In a decision considered as an intervention, the Chinese government has ended the application of customer reimbursements by Chinese electronic commerce operators. In the future, only traders will have the power to initiate reimbursements, which gives them more control over transactions with buyers.
Previously, electronic commercial platforms could initiate reimbursements without approval of merchants, allowing customers to receive reimbursements without returning goods purchased. The move, which would have started in 2021 with PDD Holdings taking the lead, was designed to stimulate customer satisfaction and make resolutions of transparent disputes.
However, the practice has led to substantial financial losses for traders, who have often had to lose both the product and the income.
Traders protest against the return policy for Chinese electronic commerce
Last July, a PDD Holding office received hundreds of people protesting against its reimbursement policy, an act which led the market regulator and the Ministry of Commerce to order the company to revise its policy.
Government authorities have met the stakeholders, including the PDD, the parent company of the global electronic commerce platform, TEMU, and set in July as the date on which this practice must end.
The organizations regulating the market, the National Development and Reform Commission and the Market Regulator, were vocal in their criticisms of the Reimbursement policiesThe striking as a “Involution style” competition. During the annual parliamentary session in March of this year, organizations incorporated what he described as “complete rectification of” involution style “competition in the government work report, highlighting measures to correct the course.
While PDD and JD.com refused to comment on the directive, the decision underlines the government's commitment to respond to the concerns of merchants.
A slow economy tightens the knot flowing on traders
This evolution occurs in the context of a broader economic slowdown in China, with various sectors such as electronic commerce and housing affected. The electronic commerce scene has been characterized by increased growth and aggressive sales campaigns, and customers happy to spend. However, the market has recently been forced to combat increased competition and the reduction of consumption expenditure.
Given the pace of sales in the past, the sellers could manage the “reimbursement policy and without return”. Now, many of them are faced with a combination of challenges such as thin beneficiary margins, high rates of return and the financial pressure of participation in price wars and sales led by influencers. These factors contributed to a more precarious operational environment for merchants.
American prices add to merchant struggles
According to those who are close to the question, one of the main reasons why the government turns with the merchants is due to the current economic slowdown, which cannot be linked to President Trump's prices, and to the need to relieve the challenges that the merchants continue to face.
Trump increased prices on Chinese imports up to 145%. This decision, coupled with the imminent termination of the “minimis” exemption, which allows goods of less than $ 800 to enter the United States as a franchise of rights, has considerably had an impact on Chinese electronic commerce platforms like Temu and Shein, with large repercussions on merchants who do not have their say on the policy without return to these platforms.
The end of the reimbursement policy without return should relieve traders by reducing unnecessary losses and promoting a more balanced electronic commercial ecosystem.
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