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More coordination needed over group-buying websites

(China Daily)

13:15, September 03, 2011

BEIJING - The Chinese authorities have said that various governmental departments need to cooperate to regulate the nation's fast-developing group-buying industry.

According to the China Consumers' Association, complains about group-buying businesses have been rising at a rapid rate.

Statistics from the China Business Credit Platform, operated by the Ministry of Commerce, show that 40 percent of complains concerning online shopping - a boom area in China during recent years - were related to group buying in August.

The Ministry of Commerce launched a national campaign on Thursday to join hands with 15 ministerial-level departments, including the National Development and Reform Commission and the China Consumers' Association, to promote trustworthiness across the entire spectrum of business operations, including group buying.

However, the China Consumers' Association said on Thursday that resolving the disputes is still a difficult task, despite new regulatory measures set out by a number of government departments.

"We could not even find the registered addresses of some small group-buying websites, when those involved complains," said Pi Xiaolin, deputy director of the association's complaints department.

Pi said complaints about group buying usually involve little money but lots of consumers and some government departments, including the police and industrial and commercial authorities, need to work together.

He said the problems in the industry are partly due to a lack of integrity on the part of the enterprises involved, but also a result of poor regulation and supervision.

"Although we do not know how many complaints there have been nationally, the number is increasing rapidly, even by a factor of 10 in some cities recently," Pi said.

In May, the Guangzhou Consumers' Commission said that it received 245 complains about group-buying websites in the first five months of the year, an almost 10-fold increase from the same period in 2010.

Some websites try to increase profits by cheating consumers in terms of quality, because of stiff competition in what is a rapidly developing business, Pi said.

Statistics from Pi's association show that by the end of July, there were 5,500 group-buying websites in China. Meanwhile,the number of consumers rose to 4.22 million from 1.88 million at the end of 2010.

However, some business insiders are predicting that a turning point is coming because the consumer passion for group buying is cooling as a result of the complaints and also because the market cannot support so many websites.

Data from Analysys International, a Beijing-based Internet researcher, indicates the number of national group-buying websites will decline massively to about 10 over the next 12 months, which will fall to around five in the coming years.

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