China has acknowledged that Chinese sellers recently banned by Amazon for dodgy business practices have fallen foul of differences in laws, cultures and business practices. What goes in China is not always tolerated in the Western world.
This follows the news in May that Amazon suspended multiple Chinese sellers including some of the biggest white label brands on Amazon with estimated annual sales of more than $1 billion.
“As the country’s cross-border ecommerce industry has grown, differences in laws, cultures and acceptable business practices have led to Chinese companies facing serious challenges”
– Li Xingqian, director, Ministry of Commerce
The main reason that Amazon suspended the Chinese sellers, many of which had become household names, such as Mpow, VictSing, and Aukey, was for review abuse. Whilst differences in laws, cultures and how you operate a business might make this acceptable in China, the practice is receiving increased attention in the west.
Unrelated, but unsurprisingly, UK Business Secretary Kwasi Kwarteng this week announced new reforms which would make it automatically illegal to pay someone to write, or host, fake reviews. The reforms would allow the CMA to impose stronger penalties for companies that don’t comply with its investigations or orders, with new powers for fixed penalties of up to 5% of global annual turnover and additional daily penalties up to 5% of daily turnover while non-compliance continues.
Amazon certainly won’t be up for a fine of 5% of their $386.06 billion annual turnover and also won’t want an ongoing 5% daily turnover fine. In fairness to Amazon, it’s worth pointing out that they banned the tranche of Chinese sellers several months prior to the Business Secretary’s announcement this week.
It’s good that China is recognising the differences in laws, cultures and business practices, both for fair competition for Western sellers and to educate their sellers on the norms of trading with the West. With review manipulation already receiving zero toleration from Amazon, it’s highly likely that all marketplaces will be similarly unforgiving if similar reviews land on their platforms.