Volkswacht Bodensee - China issues new rules to bust 'ghost' takeout deliveries

Fierce competition among food delivery apps has led to the spread of "ghost" merchants that lack dine-in premises and are accused of unsanitary conditions and bypassing food safety regulations while posing as regular restaurants online.

They often operate out of residential buildings and use rented business licenses or fake details to get listed on the delivery platforms.

The State Administration for Market Regulation (SAMR) fined seven major e-commerce platforms a total of 3.6 billion yuan ($532 million) in April for violations mostly related to ghost deliveries.

The new regulations compel delivery platforms to review their listed merchants at least once every six months to ensure they are legitimate and have the correct business licenses, shifting more onus for food safety onto the apps.

Merchants on food delivery platforms must now have physical shopfronts and label themselves if they do not offer dine-in services, according to the SAMR's new rules.

Platforms will now also face fines of between one and 10 times their annual revenue for violations if they involve the platform's leadership, were deliberate, and are judged to be serious.

Merchants, on the other hand, face maximum penalties of 200,000 yuan if they flout the rules.

Some merchants, labelled "transparent kitchens" on the platforms, have begun offering live broadcasts from their premises to allay consumer fears about food preparation conditions.

Taobao, which operates one of China's largest food delivery platforms, will boost the in-app visibility of merchants that implement "transparent kitchens", a representative for the platform told communist party media outlet Guangming Daily on Monday.

"Food delivery platforms... cannot simply collect commission without taking responsibility, and cannot only focus on traffic while neglecting quality," the SAMR's Director of Food Safety, Sun Huichuan, was quoted Monday as saying by state news agency Xinhua.

"Food delivery platforms must truly assume the primary responsibility of being 'gatekeepers' of food safety in the food delivery industry," Sun said.

E.Burkhard--VB