<div id="readability-page-1"><div id="news-body">(Yicai) April 20 -- China has imposed administrative penalties of CNY3.6 billion (USD527.5 million) on seven e-commerce and food delivery platforms for failing to identify ‘ghost stores.’Pinduoduo was fined CNY1.5 billion, the most among the seven platforms, according to a notice issued on the website of the State Administration for Market Regulation on April 17. Meituan, JD.Com, and Taobao Flash Buy were fined CNY746 million (USD109.4 million), CNY635 million, and CNY558 million, respectively, while Douyin, Taobao, and Tmall were fined a total of about CNY140 million.Ghost stores are restaurants and cake shops operating without a catering business license or a physical storefront. After receiving orders, they subcontract them to other merchants at a lower price and then deliver the products through third-party platforms.For example, a customer bought a CNY252 (USD37) cake from a ghost store on a food delivery site. The outlet then posted the order on order transfer platform Zhuandanbao, where three cake shops bid for the order by offering CNY100, CNY90 (USD14), and CNY80. The ghost store chose the cheapest bid and earned CNY122, the cake shop got about CNY77 after paying delivery fees, and Zhuandanbao received CNY55 in service fees.The SAMR investigation uncovered more than 3.6 million illegal orders processed by 67,604 ghost stores and fined the platforms based on the number of non-compliant outlets that failed to fulfill review obligations. Moreover, the watchdog fined the legal representatives and food safety directors of the seven platforms another CNY19.7 million (USD2.9 million).All seven platforms have signed cooperation agreements with order transfer platforms, even though they knew or should have known that order transfers are illegal, but they did not take the necessary measures, based on the results of the SAMR probe.According to Xinhua News Agency, the law enforcement process also encountered obstruction. An officer from the SAMR who was assigned to investigate Pinduoduo had his left index finger fractured, and his right ankle soft tissue bruised after a door was deliberately closed to not let him in by the firm’s staff.The seven platforms have taken down the ghost stores, ceased cooperation with the order transfer platforms, and issued statements that they will thoroughly implement rectification measures and crack down on illegal and non-compliant behaviors. The SAMR has ordered them not to add new cake shops for three to nine months.The Supervision and Administration Measures for Food Safety of Online Catering Services prohibit catering service providers from entrusting orders to others.The order transfer model in the catering industry evades food safety supervision and infringes upon consumers’ rights to know and choose, Xinhua reported, citing Shi Jianzhong, director of the Data Law Lab at China University of Political Science and Law.“The application of law is not mechanical,” Xue Jun, director of the E-Commerce Law Research Center at Peking University, told Xinhua. “The penalties this time demonstrate the purpose of law enforcement to maintain the bottom line of food safety and promote the sustained and healthy development of the platform economy.”Editor: Futura Costaglione</div></div>

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China has fined seven e-commerce and food delivery platforms a total of CNY3.6 billion (USD528 million) for failing to identify 'ghost stores'—businesses operating without proper licenses. Pinduoduo received the largest fine of CNY1.5 billion. The investigation revealed over 3.6 million illegal orders processed by these ghost stores. The platforms have agreed to cease cooperation with illegal order transfer services and implement corrective measures. The penalties aim to uphold food safety standards and ensure compliance within the platform economy.

- China has fined seven e-commerce and food delivery platforms a total of CNY 3.6 billion (USD 527.5 million) for failing to identify 'ghost stores,' which operate without licenses and subcontract orders.  
- Pinduoduo received the highest fine of CNY 1.5 billion, while other major platforms like Meituan, JD.Com, and Taobao Flash Buy were also penalized significantly.  
- The State Administration for Market Regulation discovered over 3.6 million illegal orders processed by these ghost stores, and the platforms have agreed to cease cooperation with illegal practices and implement rectification measures.

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Chinese Regulator Fines Seven Retail Platforms USD528 Million for ‘Ghost Stores’