5 Penalized in China Smear Campaign: Legal Lessons for E-Commerce Giants

For legal and compliance professionals, this case marks a significant enforcement action under China’s evolving anti-unfair competition laws. The use of administrative penalties—rather than criminal charges—against agency operatives, coupled with a referral to market regulators, illustrates a tiered approach to accountability. The anonymous principal behind the campaign raises unresolved questions about liability chains and evidentiary standards in unmasking corporate orchestrators of online smear operations.

Chinese police in Chengdu have dismantled a coordinated, months-long smear campaign targeting e-commerce and food delivery giants Alibaba Group Holding and JD.com, the companies confirmed via social media posts last week. The campaign involved a media agency, Chengdu Xiaoben Culture Media, hired by an unnamed company to spread false information, including fabricated images of delivery uniforms with altered text suggesting illegal services. JD.com said the attacks also targeted its finance unit and founder Richard Liu Qiangdong. The Sichuan public security authority earlier this month announced administrative penalties against five individuals from the agency and referred evidence to market regulation authorities for further investigation, exposing a rare instance of enforced accountability for corporate disinformation in China’s hyper-competitive internet sector.

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Chinese police in Chengdu have dismantled a coordinated, months-long smear campaign targeting e-commerce and food delivery giants Alibaba Group Holding and JD.com, the companies confirmed via social media posts last week.

The campaign began last summer, when Alibaba, JD.com, and Meituan were locked in an intense food delivery price war, with platforms giving away products like milk tea to attract consumers. The fierce competition drew a formal warning from the State Administration for Market Regulation to engage in “rational” competition, underscoring the regulatory sensitivity around market disorder. The timing of the police announcement—just days before the June 18 “618” shopping festival finale, one of China’s largest online retail events—raises the stakes, as reputational attacks during peak sales periods can materially affect consumer trust and revenue. Both Alibaba (through its Taobao Shangou instant commerce unit) and JD.com publicly thanked the police for “combating online rumours” and maintaining a “clean and healthy online environment.”

From a regulatory perspective, the case signals Beijing’s continued push to protect the private sector and ensure fair competition, a theme elevated after years of antitrust crackdowns. The use of administrative penalties rather than criminal charges suggests authorities are signaling deterrence without escalating to corporate criminal liability, at least for the agency individuals. The hand-off to market regulators could lead to fines or business license revocations under anti-unfair competition laws, setting a precedent for how China handles proxy smear campaigns where the ultimate beneficiary remains anonymous. The lack of identification of the unnamed company behind the campaign leaves open the possibility of further enforcement and civil litigation by the targets.