JD.com reported a 22% year-on-year revenue rise to 356.7 billion yuan (US$49.7 billion) for the June quarter, beating analyst estimates of 335.5 billion yuan.

Net income for the period fell by half to 6.2 billion yuan.

The Chinese ecommerce giant saw increased sales after government subsidies and its move into meal delivery, sparking heightened competition with Meituan and Alibaba.

Aggressive discounting among all three companies has squeezed industry margins and led to intensified price wars during major shopping events like the “618” summer festival.

In response to market pressures, Meituan offered electronics and alcohol discounts, while Alibaba integrated its Ele.me food delivery services with Taobao to attract more users.

Amid growing deflationary pressures and weak consumer demand, Beijing intervened, pushing JD.com, Meituan, and Alibaba to pledge to rein in destructive competition this month.

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🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Price wars in Chinese e-commerce follow destructive cyclical patterns

The current three-way battle between JD.com, Meituan, and Alibaba echoes a similar destructive price war that began in 2012 between JD.com and Suning in China’s home appliance sector.

That earlier conflict drove industry profit margins below 5%, demonstrating how aggressive pricing strategies can devastate entire sectors rather than just individual companies 1.

The government’s recent intervention to stop “self-destructive competition” reflects lessons learned from these historical patterns, where game theory analysis shows that sustained price wars create scenarios harmful to all participants.

The 2012 precedent suggests that without intervention, the current food delivery and e-commerce price war could have similarly eroded profitability across the entire industry.

2️⃣ China’s tech policy oscillates between control and growth promotion

The government subsidies that boosted JD.com’s growth represent a significant shift from the tech crackdown that began in late 2020, which targeted major firms like Alibaba and caused substantial market instability 2.

This regulatory shift from restriction to support demonstrates how Beijing balances competing priorities of maintaining control while promoting economic growth.

The intervention to end the price war shows the government now actively protects tech companies from self-inflicted damage, contrasting sharply with the previous period when regulatory pressure was the primary concern for these firms.

This policy evolution suggests that after establishing regulatory boundaries, Beijing is now focused on ensuring the tech sector contributes to broader economic recovery and consumption growth.

Recent JD.com developments

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