Chinese authorities have asked e-commerce platform operators to stop insisting on merchants refunding customers without requiring the return of goods, to alleviate financial pressure on merchants.
The government convened with operators such as PDD Holdings and determined that the practice should cease by July, after which only merchants will have the ability to initiate a refund, according to the individuals, who did not mention specific dates.
The goal is to avert merchants' circumstances from becoming precarious during periods of economic downturn, stated one individual, who asked to remain unnamed because the details are confidential.
In July, numerous individuals assembled at a Temu office of the PDD platform in southern China to demonstrate against its refund policy. Officials, such as the market regulator and the commerce ministry, later instructed PDD to amend the policy.
This year, various government entities such as the market regulator and the National Development and Reform Commission have intensified their criticism of what they refer to as involution-style competition. In March, at the yearly parliamentary session, the term "thorough rectification of 'involution-style' competition" was included in the Government Work Report.
The policy of refunding without requiring returns was created to advantage both purchasers and vendors for certain order types. In 2021, PDD started to broaden its policy, encouraging competitors to do the same.
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Traders dealing in a range of items, from apparel to home appliances, have indicated that the policy negatively impacts their profits, as they face the threat of losing both funds and inventory.