BEIJING/HONG KONG (Reuters) -Chinese authorities have asked e-commerce platform operators to stop insisting on merchants refunding customers without requiring the return of goods, to alleviate financial pressure on merchants, two people familiar with the matter said.
The government met operators including PDD Holdings and concluded the practice must end by July, from which point only merchants will be able to initiate a refund, the people said, without specifying dates.
The aim is to prevent merchants’ situation becoming tenuous during times of economic slowdown, said one of the people, who declined to be identified because the information is not public.
PDD and peer JD.com declined to comment. Alibaba (NYSE:BABA) Group and the State Administration for Market Regulation did not respond to requests for comment.
In July, hundreds of people gathered at an office of PDD platform Temu in southern China to protest against its refund policy. Authorities including the market regulator and commerce ministry subsequently ordered PDD to revise the policy.
This year, government bodies including the market regulator and the National Development and Reform Commission have increased criticism of what they dub "involution-style" competition. In March, during the annual parliamentary session, the phrase "comprehensive rectification of ’involution-style’ competition" was incorporated into the Government Work Report.
The refund-without-returns policy was designed to benefit both buyers and sellers for some types of order. PDD began to expand the policy in 2021, prompting rivals to follow suit.
Merchants of goods as varied as clothes and household appliances have reported the policy as detrimental to their bottom line as they risk losing both money and goods.