merchants’ profit margins and undermine the quality of supply.
The new rules reflect Beijing’s broader efforts to regulate how digital technologies influence commerce. Algorithms determine which products millions of consumers see first, which merchants gain visibility and which businesses face greater challenges in reaching customers. By requiring greater transparency, authorities are signaling that algorithmic control is becoming a matter of regulatory oversight rather than solely proprietary business logic.
The guidelines also introduce new requirements for pricing transparency and promotional activities. Platforms will have to disclose the rules, duration and scope of discounts and will be prohibited from forcing merchants to participate in unwanted promotions or bear the costs of subsidies. The document also bans so-called “zero-yuan purchase” schemes, where products are advertised as free while related costs are shifted onto sellers.
Chinese authorities also aim to bridge the gap between online and offline retail and support traditional retailers facing declining foot traffic. The measures call for more consistent enforcement standards across online and offline markets, stronger oversight of platforms’ tax-related data reporting and efforts to create more equal competitive conditions for online merchants and brick-and-mortar businesses.
The guidelines also include broader measures to improve retail operations, including expanding financing support for qualified retailers, accelerating approval of flexible work-hour arrangements and encouraging retailers to move away from traditional slotting fees paid by manufacturers for shelf space toward more integrated sourcing and retail models.
As an example of a successful retail model, Chinese authorities have highlighted Pang Dong Lai, a Henan-based supermarket chain known for high service standards, above-market wages, employee benefits and strong attention to product quality. Beijing plans to promote these practices across the retail sector, presenting them as an alternative to a model based on excessive cost-cutting and aggressive price competition.
Overall, the new rules aim to establish by 2030 a “modern retail system characterized by rational layout, quality supply, diverse formats, smart convenience and orderly competition.” According to official data, Pang Dong Lai recorded sales of 14.5 billion yuan ($2.1 billion) in the first half of the year, up 24% year on year.
Source: MLex
