Debate grows over role of platforms in retail biz

Nongfu Spring founder Zhong Shanshan criticized the country's e-commerce platforms for reshaping the retail landscape through algorithm-driven pricing and traffic allocation, arguing that their growing influence has disrupted traditional distribution networks and intensified price competition.

Speaking on State broadcaster CCTV Finance's Dialogue program on Saturday, Zhong said digital platforms have evolved into a new class of intermediaries, replacing conventional wholesalers and distributors while exerting greater control over merchants through algorithms.

"Traditional distributors operated under relatively transparent and predictable fee structures," Zhong said. "Today, platforms determine transaction commissions through algorithms and decide which merchants receive traffic."

He said the shift has fundamentally altered the country's retail ecosystem, placing mounting pressure on brick-and-mortar businesses and contributing to the decline of many city-based distributors.

Zhong also argued that the rise of online shopping has changed consumer behavior by reducing spontaneous purchases typically associated with physical retail.

"People used to stroll through shopping districts, discover products they liked and make impulse purchases," he said. "That kind of emotional and spontaneous consumption has largely disappeared."

Beyond commerce, Zhong warned that excessive reliance on smartphones could have broader social consequences, particularly for younger generations.

"People spend their days absorbed in phone screens, with their thoughts confined there," he said. "Where are creativity and emotional experiences? I believe the power of platforms must be limited."

Zhong's comments come as debate over the market power of China's internet platforms has resurfaced amid intensifying competition in e-commerce and instant retail. While regulators have tightened oversight of major tech companies in recent years, major platforms continue to compete aggressively on price, subsidies and merchant traffic.

Nongfu Spring is the country's largest packaged drinking water producer. The company reported revenue of 52.55 billion yuan ($7.79 billion) in 2025, surpassing the 50 billion yuan mark for the first time, while net profit attributable to shareholders rose 30.9 percent year-on-year to 15.87 billion yuan. Tea beverages were the company's fastest-growing business, with revenue climbing 29 percent to 21.6 billion yuan, while its functional drinks and juice businesses also recorded double-digit growth.

The strong performance has helped Zhong retain his position as China's richest person. According to the latest Hurun China Rich List released in October 2025, his personal fortune stood at 530 billion yuan.

Jason Yu, general manager at CTR Market Research, said Zhong's criticism reflects broader concerns over the growing influence of digital platforms and the pressure they place on traditional retail channels.

"Digital platforms can indeed become dominant intermediaries and contribute to aggressive price competition," Yu said. "At the same time, they improve efficiency, reduce transaction costs and provide market access for smaller businesses."

The solution is not necessarily to eliminate platform power entirely, but to establish fair regulations that curb abusive practices while preserving the innovation and accessibility that digital commerce brings to the broader economy, he added.

wangzhuoqiong@chinadaily.com.cn