China's Instant Retail Market is Broken. Can the Industry Fix Itself?

Key Points

The China instant retail market is engaged in a severe price war, leading to “involution” (内卷, nèijiǎn) where milk tea can be delivered for as low as ¥1.9 RMB ($0.26 USD).
The China Chain Store & Franchise Association (CCFA) (Zhongguo Lian Suo Jing Ying Xie Hui 中国连锁经营协会) issued an initiative on July 15, 2025, calling for an end to these unsustainable price subsidy wars.
The CCFA highlights that these price wars are damaging physical merchants, leading to a decline in product quality and service standards, and evaporating profits, threatening sustainable industry development.
The CCFA’s 5-point plan aims to shift competition towards value, innovation, and service quality, emphasize ethical business practices, build diversified ecosystems, encourage self-regulation, and promote social responsibility.
This intervention suggests a potential maturing of China’s tech market, moving away from “growth at any cost” towards healthy unit economics and long-term sustainability.

The China instant retail market is in a full-blown price war, and the casualties are piling up.

You’ve seen the headlines: milk tea delivered to your door for a jaw-dropping ¥1.9 RMB ($0.26 USD).

While consumers might love the bargain, this kind of competition is what many in China call “involution” (内卷, nèijiǎn) – a vicious cycle of cutthroat-but-pointless competition that burns cash and crushes everyone involved.

This race to the bottom, fueled by massive capital injections, is threatening to tear the entire industry apart.

Now, a major industry player is stepping in to hit the brakes.

A Call for a Ceasefire in the Price Subsidy Wars

On July 15, 2025, the China Chain Store & Franchise Association (CCFA) (Zhongguo Lian Suo Jing Ying Xie Hui 中国连锁经营协会), a massive and influential trade group, dropped an initiative aimed at all its members.

The message was clear: this has to stop.

The CCFA warned that these low-price subsidy wars are doing incredible damage, disrupting the fair market order and causing a cascade of problems.

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Why Is Everyone Panicking? The Real Cost of “Cheap”

This isn’t just about healthy competition. The current price war is a capital-driven blitz that’s putting the squeeze on everyone.

Here’s the breakdown of the damage, according to the CCFA:

Physical Merchants Are Hurting: The normal operations of 实体 (Shíti), or physical brick-and-mortar stores, are facing existential challenges. They simply can’t compete with platform-subsidized prices.

Product Quality is Dropping: When price is the only thing that matters, quality is often the first thing to go.

Service Standards Are Slipping: corners get cut on delivery, customer support, and the overall user experience.

Profits Are Vanishing: Merchants are being pressured into margins so thin, they’re practically non-existent.

Put simply, these tactics are a threat to the entire foundation of sustainable industry development.


Category	Description of Impact
Physical Merchants	Existential challenges, inability to compete with platform-subsidized prices.
Product Quality	Significant decline as price becomes the sole focus.
Service Standards	Slipping due to shortcuts in delivery, customer support, and user experience.
Profits	Vanishing due to pressure on merchants for razor-thin margins.

The CCFA’s 5-Point Plan to Pull the Industry Back

To guide the industry back to sanity and value-based competition, the CCFA laid out a five-point “peace plan.” For founders, investors, and marketers watching the space, this roadmap is critical.

1. End the Unsustainable Price Wars

The association is calling for a halt to the “cutthroat price wars” that distort the market.

The new focus? Compete on value, innovation, and service quality—not just who can burn money the fastest.

2. Put Quality and Consumers First

Enterprises are being urged to lock in their ethical business practices.

This means ensuring product quality and service standards aren’t sacrificed in the chase for rock-bottom prices. Consumer safety and satisfaction need to be the top priority.

3. Build a Diversified, Long-Term Ecosystem

The initiative pushes for a competitive landscape where different business models can actually survive and thrive.

Companies should be focused on long-term sustainability and value creation, not short-term gains from aggressive, unsustainable pricing.

4. Self-Regulate and Manage Compliance

The message to members is to clean up their own house.

This means proactively self-regulating business practices and beefing up internal compliance to stamp out monopolistic behaviors and unfair competition.

5. Fulfill Social Responsibility

Finally, the CCFA is emphasizing corporate social responsibility.

Companies have a duty to contribute to a healthy industry ecosystem that supports everyone, from the biggest platforms to the smallest independent merchants.

CCFA’s 5-Point Plan Objectives

Shift competition towards value, innovation, and service quality.
Emphasize ethical business practices and prioritize consumer safety.
Build diversified ecosystems focused on long-term sustainability.
Encourage self-regulation and robust compliance to prevent unfair competition.
Promote corporate social responsibility for a healthy industry ecosystem.

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What This Really Means: Is China’s Tech Market Maturing?

For years, the playbook in Chinese tech has been blitzscaling: grow at all costs, capture market share, and worry about profitability later.

This move by the CCFA signals a potential turning point.

It’s a powerful acknowledgment that the “growth at any cost” model has a ceiling, and the industry may be hitting it.

For investors and founders, this is a major sign that the market is maturing. The focus is shifting from pure user acquisition to healthy unit economics and long-term sustainability.

Regulators and industry bodies are drawing a line in the sand, pushing for a more stable and fair playing field.

The battle for the future of China’s instant retail market is just getting started, and this call for regulation marks a pivotal moment in the fight for its soul.