(Dec 17): PDD Holdings Inc fired a government relations team in Shanghai following a fistfight between employees and Chinese regulators who were performing checks at the e-commerce company, according to people familiar with the matter.
The dismissal of dozens of employees comes as PDD tries to stem the fallout from the unusual physical altercation earlier this month, which has only heightened government scrutiny of the company. A separate government relations team that wasn’t involved in the scuffle remains employed at the firm, said the people, who asked not to be identified due to the sensitivity of the issue.
At least two fistfights occurred at PDD’s Shanghai premises involving staff and officials from the State Administration for Market Regulation, who were investigating reports of fraudulent deliveries on the e-commerce firm’s platform, Bloomberg News reported last week. Police made several arrests in the aftermath, including some company executives, according to people familiar with the matter.
Regulators had requested to see PDD’s transaction data during their inspection, according to a person familiar with the matter. Those figures are highly sensitive as they typically contain extensive proprietary insight into customers and business operations beyond PDD’s publicly reported information, the person said.
It’s unclear what actions the SAMR may take in the wake of the incident. But it’s unheard of for interactions between large Chinese companies and regulators to descend into physical confrontations, even as tensions often run high between the two sides.
PDD and the SAMR didn’t respond to requests for comment.
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Media outlet Caixin first reported that multiple government relations employees at PDD had lost their jobs due to the fight, but the article has been removed from its website. Publications of the report on news portals Netease and Sina were also taken down.
That underscores the sensitivity of the situation and adds to concerns that PDD will face more scrutiny from the SAMR, which has sweeping powers and led a high-profile antitrust probe against Alibaba Group Holding Ltd in 2020 that culminated in a sector-wide clampdown. The freeze only thawed in February this year, when Chinese President Xi Jinping met with entrepreneurs including Alibaba’s Jack Ma.
The potential for repercussions comes at a difficult time for PDD, which just last month warned of a slowdown in the cutthroat Chinese consumer environment that’s seen rivals Alibaba and JD.com Inc intensifying competition.
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PDD is best known as the creator of Temu and the Pinduoduo Chinese e-commerce platform but has ambitions to become a major player in the US and Europe — drawing scrutiny from regulators abroad.
The same week the SAMR officials visited PDD’s Shanghai premises, Temu’s European headquarters in Dublin were raided by European competition watchdogs, Bloomberg News has reported, amid suspicions the Chinese e-commerce giant may have received unfair subsidies from Beijing.
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