The group warned of rising cafe closures because intense rivalry among digital platforms has spilled over to brick-and-mortar businesses.
A Chinese coffee industry group has called on JD.com to stop its aggressive subsidies, warning they distort the market and align with growing regulatory scrutiny of “involution-style competition.”
In a petition, the Coffee Association of Chongqing accused JD of spending billions since launching its food delivery service, pushing down coffee prices and hurting small businesses. It said subsidies favor national chains like Luckin and Cotti, whose cost per cup is far lower than that of smaller cafes.
The share of major chains in delivery rose from 80% in April to over 90% by late May. In contrast, Chongqing’s local brands saw online sales drop 12% year-on-year and order prices fall 13%.
The group also claimed chains pressure suppliers, while rising global coffee prices further squeeze small cafes’ profits. The UN says coffee prices jumped 38.8% in 2024 due to weather-related supply issues.
The association cited growing layoffs and closures, urging JD to end “irrational” subsidies and disclose promotion algorithms.It proposed that a portion of the subsidy budget be redirected toward helping smaller cafes with digital transformation and specialty product development.
The petition, cosigned by 11 coffee merchants, was removed from the group's official WeChat account a few hours after it was posted. Chinese regulators have increasingly targeted "involution," a local term for self-defeating competition marked by unsustainable price cuts and deteriorating service quality. Last month, China's State Administration for Market Regulation (SAMR) said it had coordinated with four other agencies to summon executives from JD.com, Meituan and Alibaba's Ele.me, after JD's entry into food delivery sparked a fierce subsidy war.
On May 26, the Communist Party's People's Daily said Chinese regulators must take decisive action "when necessary" to stop "involution-style competition," despite its short-term consumer benefits.
Source: MLex
