Destabilizing speculation

Big Tech tagged for Shanghai lockdown food price spike

Chinese regulators are critically targeting major Chinese internet platforms for failing to curb food price speculation amid Shanghai’s Covid-19 lockdown, which has been marked by scenes of chaos caused by shortages and other distribution problems.

Shares of Hong Kong-listed Alibaba and Meituan both fell for a second straight day on Wednesday after the Shanghai Municipal Administration for Market Regulation (Shanghai AMR) urged a dozen internet companies to regulate their businesses and to prohibit food vendors and deliverers from improperly raising prices or adding charges. during confinement.

Shanghai AMR also released a list of supermarkets that had “illegally” raised food prices while Shanghai police arrested several individuals for food speculation by hoarding.

Millions of Shanghai residents have struggled to get enough fresh vegetables and eggs since the country’s biggest commercial city was shut down to stop the spread of Covid-19 on March 28.

While state media initially avoided reporting on food shortage concerns, netizens said fresh food prices were between 10 and 30 times higher than pre-lockdown prices, with many saying that they had to pay extra to make sure the food delivery couriers would actually arrive.

On April 10, an internet celebrity surnamed Jiang and her husband from Hong Kong said in an online live broadcast that they had paid 1,500 yuan ($234) for fresh food in Shanghai that would normally have cost around 100 yuan. They said they also had to pay an additional 500 yuan delivery fee to the courier.

Similar cases of rising food prices have been reported since the lockdown, but mainly by foreign media. Shanghai officials said earlier this month that they had encountered difficulties in providing food and basic necessities, especially with inter-provincial travel and last-mile logistics.

On April 18, Shanghai AMR announced that it had recently convened a dozen e-commerce platforms, including food delivery companies Meituan and Alibaba’s Ele.me, to discuss pricing irregularities during the lockdown.

He said he urged internet platforms to crack down on illegal retail behavior, tighten price reviews of their products and ban couriers from raising delivery charges.

Residents line up for nucleic acid testing in Pudong, Shanghai, April 4, 2022. Photo: Xinhua

Meituan said he has already set up a special team to monitor the prices of food and daily necessities on his platforms and imposed price caps on various products. Ele.me said it launched new guidelines on March 27 to stabilize prices for 25 types of meats and vegetables.

Meituan shares have lost 6.5% over the past two days while Alibaba shares have slipped 5.1%. Other internet giants, including Tencent and JD.com, also fell.

Shares of Chinese internet companies have been under pressure since Beijing began tightening rules on the tech sector in late 2020. Shares of Tencent have so far fallen 41% in the past year, while Alibaba has down 59%. Meituan lost 49% while Bilibili plunged 76% over the period.

In addition to blaming internet companies, Shanghai AMR also revealed the names of stores that had erratically raised food prices since mid-March.

Shanghai AMR said on April 18 that it had issued 41,214 warnings to stores for food price gouging and had investigated 224 such cases since March 14.

He accused one store in particular of selling potatoes at 16.8 yuan and tomatoes at 30 yuan per 500 grams, generating gross margins of 460% and 300%, respectively. Another food supplier was criticized for raising prices by 100-200%.

Shanghai police also said they arrested a 39-year-old supermarket worker for hoarding food and then selling it for exorbitant prices online. Another man was arrested for illegally importing food from other provinces and selling it with a gross profit of 150-437% to make a net profit of around 1.5 million yuan.

In another case, a motorcycle courier was arrested after charging a consumer an additional 630 yuan for delivering groceries worth 270 yuan. Police said the man had earned an additional 20,000 yuan so far in April.

Netizens said all these cases were just the tip of the iceberg of food shortage issues in Shanghai during the lockdown.

Authorities distribute food during Shanghai lockdown. Image: Screenshot/BBC

Meanwhile, Shanghai’s Health Commission announced on Wednesday that its Jinshan and Chongming districts had obtained Covid clearance in communities. He said five other districts had shown a downward trend in infections over the past three days while six districts were still seeing fluctuating case levels.

Shanghai had set a goal of cutting off all chains of virus transmission in communities by Wednesday, April 20, meaning all mild and asymptomatic patients were to be sent to quarantine centers within days.

Quarantine centers in Shanghai, in particular, have suffered from food shortages that have led to scenes of chaos in recent weeks.

Read: Beijing unveils measures to keep supply chains moving

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