According to reports released this afternoon, the NDRC (National Development and Reform Commission) is commencing an investigation of China’s electronics giants, namely Jingdong, Suning, and Gome, who are allegedly fabricating prices in a scandal masked as a price war.
The so-called “battle” began in mid-August when Jingdong CEO Liu Qiangdong posted on his microblog that the company would accept “zero profit for three years” even stooping to prices more than 10% lower than its competitors Suning and Gome. In response, Suning declared that consumers would be able to match and lower prices online, while Gome promised that prices would be 5% lower than Jingdong’s.
It gets pretty sinister. The NDRC has discovered that their promotions are priced higher than the original costs, suggesting that they intended to cheat consumers into thinking there was a deal. Comparing prices from products 7 days before the announcement, they found that they were noticeably lower than the promotional prices. Additionally, the promised goods are out of stock online, even though the NDRC has found inventory in their warehouses, suggesting an attempt to tighten supply.
So far there has been no conclusion as to what legal actions will be taken, but this will surely shake up the industry a bit.
Source: QQ Finance