Facing economic challenges, Chinese e-commerce platforms are being forced to reevaluate their return policies. The move comes as a response to increasing merchant losses caused by previously permissive refund practices. Previously, e-commerce platforms could initiate refunds directly without the approval of merchants, leading to customer reimbursements without product returns. This practice, which began in 2021 and was adopted by companies like PDD Holdings (the parent company of Temu), aimed to enhance customer satisfaction and streamline dispute resolution. However, this approach led to substantial financial losses for businesses who often had to forfeit both goods and income. The move marks a change in the regulatory landscape as it shifts control of refunds from platforms to merchants. A protest against PDD Holdings’ refund policy led to market regulator intervention, prompting the company to adjust its policies. This shift is being seen as part of a broader government effort to address concerns raised by both the National Development and Reform Commission and market regulators who have criticized the practices as “involution-style” competition.