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SCMP Editorial
Editorial
SCMP Editorial

Beijing’s latest salvo in the war on ‘involution’ is warranted

The massive fine imposed on Trip.com Group is part of Chinese regulators’ campaign against self-defeating cutthroat price wars and competition

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The logo of China’s travel agency Trip.com Group is seen at its headquarter in Shanghai on January 15. Photo: AFP
SCMP Editorial
Editorials represent the views of the South China Morning Post on the issues of the day.
China’s regulators have fired a new salvo in the war on “involution” by imposing a whopping 5.2 billion yuan (US$765 million) fine on Trip.com Group, the nation’s largest online travel services provider, for monopolistic practices. The term “involution” refers to self-defeating cutthroat price wars and competition among rival businesses due to overproduction or competition, often for tiny gains in market share.
Beijing is right to target such fiercely competitive sectors because involution challenges its “dual circulation” strategy of boosting domestic consumption and technological self-reliance alongside international trade and foreign investment. Rising domestic consumption ought to raise profits and create new opportunities for local firms, but involution driven by low-margin gains prevents, or at least slows, the development of healthy domestic markets.

A months-long antitrust probe found that Trip.com Group – the corporate parent of its namesake international platform, mainland-focused siblings Ctrip and Qunar, and global site Skyscanner – had engaged in anticompetitive practices since 2020. It exploited traffic-allocation algorithms and its dominant market position to pressure hotel partners to offer exclusive deals or the lowest rates available anywhere online on its platform. It induced hotels to sign exclusive deals by promising them greater online traffic and marketing support while barring them from working with rival platforms. The fines include the recovery of 1.658 billion yuan in illegal gains and a penalty of 3.521 billion yuan, equivalent to 7.5 per cent of the company’s domestic sales of 46.958 billion yuan in 2025.

The case is the most significant antitrust action against a major internet platform since the 2021 tech crackdown. Hopefully, Trip.com will learn the error of its ways and rectify its business practices. Its public statements sound contrite; it has promised to change its ways.

But fierce price wars continue to grip the domestic hotel sector. To ensure free and fair competition not only in this but other e-commerce and e-ticketing sectors, regulators must stay vigilant and be willing to impose sufficient penalties for deterrence. Healthy competition is essential to market growth, but involution undercuts proper development and must be countered.

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