CNBC AI News, July 25 – China’s state-backed newspaper, *People’s Daily*, has weighed in on the recent price wars erupting in sectors like automotive and food delivery, arguing that a strategic pivot from aggressive pricing to superior value is the key to sustainable growth.
The publication notes that while consumers may initially benefit from price-slashing tactics employed by competing platforms, these “burning money” campaigns often lead to price hikes once the dust settles. As the saying goes, there’s no such thing as a free lunch.
In the long run, this type of “involutionary” competition, as it’s often described, can be detrimental to both service quality and product standards. Consumers may find themselves on the losing end.
The *People’s Daily* argues that by shifting the focus from price to value, and from beating competitors to satisfying customers, companies can unlock innovation, boost market competitiveness, and ultimately deliver superior products and services through gains in efficiency and technological advancements.
A strong foundation built on internal improvements, coupled with collaborative industry efforts, can unlock market dynamism and unleash innovation. This creates a virtuous cycle where investments are rewarded, businesses thrive, employees prosper, and governments benefit from increased tax revenue – all vital components of high-quality economic and social development.
Efforts are already underway. The China Association of Automobile Manufacturers has urged automakers to refrain from engaging in malicious competition through negative comparisons and disparagement. Shanghai is reportedly reviewing industrial support policies tied to tax revenue, aiming to eliminate incentives that encourage “tax-break-driven” investment.
Addressing “involutionary” competition is crucial for fostering healthy industry growth, protecting consumer interests, and driving industrial transformation and upgrades.
This sentiment echoes the Sixth Meeting of the Central Finance and Economics Commission, which emphasized the need to regulate disorderly low-price competition according to laws and regulations. Furthermore, revisions to the Anti-Unfair Competition Law explicitly prohibit platform operators from coercing or indirectly forcing merchants to sell goods below cost, thereby disrupting market competition.
Moving from a race to the bottom to a climb towards excellence requires both technological empowerment and a strong foundation of legal safeguards and innovative mechanisms. When companies focus on building internal strength and industries collaborate, market vitality can be fully unleashed, creating an environment beneficial to investors, businesses, employees, and the government alike, ultimately driving high-quality economic and social development.
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