Recently, some of the largest Chinese merchants have been banned by Amazon for improper use of review system. They have been found to have solicited false reviews from consumers and manipulated reviews through gift cards. These companies have also been alleged to have leaked data derived from billing information. This has plunged Amazon into a public opinion crisis in the US and Europe.
These developments occurred after the Competition and Markets Authority (CMA) of the US launched a formal investigation into Amazon and Google to address concerns that the two companies were not doing enough to tackle fake reviews. Upon further investigation by Amazon it was found that Chinese sellers had resorted to malpractices of selling their products by either compensating /reimbursing real customers for leaving a positive review. They also made fake orders and left positive reviews through ghost Amazon accounts.
As a result of the investigation, Amazon has banned some of the biggest Chinese brands on its platform since May 2021, including Zebao, Aukey, Mpow, VicTsing, Austor, TopElek, Atmoko, TaoTronics, RAVPower, Apeman, Homfa and Shenzhen Youkeshu Technology Co., whose sales on the platform exceed USD 1 billion.
The allegations against the Chinese companies surfaced in the face of sustained rise in Chinese e-commerce transactions in recent years. According to statistics from the General Administration of Customs, China’s total cross-border e- commerce (imports and exports) in 2020 increased by 31.1% to USD 260 billion of which exports amounted to 172 billion. In the first half of 2021, e-commerce export and import revenues increased by 29%. According to e-commerce data company Marketplace, 43% of the top sellers on Amazon were from China by the end of 2020, as against 11% in 2016.
The controversy over ban on Chinese e-commerce companies is being interpreted in some domestic quarters as part of the US-China trade dispute and politics of containing China. A cross-border e-commerce industry group based in the commercial hub of Shenzhen has complained to China’s Ministry of Commerce that recent crackdown could be politically motivated due to the ongoing “trade war” with the US. However, such controversies are likely to arise in future as well, unless Chinese companies start following standard international practices and conventions regarding e-commerce which may further impinge on China’s exports.