360Buy, Suning, Gome Investigated for Fraud in China E-Commerce Price War

When 360Buy CEO Liu Qiangdong kicked off a price war in China’s e-commerce sector, he probably didn’t expect things to go quite as far as they did. But thanks in part to the mudslinging on weibo, the war got very high profile very fast. It got a lot of attention, including the addition of China’s National Development and Reform Commission (NDRC), which recently kicked off an investigation into the “price war” via its Office of Price Supervision. The investigation is ongoing, but the Commission has already announced via the Beijing News that early results indicate that some e-commerce players may be guilty of using fabricated “original prices” in their advertising materials to hoodwink consumers.

Other violations include failing to meet sales promises and failure to have advertised goods in stock. The Commission has not announced which companies are guilty of what — it is investigating 360Buy, Suning, and Gome — but it has promised that these violators will be punished in accordance with the law. Specific details and fines have not yet been determined.

Separately, a government investigation of Liu Qiangdong’s weibo claim that 360Buy goods would be sold at cost for the next three years was total crap, with the fifteen types of products checked all still being sold at a profit, some with margins as high as 22 percent.

In response to these announcements, 360Buy has already apologized for its failure to meet its promise of zero profits, and claims it has already developed a plan to rectify and improve its behavior. Suning has stated it has kept its sales promises, but admitted that there were “flaws” in the way the price war was managed. Gome does not seem to have made a public statement yet but all companies seem to be cooperating with investigators.

[Beijing News via Sina Tech, Image via Shutterstock]