Brawls, Raids, and Layoffs: Inside PDD's Explosive Clash with Regulators

PDD Holdings Inc. has taken swift internal action after an extraordinary confrontation with regulators in Shanghai escalated into physical altercations, according to people familiar with the matter. Earlier this month, officials from the State Administration for Market Regulation visited the company's premises to investigate reports of fraudulent deliveries on its e-commerce platform. During the inspection, at least two fistfights reportedly broke out between employees and regulators, an episode that later led to police involvement and several arrests, including some company executives. In the aftermath, PDD dismissed dozens of government relations staff tied to the incident, while another government relations team not involved has remained in place.During the inspection, regulators requested access to PDD's transaction data, people familiar with the matter said. Such data is considered highly sensitive, as it could reveal extensive details about customer behavior and internal operations beyond what the company publicly reports. It remains uncertain how the SAMR may proceed following the incident, but physical confrontations between major Chinese companies and regulators are highly unusual, even when inspections are contentious. PDD and the SAMR did not respond to requests for comment, and reports by Caixin and other Chinese news portals describing the dismissals were later removed, highlighting how delicate the situation has become.The fallout could arrive at a difficult moment for PDD's broader strategy. Just last month, the company warned of a slowing and increasingly competitive Chinese consumer environment, with rivals Alibaba and JD.com intensifying their efforts. PDD, which operates the Pinduoduo platform and the fast-growing overseas marketplace Temu, has been pushing to expand further into the US and Europe, a move that has drawn regulatory attention abroad. Notably, the same week Chinese officials visited its Shanghai offices, Temu's European headquarters in Dublin were raided by European competition authorities amid suspicions the company may have benefited from unfair subsidies, according to Bloomberg News.