China Publishes Typical Cases of Illegal Competition Involving Product Quality
Published 8 July 2025
Fei Dang
On July 6, 2025, the State Administration for Market Regulation (SAMR) published a batch of typical cases involving violations of the law in the field of product quality in order to “warn production and sales units to strictly implement the main responsibility for quality and safety and actively create a safe and secure consumer environment.”
All of the published cases are the “rat race competition” cases, which refer to “the phenomenon of over-competition in a particular field or industry, where participants compete for limited resources and opportunities without resorting to over-investment, which ultimately leads to a waste of resources and a decline in efficiency.” More specifically, it can be reflected as low price competition, homogenization competition, and only focusing on publicity and marketing other than product quality.
For instance, in August 2024, the Market Regulation Bureau of Hainan Province inspected power cables used in a construction site and found that the said power cables did not meet the national standard, the quality thereof was not qualified. Upon investigation, the said cables were sold by Hainan Huancheng Wire and Cable Co., Ltd. to the construction site, and the unqualified cables that did not meet the national standard were 1528 meters with a value of 646,500 yuan, the illegal gain therefrom was 63,600 yuan. The said party's behavior violated Article 13 of the PRC Product Quality Law, which provides that “The industrial products that may endanger human health and personal and property safety must comply with the national standards and industrial standards that protect human health and personal and property safety; the requirements that protect human health and personal and property safety in case of no national standards and industrial standards. It is forbidden to manufacture and sell industrial products that do not meet the standards and requirements that protect national standards, industrial standards.” Accordingly, the Market Regulation Bureau of Hainan Province ordered the concerned party to stop selling the power cables that do not meet the national standards and confiscated the unqualified power cables of 1528 meters, as well as the illegal gains of 63,600 yuan, and imposed a fine of 1,313,300 yuan (the total amount of confiscation of 1,194,900 yuan) of the administrative penalties.
Another example of the published case is the sale of “liquid wax alcohol ether composite diesel fuel” of substandard quality. In August 2024, a local Market Regulation Bureau in Zhejiang Province received information regarding the sales of “liquid wax alcohol ether composite diesel fuel,” which is a diesel alternative fuel oil known in the industry as “new energy fuel oil,” to trucks within its jurisdiction, and the seller is a company named Shaoxing Hongguan New Energy Co., Ltd. Upon a random sampling check and a test based on the standard Q/410100BH 001-2023 “liquid wax alcohol ether composite diesel fuel” committed by the manufacturer and the seller, it was found that the fuel failed the requirements in terms of sulfur content, freezing point, cold filtration point, distillation range, and kinematic viscosity, which means that it was an unqualified product. Upon investigation, the product value of the unqualified fuel was 245,700 yuan. Such sales had violated Article 39 of the PRC Product Quality Law, which provides that “When selling products, the sellers shall not adulterate, counterfeit, pass off with good quality, nor pass off unqualified products as qualified products.” As a result, the concerned party was imposed a fine of 311,700 yuan of administrative punishment.
As early as in July 2024, China mentioned strengthening the industry's self-regulation and preventing ‘involutional’ vicious competition (i.e., rat race competition) in a meeting of the Political Bureau of the Communist Party of China Central Committee for the first time. Subsequently, the SAMR issued ten measurements to rectify such involutional competition, which includes strictly investigating and dealing with unfair competition offenses, such as exposing a number of typical cases, etc., as the published cases herein show. Other measurements include, but are not limited to, strengthening price supervision in key industries and areas in accordance with the law, resolutely combating infringement and counterfeiting, the production and sale of counterfeit goods and other illegal acts, and thoroughly implementing the fair competition review system, and so on.
In a word, more specific measures may be adopted to regulate such “involutional competition” in order to maintain a fair and healthy market order.
All of the published cases are the “rat race competition” cases, which refer to “the phenomenon of over-competition in a particular field or industry, where participants compete for limited resources and opportunities without resorting to over-investment, which ultimately leads to a waste of resources and a decline in efficiency.” More specifically, it can be reflected as low price competition, homogenization competition, and only focusing on publicity and marketing other than product quality.
For instance, in August 2024, the Market Regulation Bureau of Hainan Province inspected power cables used in a construction site and found that the said power cables did not meet the national standard, the quality thereof was not qualified. Upon investigation, the said cables were sold by Hainan Huancheng Wire and Cable Co., Ltd. to the construction site, and the unqualified cables that did not meet the national standard were 1528 meters with a value of 646,500 yuan, the illegal gain therefrom was 63,600 yuan. The said party's behavior violated Article 13 of the PRC Product Quality Law, which provides that “The industrial products that may endanger human health and personal and property safety must comply with the national standards and industrial standards that protect human health and personal and property safety; the requirements that protect human health and personal and property safety in case of no national standards and industrial standards. It is forbidden to manufacture and sell industrial products that do not meet the standards and requirements that protect national standards, industrial standards.” Accordingly, the Market Regulation Bureau of Hainan Province ordered the concerned party to stop selling the power cables that do not meet the national standards and confiscated the unqualified power cables of 1528 meters, as well as the illegal gains of 63,600 yuan, and imposed a fine of 1,313,300 yuan (the total amount of confiscation of 1,194,900 yuan) of the administrative penalties.
Another example of the published case is the sale of “liquid wax alcohol ether composite diesel fuel” of substandard quality. In August 2024, a local Market Regulation Bureau in Zhejiang Province received information regarding the sales of “liquid wax alcohol ether composite diesel fuel,” which is a diesel alternative fuel oil known in the industry as “new energy fuel oil,” to trucks within its jurisdiction, and the seller is a company named Shaoxing Hongguan New Energy Co., Ltd. Upon a random sampling check and a test based on the standard Q/410100BH 001-2023 “liquid wax alcohol ether composite diesel fuel” committed by the manufacturer and the seller, it was found that the fuel failed the requirements in terms of sulfur content, freezing point, cold filtration point, distillation range, and kinematic viscosity, which means that it was an unqualified product. Upon investigation, the product value of the unqualified fuel was 245,700 yuan. Such sales had violated Article 39 of the PRC Product Quality Law, which provides that “When selling products, the sellers shall not adulterate, counterfeit, pass off with good quality, nor pass off unqualified products as qualified products.” As a result, the concerned party was imposed a fine of 311,700 yuan of administrative punishment.
As early as in July 2024, China mentioned strengthening the industry's self-regulation and preventing ‘involutional’ vicious competition (i.e., rat race competition) in a meeting of the Political Bureau of the Communist Party of China Central Committee for the first time. Subsequently, the SAMR issued ten measurements to rectify such involutional competition, which includes strictly investigating and dealing with unfair competition offenses, such as exposing a number of typical cases, etc., as the published cases herein show. Other measurements include, but are not limited to, strengthening price supervision in key industries and areas in accordance with the law, resolutely combating infringement and counterfeiting, the production and sale of counterfeit goods and other illegal acts, and thoroughly implementing the fair competition review system, and so on.
In a word, more specific measures may be adopted to regulate such “involutional competition” in order to maintain a fair and healthy market order.