A complaint over a poorly made birthday cake in Beijing has sparked an investigation into China’s food delivery industry. The case began last summer when Liu, a resident, reported a cake ordered through an online platform that arrived with an inedible decorative flower.
Regulators traced the order to a fraudulent bakery chain claiming nearly 400 outlets but operating without physical storefronts and using forged licenses. This led to a nationwide probe into the online food supply chain.
Investigators found a widespread system where merchants accepted orders, then relisted them on intermediary platforms for fulfillment at the lowest price. Authorities said this incentivized cost-cutting over quality and safety.
More than 67,000 such vendors were identified, selling over 3.6 million cakes. Seven major platforms, including PDD Holdings, Alibaba Group, ByteDance, Meituan, and JD.com, failed to verify vendors or protect consumers.
Authorities imposed combined fines of 3.6 billion yuan ($528 million), the largest penalty since China’s food safety law was amended in 2015.
The investigation also documented resistance from company staff, including delayed cooperation, obstruction of data requests, and reported confrontations with investigators.
In one case cited by state media, a customer paid 252 yuan ($35) for a cake that was resold through an intermediary bidding system, with the final producer receiving just 80 yuan. Regulators said intermediaries and platforms captured most of the value chain.
Officials described the system as an “industrialised” form of illegal activity linked to intense price competition in China’s platform economy, known domestically as “neijuan,” or involution.
Authorities have stepped up efforts in recent years to curb such practices, which they say are driving unsustainable price wars and eroding product quality across industries.