Chinese regulators are taking critical aim at top Chinese internet platforms for failing to curb food price speculation amid Shanghai’s Covid-19 lockdown, which has been plaqued by scenes of chaos caused by shortages and other distribution problems.
Alibaba and Meituan’s Hong Kong-listed shares both declined for a second straight day on Wednesday after Shanghai Municipal Administration for Market Regulation (Shanghai AMR) urged a dozen internet companies to regulate their businesses and forbid food sellers and deliverers from irregularly raising prices or adding charges during the lockdown.
Shanghai AMR also unveiled a list of supermarkets that had “illegally” raised food prices while Shanghai police arrested several individuals for food speculation through hoarding.
Millions of Shanghai residents have faced difficulty obtaining enough fresh vegetables and eggs since the nation’s largest commercial city was locked down to stop the spread of Covid-19 on March 28.
While state media initially avoided reporting on the food shortage problems, netizens said fresh food prices were anywhere between 10-30 times higher than pre-lockdown prices, with many saying they had to pay extra fees to ensure food delivery couriers would actually arrive.
On April 10, an internet celebrity surnamed Jiang and her Hong Kong husband said in an online live show that they paid 1,500 yuan (US$234) for fresh food in Shanghai that would have normally cost around 100 yuan. They said they also had to pay an extra delivery fee of 500 yuan to the courier.
Similar cases of food price gouging have been reported since the lockdown, though mostly by overseas news media. Shanghai officials said earlier this month that they had experienced some difficulties in supplying food and necessities, including with interprovincial travel and last-mile logistics.
On April 18, Shanghai AMR announced that it had recently summoned a dozen e-commerce platforms, including food deliverers Meituan and Alibaba’s Ele.me, to discuss pricing irregularities during the lockdown.
It said it urged the internet platforms to crack down on illegal retail behavior, strengthen reviews of their product prices and forbid couriers from raising delivery fees.
Meituan said it had already set up a special team to monitor the prices of food and necessities on its platforms and imposed price caps on various products. Ele.me said it launched new guidelines on March 27 to stabilize prices of 25 kinds of meats and vegetables.
Shares of Meituan have lost 6.5% over the past two days while shares of Alibaba have slipped 5.1%. Other internet giants, including Tencent and JD.com, also dropped.
Chinese internet companies’ shares have been under pressure since Beijing started tightening rules on the technology sector in late 2020. Tencent’s shares have so far slumped 41% during the past one year while Alibaba has declined 59%. Meituan has lost 49% while Bilibili has plunged 76% over the period.
Apart from blaming the internet firms, Shanghai AMR also disclosed the names of the shops that had irregularly raised food prices since mid-March.
Shanghai AMR said on April 18 that it had issued 41,214 warnings to shops for food price gouging and that it had investigated 224 such cases since March 14.
It accused one particular shop of selling potatoes at 16.8 yuan and tomatoes at 30 yuan per 500 grams, yielding gross margins of 460% and 300%, respectively. Another food supplier was criticized for raising prices by 100 to 200%.
Shanghai’s police also said it arrested a 39-year-old supermarket staff for hoarding food and then selling it at exorbitantly high prices online. Another man was arrested for illegally importing food from other provinces and selling them at a gross margin of 150-437% to make a net profit of some 1.5 million yuan.
In another case, a motorbike courier was arrested after he charged a consumer 630 yuan more for delivering grocery products worth 270 yuan. Police said the man had made an additional 20,000 yuan so far in April.
Netizens said all these cases were only the tip of the iceberg of food shortage problems in Shanghai during the lockdown.
Meanwhile, the Shanghai Health Commission announced on Wednesday that its Jinshan and Chongming districts had achieved Covid clearance in the communities. It said five other districts had shown a declining trend in infections during the last three days while six districts saw still fluctuating levels of cases.
Shanghai had set a target to cut off all virus transmission chains in communities by Wednesday (April 20), meaning that all mild and asymptomatic patients had to be sent to quarantine centers within days.
Shanghai quarantine centers, in particular, have suffered from food shortages that have resulted in scenes of chaos in recent weeks.
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