Chinese food delivery platform "ghosts" trouble business owners; government cracks down
Food entrepreneurs across China are increasingly troubled by “ghost” vendors—fictitious sellers operating as competitors on delivery applications, causing legitimate businesses to struggle financially.
Intense competition among food delivery platforms has enabled the proliferation of fictitious merchants with no physical dining establishments. These operations often lack hygiene standards and disregard food safety regulations whilst posing as ordinary restaurants online.
The ghost kitchens frequently operate from residential buildings and use rented business licences or falsified details to register on delivery platforms.
China’s State Administration for Market Regulation (SAMR) has levied fines totalling 3.6 billion yuan (US$532 million) against seven major e-commerce platforms in April for enabling fictitious food delivery operations.
In response, the Chinese government has implemented new regulations requiring all food sellers on delivery platforms to maintain physical establishments and display specific labels if they offer dine-in services. Delivery platforms are now mandated to audit registered merchants at least every six months to verify legitimacy and proper business licensing, shifting greater food safety responsibility to the applications.
Platforms face penalties ranging from one to ten times their annual revenue for violations, whilst merchants face maximum fines of 200,000 yuan (approximately Rp 454 million) for breaching regulations.
“We will increase visibility within our application for merchants implementing transparent kitchens,” stated a representative from the Taobao delivery platform on Monday, 1 June 2026.
Sun Huichuan, SAMR’s Director of Food Safety, emphasised that delivery platforms cannot focus solely on commission collection. “Food delivery platforms cannot simply collect commissions without responsibility, and cannot focus only on traffic whilst neglecting food quality,” he said.
“Food delivery platforms must genuinely assume their primary responsibility as ‘gatekeepers’ of food safety within the delivery industry,” Sun added.