What Happened: As reported by Reuters, China’s top antitrust agency is looking carefully into whether to launch a probe into the country’s largest online payment platforms, Alipay and WeChat Pay. The central bank argues that the two players have used their dominant position in the market to stamp out the competition.
Jing Take: Reuters rightfully highlights that an investigation into possible anti-competitive behaviors would moderate the fervor for Ant Group’s planned dual listing in Hong Kong and Shanghai. Furthermore, if the State Council antitrust committee goes ahead with a probe into Alipay and WeChat Pay, it will send shock waves through the landscape of digital payments. And this is an especially dangerous move in a time when the COVID-19 pandemic has hit SMEs the hardest, and individuals are bracing for a recession. In a cashless economy, digital payments have become a financial lifeline for many traditional actors, and they helped intensify competition in various industries. In retail, this healthy rivalry has translated into creating greater value for the customer with competitive pricing. However, regulating digital payments could also curb online shopping. Considering that this move would come at a time when brick-and-mortar sales are declining because of ongoing concerns over the virus, retail could to take a double hit. Plus, the timing for the probe could have been better. The Trump administration could take advantage of this move and target Chinese digital wallets under US antitrust laws.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.