China fines seven platforms RMB 3.597 billion over “ghost” food shops and order‑transfer services

Enforcement action

China’s State Administration for Market Regulation (SAMR) announced administrative penalties against seven e‑commerce platforms — including Pinduoduo (拼多多), Shanghai Lazas Information Technology (上海拉扎斯信息科技有限公司, formerly Ele.me, now branded as Taobao Flash Purchase), Beijing Douyin Technology (抖音), Zhejiang Taobao Network (淘宝) and Zhejiang Tmall Network (天猫) — for facilitating so‑called “ghost” or unvetted food vendors. Regulators ordered the platforms to correct the illegal conduct, suspend the onboarding of new cake shops for three to nine months, and imposed combined fines and confiscations totaling RMB 3.597 billion. It also levied RMB 19.6874 million in fines on the legal representatives and food‑safety chiefs of the companies involved.

What the regulator found

SAMR said the platforms failed to properly vet food‑business licenses, signed cooperation agreements with third‑party “order‑transfer” service providers, and allowed merchants to re‑route consumer orders to unvetted kitchens without informing customers — conduct that the regulator says violated China’s Food Safety Law, the E‑commerce Law and related rules. SAMR’s investigation found platforms had granted service providers API access to order data and logistics functions, enabling “one‑click” transfers that undermine consumers’ right to know where food is prepared.

Case specifics and examples

The regulator released granular figures. On Pinduoduo (拼多多) the agency identified 9,463 cake vendors that escaped proper qualification checks — 4,522 had not uploaded any food‑business license and 4,941 had licenses that did not cover cake production; those shops generated about RMB 97.09 million in transactions and yielded roughly RMB 5.84 million in illegal platform income. SAMR’s files likewise show thousands of problematic stores on the Taobao/Ele.me lineage and other platforms, with millions of RMB in illicit proceeds traced to transfer‑shop arrangements. It has been reported that the regulator also accused some platforms of obstructing the investigation; SAMR said it issued multiple notices and that the firms did not submit rebuttals within the statutory deadlines.

Why it matters

This action is the latest example of Beijing’s sustained regulatory push into Big Tech since 2020, shifting from antitrust and data security to consumer protection and platform governance. For Western readers unfamiliar with China’s tech landscape: regulators have broad powers to impose operational restrictions and large fines, and firms face tight timelines to pay, seek administrative review or litigate. Will platforms tighten API access and third‑party integrations as a result? Expect product and partnership changes — and more enforcement headlines to come.