China’s ‘AB Goods’ E-Commerce Chaos Exposes Pressures

Chinese consumers are increasingly discovering that the same product, at the same price, from the same online listing can arrive with dramatically different quality depending on where they live. This practice, known as “AB goods” (AB货), has become a flashpoint in China’s e-commerce industry, raising serious questions about consumer protection and fair business practices in the world’s largest online retail market.

According to a People’s Daily investigation published on August 17, some merchants deliberately send higher-quality “A-grade” products to consumers in first-tier cities while shipping lower-quality, reduced-specification “B-grade” products to county towns and rural areas - exploiting lower consumer awareness and higher return costs in those regions.

The ‘Same Price, Different Quality’ Problem

The phenomenon spans multiple product categories, including clothing, footwear, home appliances, fresh produce, daily chemicals, and cosmetics. Consumers have reported receiving shoes that feel different from what they tried on in stores, hair clips that arrive smaller when shipped to rural addresses, and cutting boards with different materials depending on the delivery location.

One consumer, identified only as Li, tried on a pair of brand-name shoes at a physical store and then ordered the same style from the brand’s official online shop at a lower price. When the shoes arrived, the color appeared grayer and the feel was noticeably less soft than the in-store version. “Generally, when consumers see the same brand and same style from an official store, they naturally expect it to be the same product,” Li said.

An earlier Economic Information Daily investigation published in March found that some merchants use “same product, same quality” claims as a low-price marketing tactic, while actually shipping products with reduced specifications, different materials, or from different production batches.

Industry ‘Involution’ and Economic Pressures

The roots of the “AB goods” problem lie deep in China’s hyper-competitive e-commerce landscape. Industry observers describe a state of “involution” (内卷) - a zero-sum competitive dynamic where merchants must work increasingly harder for diminishing returns.

“Before, it was hard to find goods; now there are too many goods,” said Chen Yu, an e-commerce clothing merchant with a decade of experience in Guangdong and Zhejiang provinces. Chen acknowledged that some shops maintain inventory from multiple batches and quality levels, driven by the intense pressure of low-price competition.

Nanjing-based e-commerce operator Zhang Lei calculated the economics of a typical 100-yuan women’s garment: product costs consume 30-40%, platform commissions 5-10%, advertising 15-25%, and logistics 10-20%. “Profit is sometimes only a few percentage points,” Zhang said, noting that high return rates in clothing can turn a single sale into a loss.

This profit squeeze has direct consequences for supply chain quality control. Merchants increasingly source from multiple factories, choosing whichever offers the lowest price. “Looking at the detail page, it’s the same piece of clothing, but behind it there may be three or four factories and multiple production batches,” Zhang explained. “Some merchants can’t even inspect every item themselves.”

A Structural Problem, Not Just Bad Actors

Experts say the “AB goods” phenomenon reflects deeper structural issues in China’s platform economy. Hu Xiaowu, associate professor at Nanjing University, described it as “a structural phenomenon formed by the combined effects of platform economics, supply-demand imbalance, and consumer psychology.” The widespread consumer expectation of “low price, high quality” pushes merchants toward ever-lower costs, while an oversupply of homogeneous products intensifies the race to the bottom.

“When an industry falls into deep involution, some business ethics originally built on quality are easily eroded by the market logic of ‘lowest price first,’” Hu warned. This dynamic risks creating a “race to the bottom” that undermines both consumer trust and industry innovation.

Some merchants have developed sophisticated “AB goods” production and distribution chains. Su Haopeng, a professor at UIBE Law School, described factories maintaining separate production lines - one using quality materials for display samples and urban deliveries, another using cheaper materials for budget-conscious markets. Merchants may use address data, account levels, or promotional codes to determine which version to ship.

Regulatory Response Intensifies

Chinese regulators have been increasingly concerned about “involution-style competition” in the platform economy. In February 2026, the State Administration for Market Regulation (SAMR) summoned representatives from seven major platform companies - including Alibaba, JD.com, Meituan, Tencent, and Douyin - demanding they eliminate various forms of “involution-style competition.”

The “Internet Platform Price Behavior Rules,” which took effect on April 10, 2026, explicitly prohibit “big data price discrimination” with fines up to 5 million yuan. In May 2026, SAMR launched a nationwide special campaign to combat “inferior low-price” practices as part of addressing involution-style competition.

However, enforcement remains challenging. Zhao Zhanling, a lawyer at Beijing Jiawei Law Firm, noted that “proving merchant fraud or failure to respect consumer right-to-know is currently difficult because there is no specific definition or standard for ‘AB goods.’” Over 3,000 complaints related to “AB goods” have been filed on major complaint platforms.

Calls for Stronger Platform Oversight

Experts argue that platforms must take greater responsibility for policing “AB goods” practices. Deng Shiming, a professor at Huazhong University of Science and Technology, recommended that platforms establish clearer definitions distinguishing quality downgrades from normal batch variations, implement blind testing of popular products, and impose escalating penalties on offending merchants - including point deductions, reduced visibility, frozen deposits, and store closures.

Zhu Wei, associate professor at China University of Political Science and Law, emphasized that “e-commerce platforms must truly assume their primary responsibility and use AI and other technological means for supervision,” particularly for products and merchants with concentrated complaints.

Chen Yinjiang, deputy secretary-general of the China Law Society Consumer Protection Law Research Association, characterized the recent emergence of “regional AB goods” as “unreasonable differential treatment of consumers, constituting consumption discrimination and suspected consumer fraud.” The Jiangsu Provincial Consumer Protection Commission has also declared that such practices infringe on consumers’ right to know and fair dealing.

What’s Next

As China’s e-commerce industry continues to evolve, the “AB goods” controversy highlights the tension between price competition and quality assurance. Industry observers suggest that platforms need to move away from “lowest price wins” algorithms and incorporate quality metrics, complaint rates, and merchant credibility into their recommendation systems.

“Let quality return to its intrinsic value, and let integrity become the foundation of market competition,” Hu Xiaowu said, calling for the industry to shift “from competing on price to competing on quality.”

For consumers, experts advise keeping evidence of purchases, verifying product details with customer service before ordering, and documenting unboxing experiences. The broader question - whether China’s e-commerce industry can transition from a race to the bottom to a sustainable quality-based competition model - will likely define the sector’s next chapter.