They operated in the shadows, but with almost surgical efficiency. A customer would open a delivery app, choose a restaurant displaying impeccable photos of its dishes, hundreds of reviews, and a well-established brand appearance, and place an order. What they didn't know is that, in many cases, that business did not exist beyond the screen.
Behind it was an intermediary who would collect the order and quickly forward it to a parallel network of anonymous cooks competing to prepare it at the lowest possible cost. The cheapest one would win. Quality would almost always lose. In some cases, there were elderly women cooking from their homes. None of this underwent any sanitary control.
This is how the so-called "ghost restaurants" operated in China: establishments without physical locations or any type of legitimate license. Some rented permits from third parties; others forged documents or recycled data from already closed businesses. The result was a digital ecosystem where the same kitchen could operate under multiple names, simulating chains with hundreds of non-existent branches. Like a supposed cake brand with nearly 400 stores, which turned out to be a fiction built on fake licenses and invisible kitchens.
A few days ago, the authorities in the Asian giant uncovered this entire scheme, which had a well-oiled opaque supply chain where orders were auctioned on intermediary platforms. The consumer, unaware of this circuit, would receive the final product without knowing how many hands had been involved in their order.
Beijing's response has been decisive. The State Administration for Market Regulation (SAMR) imposed fines totaling 3.6 billion yuan (around 450 million euros) on seven major digital platforms for failing to adequately verify sellers.
The regulator concluded that leading e-commerce and delivery companies had failed in their legal obligation to review licenses and qualifications, allowing the proliferation of irregular operators. In addition to the economic sanctions - the highest since the food safety law reform in 2015 - immediate corrections were ordered along with strengthened internal controls.
The platforms named are Taobao (owned by Alibaba), JD.com, Meituan, Pinduoduo (owned by PDD Holdings, which is also the parent company of Temu), and Douyin (the Chinese version of TikTok). SAMR stated in a release that it had "ordered seven e-commerce platforms to rectify their illegal activities and imposed fines." According to the regulator, the legal representatives of the companies were also fined a total of 19.7 million yuan, which is 2.5 million euros at the exchange rate.
Local media reported that this all started with what seemed like a minor complaint: a customer in Beijing reported receiving a birthday cake decorated with a non-edible flower. The complaint triggered an inspection that, over the months, turned into a national-level investigation last year. Nearly a year later, the outcome was clear: over 67,000 "ghost" sellers identified and over 3.6 million cakes sold under this system.
But the scandal is just the tip of a deeper problem: the fierce price war permeating the Chinese digital economy. In the delivery sector, as in others (electric vehicles, solar panels, or e-commerce), platforms compete in a downward spiral of discounts, subsidies, and aggressive promotions to attract users. This dynamic describes a cycle of extreme competition where all actors reduce margins to unsustainable levels without achieving real improvements in productivity or innovation.
In this context, the incentive to cut costs at any price becomes structural. Restaurants and suppliers, pressured by high commissions and increasingly lower final prices, resort to extreme, borderline legal practices to survive. Platforms, on the other hand, prioritize transaction volume over control, relying on algorithms and automated systems that, as demonstrated by this "ghost restaurant" case, are insufficient to ensure basic food safety standards.