China’s market regulator has released draft guidelines to regulate fees charged by online platforms to third-party merchants. This move impacts major companies such as JD.com, Meituan, and PDD Holdings Inc.

The State Administration for Market Regulation (SAMR) said that platforms should charge reasonable fees, taking into account the operational conditions of merchants.

The draft encourages flexible pricing strategies for commissions, memberships, and service fees to help reduce financial burdens on businesses. The deadline for public feedback on the draft is June 3.

The guidelines follow complaints from merchants regarding opaque and complex fee structures on these platforms. SAMR noted that the initiative aims to enhance compliance frameworks and promote healthy industry growth.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Fee regulation reflects China’s evolving approach to platform governance

China’s new draft guidelines on platform fees continue a regulatory pattern that began intensifying in recent years, signaling a shift away from the government’s previously lighter touch on tech platforms.

The State Administration for Market Regulation (SAMR) has been systematically addressing market power imbalances, with the current fee regulation targeting a critical revenue stream for major platforms like JD.com and Meituan 1.

This approach aligns with China’s broader internet regulatory framework that integrates technical, legal, and administrative measures to shape digital market behavior, leveraging its comprehensive oversight capabilities 2.

By requiring platforms to consider merchants’ “operational status” when setting fees, regulators are intervening directly in the business model of platforms rather than just addressing specific violations, showing a more structural approach to regulation.

The June 3 feedback deadline reflects China’s increasingly consultative approach to tech regulation, allowing stakeholders to provide input while still maintaining the government’s authority to set market rules 1.

2️⃣ Platform fee caps show mixed results globally for merchant protection

Research on similar fee regulations internationally suggests complex outcomes that don’t always benefit the small businesses they aim to protect.

Studies of delivery platform fee caps found that after implementation, independent restaurants experienced a 2.5% decrease in takeout orders while chain restaurants saw a 4.5% increase—the opposite of the intended effect 3.

Platforms often respond to fee restrictions by adjusting other business levers, including shifting consumer demand patterns through promotional changes or introducing new fees in unregulated categories 3.