Beijing Watch: E-commerce's 'Low-Price Revolution' — Who Is Paying the Price? Zong Shanshan Attacks Platform Power and Reveals the Truth Behind the Disappearance of Quality Competition

China's e-commerce industry has experienced rapid growth for many years, allowing consumers to enjoy lower prices, faster logistics, and more convenient shopping experiences. But behind this 'low-price revolution,' who is actually bearing the cost?

On August 8, Zong Shanshan appeared on CCTV Finance's dialogue program to discuss e-commerce platforms, offline retail, and price competition. He argued that while e-commerce has eliminated traditional distributors and retailers, it has gradually become a new kind of 'middleman.' Unlike traditional intermediaries, platforms can use algorithms to adjust commission rates and traffic distribution, exerting direct influence over transactions.

Zong bluntly stated that what China should worry about most today is 'competing only on price'—not on quality, not on premium offerings, and not on value-added capabilities. He believes that when companies continuously fight for market share through low pricing, profit margins across the supply chain get squeezed. Ultimately, the damage doesn't just affect brand enterprises; it could ripple all the way down to manufacturers, farmers, and the entire real economy.

As early as November 2024, he publicly declared, 'I will never do live-stream selling,' criticizing the bottomless price wars in live e-commerce. At the time, he directly pointed out that online platforms have driven down pricing systems, causing significant harm to Chinese brands and industries, and insisted that the government should intervene.

JD.com, a major Chinese e-commerce giant. (Image source: JD.com official website)

Who Has E-commerce Eliminated? Zong Shanshan: Traditional Middlemen Are Gone, But Platforms Have Become the New Intermediaries

Zong Shanshan raised a core question this time: Has e-commerce truly eliminated the 'middleman'?

In the traditional retail system, goods typically pass through layers such as distributors, wholesalers, and retailers, with relatively transparent and fixed profit margins at each level. Zong believes traditional middlemen had open and stable commission structures. But in the era of platform economies, platforms can use algorithms to adjust commissions per order and even intervene in traffic allocation.

In the past, urban distributors controlled products and distribution channels. Today, platforms control traffic, algorithms, consumer attention, and access to transactions—this is precisely why Zong demands 'limiting platform power.'

From an industrial perspective, the biggest advantage of platforms isn't merely delivering products to consumers, but their possession of vast transaction data. When traffic allocation, search rankings, promotional activities, and commission mechanisms are all controlled by platforms, they are no longer just providing a marketplace—they may become key players shaping market rules.

He further pointed out that many city stores relied on emotional consumption—impulse buys made while window-shopping. This kind of spontaneous, sensory experience has now been killed off. 'Platforms have drawn all young people into their smartphone screens. Where is creativity and emotionality now? A society needs emotionality to foster creativity.'

Consumers used to walk into malls, pass by small shops, and make unplanned purchases after seeing items in display windows. They might change their buying decisions based on staff recommendations, friends’ suggestions, or even how products were arranged. Now, consumers type keywords, and e-commerce platforms recommend products via algorithms, followed by comparisons based on price, discounts, sales volume, and reviews.

The issue Zong raised is one currently drawing attention in China's instant retail sector—on weekends, malls in Beijing and Baoding are increasingly empty, with the only visible figures being delivery riders darting between stores.

Temu, a Chinese e-commerce platform, is a subsidiary of Pinduoduo. (Photo/Screen capture from FB/Temu)

Price Wars Destroy Social Productivity: Are Consumers Always the Winners?

During the recent Start of Autumn festival, 'the first milk tea of autumn' became a major advertising slogan for various hand-held drink platforms across China. Yet behind this lies a fierce 'price war' among merchants, with many young people choosing solely based on 'who offers the cheaper price.'

Similar to previous price wars, platforms like Xiaohongshu and Douyin have spawned numerous 'discount hacks.' One Starbucks coffee, through stacking delivery coupons, dropped from 32 yuan (RMB, same below) to just 4 yuan. The reporter’s first cup of Cotti Coffee this autumn cost only 4.4 yuan.

When the entire market begins chasing the lowest price, is low pricing really the result of improved efficiency—or the outcome of shrinking industrial profits? Zong Shanshan believes that what China's market truly needs to guard against is 'competing on price' instead of 'competing on quality.'

Using Coca-Cola and Pepsi as examples, Zong argued that mature market competition does not mean constant price reductions. Companies can compete on quality, branding, and product value rather than endlessly driving prices down.

This view aligns with his statements in 2024, when he opposed the 'bottomless' price wars on live-streaming platforms, arguing that online platforms depress pricing systems and cause great harm to Chinese brands and industries.

In 2024, Nongfu Spring launched its green-bottle purified water using a similar low-price strategy. This suggests that what he truly opposes is not 'low pricing' per se, but rather the endless price competition driven by platform traffic and competitive mechanisms.

Taobao, Taiwan, e-commerce, shopping (Photo by Hong Yuxun)

Beyond 'Cheap': What Should Be the Next Competitive Frontier for Chinese E-commerce?

For over a decade, one of the greatest success stories of China's e-commerce retail industry has been taking 'cheapness' to the extreme. But when every platform starts subsidizing, every merchant cuts prices, and every live stream shouts 'lowest price online,' low pricing itself may gradually lose its competitive edge.

Because if price becomes the sole competitive standard, companies can only survive by cutting costs. And if cost reduction doesn't come from technological advancement or efficiency gains, it translates into squeezing supplier profits, lowering product quality, or even sacrificing labor conditions.

E-commerce may have eliminated traditional middlemen, but if platforms themselves become new centers of market power, then the next phase of industrial reform must address not just 'how much middlemen earn,' but how much power platforms should wield—and what societal cost we are willing to pay for 'extreme cheapness.'