ZTO, ATRenew: China's Ban on Below-Cost Pricing Squeezes Small Operators

On earnings calls held between August 18 and August 20, 2026, ZTO Express (ZTO), FlashEX (FLX) and ATRenew (RERE) each said the same thing about China's anti-involution enforcement: pricing below cost to win orders and share is now treated by regulators as a violation [1][2][3]. The three run different businesses — parcel delivery, intra-city instant delivery and pre-owned phone trading — and do not compete with one another.

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How the low-price playbook worked, and what closed it

Parcel carriers charge per item. The more items move through the network, the less each sorting center and line-haul truck costs per parcel, so the standard playbook was to cut price, build volume, and spread fixed cost over the larger base. Instant-delivery and second-hand trading platforms ran the same play with subsidies instead of postage.

What changed is the legality of that move. The State Administration for Market Regulation's anti-involution campaign turned below-cost volume buying into a violation. ZTO said on its May 19 call that tighter enforcement across regions shrank low-priced parcel volume and restored industry pricing stability [4]. The rules also add a mandatory cost to each unit: express networks must provide standardized social security for their workers, which ZTO said "will inevitably bring about end-to-end cost increases in the foreseeable future" [1]; in instant retail, seven platforms signed a self-discipline convention in Hangzhou on May 20, 2026 covering marketing conduct, merchant rights and rider protections [2]. Together, the operator whose price advantage came from paying the least loses that advantage.

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Growth slows first; share moves to the compliant operator

ZTO cut its full-year 2026 parcel volume growth guidance to 6%-10% from 10%-13%, a range of 40.83 billion to 42.37 billion parcels [1]. That absolute range is almost identical to the guidance it gave for 2025 a little over a year earlier — 40.8 billion to 42.2 billion parcels — which at the time represented 20%-24% growth [5]. Roughly a year of volume growth has been erased. Growth is what moved; margin has not changed yet.

ATRenew's disclosure is about share. Its chairman and CEO said on the August 20 call that tighter taxation and device-refurbishment regulation hits fragmented, small-scale and non-compliant operators harder, and that this business flows to the company's first-party operation [3]. The same call reported that third-party warehousing inspection penetration on PJT, its merchant-facing pre-owned marketplace, reached 84.4%, up about 11.5 percentage points year over year [3].

The rule change has not yet improved anyone's reported numbers. FlashEX signed the Hangzhou convention, and its second-quarter revenue still fell to RMB940.3 million from RMB1,024.6 million, with gross margin down to 10.2% from 12.0%; management attributed the decline to intensifying marketing competition [2]. The convention was signed inside the quarter, and so was the price war.

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What happens once the cost floor per order rises

The rules change the floor under the cost of a single order. How low that cost could go used to depend on how much an operator was willing to skip — no invoice, no refurbishment, no social insurance for riders and couriers. Those items are now compliance requirements, so every order carries a fixed charge, fewer operators survive at the old price, and the remaining orders move to the scaled platforms that were already paying.

Subsidies are being pulled back as well. JD.com (JD) said on August 13 that food-delivery order volume kept growing in the second quarter while total losses narrowed by more than 50% year over year and subsidy per order fell notably [6]. Alibaba (BABA) said on August 20 that quick commerce grew 45% in scale while losses narrowed substantially [7].

The boundary sits here. The evidence shows the price-and-subsidy instrument has been withdrawn; it does not yet show whose profits get fatter as a result. The figures to watch are parcel revenue and cost per unit at the carriers, and how much social security adds to each parcel once it lands in the income statement.

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Companies exposed to the same change

• Full Truck Alliance (YMM): Matches shippers with truckers online and takes a cut of the freight. On its August 19 call it disclosed that the take rate for its self-operated invoicing business remains stable at approximately 10% [8]. The regulator's July 7 rectification of Huolala, a comparable platform, cut overall platform commission from about 11% to about 9% [9] — the same rule applied to the same fee line.
• Renrui Human Resources (06919.HK): Provides blue-collar flexible staffing and HR outsourcing, billing per worker per month for onboarding, payroll and social-insurance administration. Standardized social security across express networks and rider-protection terms at the platforms convert informally engaged workers into workers who must be registered and contributed for, so its volume tracks its clients' compliance cost rather than their prices.

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Sources

[1] Drillr · ZTO Express (ZTO) · 2026-08-18 · FY2026 Q2 earnings call

"As the anti-illusion policy continued to take effect in the first half of the year, the express delivery industry has undergone a period of adjustment and has gradually shifted away from price-led scale expansion to quality-driven development, leveraging operating efficiency."

[2] Drillr · FlashEX (FLX) · 2026-08-20 · FY2026 Q2 earnings call

[3] Drillr · ATRenew (RERE) · 2026-08-20 · FY2026 Q2 earnings call

[4] Drillr · ZTO Express (ZTO) · 2026-05-19 · FY2026 Q1 earnings call

[5] Drillr · ZTO Express (ZTO) · 2025-05-20 · FY2025 Q1 earnings call

[6] Drillr · JD.com (JD) · 2026-08-13 · FY2026 Q2 earnings call

[7] Drillr · Alibaba (BABA) · 2026-08-20 · FY2027 Q1 earnings call

[8] Drillr · Full Truck Alliance (YMM) · 2026-08-19 · FY2026 Q2 earnings call

[9] Yicai · SAMR supervises Huolala's antitrust compliance rectification · 2026-07-07 · news record · https://www.yicai.com/news/103264371.html

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