China 'Ghost' Food Probe

China’s market regulator fined seven major e-commerce platforms a combined 3.597 billion yuan, or about $493 million, after an investigation found tens of thousands of “ghost” food vendors selling through their apps. (samr.gov.cn) The State Administration for Market Regulation said on April 17 that Pinduoduo, Meituan, JD.com, Ele.me’s operator Shanghai Rajax, Douyin, Taobao and Tmall failed to properly verify food-business licenses and did not stop order-transfer practices that harmed consumers. (samr.gov.cn) The case started with a July 2025 complaint in Beijing’s Haidian district about a birthday cake delivered with fresh flowers stuck directly into it. Investigators checked more than 20 local outlets linked to the seller and found no physical stores in Beijing and fake license numbers. (samr.gov.cn) Chinese regulators then escalated the case in August 2025, assembled a task force of more than 200 enforcement officers, and traced orders from glossy online storefronts to low-cost producers operating out of places including a residential building. (samr.gov.cn) A “ghost” vendor in this case was an online shop that looked like a real bakery but did not make the food it sold. Instead, it resold the order through a transfer platform to another shop that would bake the cake for less money. (samr.gov.cn) Regulators cited one 252.3 yuan cake order in which the ghost shop kept 121.9 yuan, the e-commerce platform took a 50.4 yuan service fee, and the bakery that actually made the cake received 76.8 yuan after fees and delivery costs. Xinhua, carried on the regulator’s site, said a decent six-inch cream cake costs about 60 yuan to make. (samr.gov.cn) Investigators said they found more than 3.6 million illegally subcontracted cake orders and uncovered more than 67,000 ghost shops tied to two major transfer platforms, Chongqing Zhuandanbao and Anhui Xunmeng. The regulator said the seven big platforms have since removed unverified ghost stores and stopped cooperating with the transfer services for restaurant order transfers. (samr.gov.cn; samr.gov.cn) The penalties went beyond the platforms themselves. The regulator said the legal representatives and food-safety directors of the seven companies were fined a combined 19.6874 million yuan under China’s food-safety rules. (samr.gov.cn) China is also tightening the rules for online food merchants. New regulations published by the State Administration for Market Regulation will take effect on June 1 and require delivery outlets to use online store names that match the names on their physical storefronts. (english.samr.gov.cn) The regulator’s account of the case said some platform employees tipped off intermediaries when fake documents were rejected, while one platform worker argued that stricter checks would push merchants to rivals. That turned a single cake complaint into a broader test of how China’s delivery apps police sellers in a weak-demand, price-driven market. (samr.gov.cn)