Amazon faces a lawsuit from multiple Chinese companies | Dao Insights

Amazon faces a lawsuit from multiple Chinese companies

Multiple Chinese companies are suing Amazon for illegally banning them from the marketplace and withholding their funds, after 3000 Chinese merchant accounts were closed on the platform this year. 

Amazon clarified that such a large-scale ban did not target China; the real reason behind it was their illegitimate paid product reviews that were detected by the platform’s algorithm.

To be specific, Amazon caught those Chinese vendors requesting good reviews by offering rewards such as gift cards. In fact, such practice is quite common in China and consumers are aware of it. However, bolstering ratings on product listings on Amazon violates the company’s product review policies, which often ends up with the seller being suspended.

Regarding this ban case, Chinese analysts stay neutral. On one side, they reckon that the ban stemmed from review abuse is part of the normal risk management in e-commerce, which is there for the entire industry to address, not just for one platform. In that case, Amazon’s campaign is for the good of the industry in the long run. On the other side, they also encourage overseas Chinese merchants to uphold their legal rights by resorting to law, when the platform has more say than the individual. 

For Chinese vendors, this event serves as a reminder not to put all their eggs in one basket ­– some are already considering developing their own independent e-commerce platforms and, perhaps, working with TikTok. In the meanwhile, some sellers have lost trust and left Amazon – the proportion of Chinese merchants on Amazon has dropped from 40% to 38% between January and September this year.

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