What: Chinese authorities mandate end to refund-without-returns policy on e-commerce platforms to protect merchants amid economic pressures.

Why it is important: This development demonstrates how economic pressures are forcing regulatory intervention in e-commerce practices that previously drove rapid growth.

Chinese authorities have directed e-commerce platforms to discontinue their refund-without-returns policy by July 2025, marking a significant shift in online retail practices. The directive, affecting major platforms including PDD Holdings and JD.com, aims to alleviate financial pressure on merchants during China's economic slowdown. This policy change follows protests at Temu's southern China office over its refund policies and aligns with the government's increased scrutiny of "involution-style" competition. The practice, which PDD expanded in 2021 and prompted competitors to follow, has become increasingly contentious as merchants across various sectors report significant impacts on their bottom line, losing both money and merchandise. The government's intervention through market regulators and the commerce ministry reflects growing concerns about the sustainability of aggressive e-commerce practices in a challenging economic environment.

IADS Notes: This policy shift comes amid broader challenges in China's e-commerce sector. In March 2025, PDD Holdings reported disappointing quarterly revenues despite aggressive discounting, while JD.com's strong performance in the same period highlighted the growing divide in platform strategies. The change follows significant protests in July 2024, when hundreds gathered at Temu's office to challenge its refund policies. These developments coincide with China's retail sales growth slowing to 2% in June 2024, suggesting that aggressive e-commerce practices may be unsustainable in the current economic climate.

Chinese e-commerce platforms to end refund-without-returns amid weak economy