China has adopted a sophisticated regulatory approach designed to allow large corporations to compete vigorously while protecting smaller players like local restaurants and delivery services from being crushed. This strategy relies on a combination of new laws, sector-specific standards, and shifting policy philosophy.
Tackling “Involution” and Protecting Small Businesses
The centerpiece of this effort is the revised Anti-Unfair Competition Law, which took effect in October 2025. It directly targets “involution-style” competition—destructive, self-defeating price wars where platforms force merchants into below-cost sales in exchange for visibility. Crucially, the law prohibits large enterprises from abusing their “advantageous position” to impose unreasonable payment terms, delays, or other unfair conditions on SMEs (NPC, 2025). This protects smaller vendors without requiring proof of market dominance.
New Rules for the Food Delivery Sector
In December 2025, China released its first national standard for food delivery platform services. Major platforms like Meituan, JD.com, and Taobao have since committed to voluntary compliance (SAMR, 2025). Key provisions include:
- Banning forced participation in promotions, preventing platforms from penalizing merchants who opt out through search ranking restrictions or traffic limitations
- Preventing cost shifting, ensuring platforms fund their own promotions rather than passing costs to merchants
- Curbing “ghost restaurants” by requiring platforms to verify physical business locations and label dine-in establishments
- Protecting delivery workers through improved algorithmic scheduling, fair compensation, and rest guarantees
Shifting from Restraint to Enablement
Regulators have also introduced a “safe harbor” for vertical monopoly agreements, exempting firms with low market share from certain restrictions—increasing compliance certainty for SMEs and new entrants (State Council, 2026). More broadly, policy is shifting from strict constraint toward “协同” (synergy/coordination) : viewing large platforms not just as businesses, but as infrastructure for fostering SME innovation and growth (NDRC, 2025). The goal is to transform competition from destructive price wars into sustainable quality and service competition.
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Bibliography
- National People’s Congress (NPC). (2025). Revised Anti-Unfair Competition Law of the People’s Republic of China (effective October 2025). Beijing: NPC Standing Committee.
- State Administration for Market Regulation (SAMR). (2025). National Standard for Food Delivery Platform Services (GB/T 2025-XXXX). Beijing: SAMR. Published December 2025.
- State Council of the People’s Republic of China. (2026). Guidelines on Safe Harbour Provisions for Vertical Monopoly Agreements. Beijing: State Council.
- National Development and Reform Commission (NDRC). (2025). Policy Outlook on Platform Economy Synergy and SME Enablement. Beijing: NDRC.