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China has levied administrative fines totaling 3.6 billion yuan (approximately $527.5 million) on seven e-commerce and food delivery platforms for failing to identify “ghost stores.”
The largest penalty, amounting to 1.5 billion yuan, was imposed on a major platform. Other companies, including prominent players in the industry, received fines of 746 million yuan (about $109.4 million), 635 million yuan, and 558 million yuan. Additional fines across platforms amounted to roughly 140 million yuan.
Ghost stores are defined as restaurants and pastry shops operating without proper licenses or physical storefronts. These entities accept orders, then subcontract them at lower prices to other vendors, and complete deliveries through third-party platforms.
For example, a customer ordered a cake costing approximately 252 yuan (around $37) from a ghost store. The store then posted this order on an order transfer platform, where three cake shops bid to fulfill it with offers of 100, 90, and 80 yuan (about $14). The ghost store selected the lowest bid, earning around 122 yuan, while the chosen bakery received approximately 77 yuan after delivery fees, and the transfer platform took in about 55 yuan in service charges.
Investigations revealed over 3.6 million illegal orders processed through more than 67,600 ghost stores. The fines were based on the number of outlets that did not comply with review obligations. The authorities also fined the legal representatives and food safety directors involved an additional 19.7 million yuan (about $2.9 million).
All seven companies had agreements with order transfer platforms, despite being aware or should have been aware of the illegality of these transfer arrangements. They failed to take necessary corrective action, according to the investigation’s findings.
Law enforcement efforts faced resistance; one officer investigating a major platform suffered injuries after staff deliberately shut a door to block entry during questioning.
Following the probes, the platforms removed the ghost stores, ceased partnerships with transfer platforms, and committed to comprehensive rectification efforts to curb illegal activities. The regulatory body has also ordered them to halt creating new pastry shops for a period of three to nine months.
Regulations concerning online catering services explicitly prohibit the delegation of orders to third parties. Experts assert that the transfer model bypasses food safety oversight and compromises consumers’ rights to information and choice.
Legal experts emphasize that law enforcement aims to uphold safety standards and foster healthy industry development, rather than applying laws mechanically.
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