Largest “Made in China, Sold on Amazon” Firm Has Closed 340 Stores Amid E-Commerce Crackdown

Amazon.com closed 340 online stores operated by one of the platform’s largest Chinese retailers in the first half of this year, as the U.S. e-commerce giant intensifies its crackdown on paid reviews and other violations.

The lawsuit has been brought against stores run by Shenzhen Youkeshu Technology Co. for allegedly breaking Amazon rules, without providing any details, according to a filing this week by the merchant’s parent company, listed Tiza Information Industry Corp. in Shenzhen.

The affected stores, which Amazon had banned or frozen from operations, accounted for 30% of Youkeshu’s total presence on the platform, according to Tiza. He said more than 130 million yuan ($ 20.08 million) of Youkeshu’s funds were frozen and estimated that the retailer’s sales in the first half of this year would be reduced by 40 to 60 percent.

Tiza said in her dossier that “the rules on e-commerce platforms have become tougher, as rights violations and manipulation of exams continue to increase.”

Youkeshu’s case marks the latest blow to the “made in China, sold on Amazon” community, comprising mainland retailers who have flocked to the US platform in an effort to reach international customers.

“Amazon can suspend sales or freeze store funds for [selling] products presenting intellectual property risks and [over] customer complaints, ”Tiza said in her record. He said more than 130 million yuan ($ 20.08 million) of Youkeshu’s funds have already been blocked by Amazon.

While Youkeshu also operates stores on other sites, including eBay, Wish, and AliExpress, the company focused more on Amazon last year with “strategic inventory” for the platform, Tiza said. AliExpress is an online retail service of Alibaba Group Holding, owner of the South China Morning Post.

Youkeshu had a total of 1,135 online stores on Amazon in 2020, which garnered 1.5 billion yuan in sales the same year, according to a separate filing by Tiza on the Shenzhen Stock Exchange in June.

Private company Youkeshu has been involved in cross-border e-commerce since 2008, selling a wide range of products including electronic gadgets, toys and outdoor equipment on various online platforms, according to the company’s website.

Amazon’s action against Youkeshu came the same week that gadget supplier Choetech, operated by Shenzhen DAK Technology Co, disappeared from the US platform, with links to product listings now inaccessible. Choetech, a popular seller of wireless chargers, did not immediately respond to a request for comment.

As Chinese merchants flock to Amazon, some are bringing with them gray area practices common to the Chinese e-commerce market. These include fabricating fake reviews and inflating sales numbers, according to industry insiders.

In June, Amazon banned three consumer brands of Shenzhen-based electronics company Sunvalley Group – RAVPower power banks, Taotronics headphones, and VAVA cameras – from offering gift cards to customers wanting to write positive reviews on their purchases.

Several weeks earlier, Amazon had blocked ads from electronics suppliers Aukey and Mpow. An Amazon spokesperson said at the time that the company did not comment on individual cases, but had systems in place to detect “suspicious behavior” and take swift action. Neither Aukey nor Mpow have been charged with fraud.

“To help earn the trust of customers, we are devoting significant resources to preventing false reviews or giveaways from appearing in our store,” Amazon said in a statement in mid-June.

“For many years, we have continued to invent, deploy and continually improve sophisticated technology powered by machine learning, and have paired it with expert human investigators to proactively prevent fake reviews from ever being seen. in our store. “

Amazon has worked for years to combat review manipulation, having banned “prompt reviews” since 2016, which includes asking a friend to leave a review and offering incentives to post positive reviews.

In 2020, Amazon stopped more than 200 million suspicious fake reviews before they were seen by a customer, and 99% of fake reviews were spotted by the platform’s own detection, according to the company.

In recent years, a growing number of Chinese merchants have turned to major international e-commerce platforms, including eBay and Amazon, to reach consumers beyond their home market.

China-based vendors made up 75% of all new merchants on Amazon in January, according to a report by consulting firm Marketplace Pulse. The share of these continental sellers on Amazon’s US site has jumped to 63% this year, from 28% in 2019.

Beijing has promoted the development of cross-border e-commerce as a new model for advancing foreign trade, with supporting policies including a faster customs clearance system.