China goes after 'ghost kitchens' to rein in cut-throat food delivery apps

The thousands of "ghost kitchens" - online shops that don't actually exist - have spooked Chinese consumers. China goes after 'ghost kitchens' to rein in cutthroat food delivery apps Copyright current_year BBC. All rights reserved. The BBC is not responsible for the content of external sites. Read about our approach to external linking. Copyright current_year BBC. All rights reserved. The BBC is not responsible for the content of external sites. Read about our approach to external linking. In one province, delivery riders have been roped in to whistleblow on "ghost kitchens" Two food delivery personnel in China wearing yellow uniforms, walking in the middle of a city, carrying big bags with photos of a sandwich and fried chicken China goes after 'ghost kitchens' to rein in cut-throat food delivery apps Chinese authorities have taken aim at a new target as they rein in the country's cut-throat food delivery industry: "ghost kitchens", or restaurants that don't actually exist but appear on apps. The "ghost kitchens" outsource orders to third-party vendors, which fulfill them at lower costs, allowing merchants to push down prices and maximise profits. Authorities have found thousands of these "ghost kitchens" across China, raising concerns that the cheap prices are coming at the cost of food safety. Starting this week, apps must verify restaurants' licences and addresses, while merchants must ensure the listing online matches the physical business and specify if it offers dine-in services. The scrutiny of "ghost kitchens" began last year, after a man in Beijing lodged a complaint over an unsatisfactory cake topped with inedible flowers. He had ordered it on a food delivery app, state media reported. Officials found that the cake chain he had ordered from listed nearly 380 locations on major e-commerce platforms but did not have a single physical store. Its online shops also allegedly used forged business licences. As the investigation continued, it revealed that the chain accepted orders which were then transferred to a different platform - and that is where the orders were outsourced to various third-party vendors, depending on who had the lowest bid. Authorities found a total of 3.6 million cake orders across two order-transfer platforms, state news agency Xinhua reported last month. They also recorded 67,000 "ghost shops" across seven major food delivery apps, which together with the order-transfer sites "formed an illegal supply chain through mutual collusion", according to Xinhua. Food delivery platforms were complicit in these arrangements, it added. "If we're too strict in our review, the merchants would go to other platforms," a staff member from one delivery app reportedly told officials. Online food delivery is a fiercely competitive industry in China. Last year, a price war among major delivery apps led to government warnings about a race to the bottom. Bearing the brunt of ever-speedier takeouts are delivery riders scrambling to meet tight deadlines for a pittance. In April, the State Administration for Market Regulation said that they have fined seven e-commerce platforms - including Taobao, JD.com, Meituan and Pinduoduo - a total of 3.6bn yuan ($530m; £400m), mostly over deliveries from "ghost kitchens". As the campaign against "ghost kitchens" continues, merchants are trying to assure consumers of food safety. According to a Xinhua report, more than 20 takeout stalls in the eastern city of Hangzhou have installed "transparent kitchens" with live broadcasting features, allowing consumers to view food preparation in real time. In nearby Anhui province, authorities announced last week that they have signed a food safety agreement with Meituan, Taobao and JD.com, which includes using AI models to monitor kitchens and rewarding delivery riders for whistleblowing on illegal restaurants. Myanmar is seeking to broaden diplomatic engagement after years of international criticism and isolation. An estate agent is looking for tech-savvy students to help find buyers in China and Hong Kong. What a day in India's hottest district reveals about life on the frontline of extreme heat. Chinese firms have been vying to secure deals with big stars as they push to become global brands. Huge crowds formed outside a shopping centre in China to see actor Zhang Linghe. China's worst coal mining disaster in 15 years comes amid an ambitious pivot towards green energy. Shinjiro Koizumi makes some of Tokyo's most pointed remarks yet in the dispute over Japan's military build-up. The US defense secretary is questioned about US commitment, including further arms deals, at an Asian security summit in Singapore.