One of China’s most powerful drinks billionaires is sounding the alarm — and taking aim at the country’s biggest e-commerce platforms.
Wu Xiangdong, chairman of VATS Liquor Store and known as China’s “godfather of baijiu,” used a three-hour livestream to call out online giants, warning that deep discounts and massive subsidies are pushing the industry into a race to the bottom.
Wu said large-scale subsidy programmes – commonly known as “hundred-billion-yuan subsidies” – are distorting pricing for premium spirits and pushing the industry into a vicious cycle. Many brick-and-mortar liquor shops are now operating at a loss, he said.
“The big operators are losing big, the small ones are losing small – and anyone selling liquor is losing money,” Wu said during the livestream.
“The big operators are losing big, the small ones are losing small – and anyone selling liquor is losing money.”
Wu Xiangdong
He added that in some cases, offline retailers are purchasing stock at prices higher than those offered by e-commerce platforms, leaving them unable to sell inventory.
“For small shop owners who rely on selling alcohol to support their families, this is the hardest time,” he said. “Nothing is profitable. Inventory doesn’t move, and even products that sell well lose value if you hold them for too long.”
Wu specifically named platforms including Pinduoduo, JD.com, Tmall and Douyin, urging them to consider the livelihoods of more than 10 million offline liquor retailers.
Subsidies drive price inversion
The so-called “hundred-billion-yuan subsidy” is a key promotional strategy used by Chinese e-commerce platforms in recent years. By injecting large amounts of capital, platforms subsidise popular products directly, pushing retail prices below market averages to attract consumers and boost user activity.
Publicly available data show that on one platform, the subsidised price of premium Feitian Moutai, the flagship baijiu under Kweichow Moutai, has fallen to about 1,449 yuan (US$200), below its official retail price of 1,499 yuan. Meanwhile, distributors paid about 1,570 yuan (US$228) to get the stock.
In other words: retailers are buying high and selling low.
With inventory piling up, many traders are dumping stock online just to generate cash, fuelling a vicious cycle of falling prices.
Pressure spreads across the industry
Wu’s comments follow similar concerns raised by Wuliangye, China’s second-largest baijiu producer, which previously warned that some products sold through subsidised e-commerce channels may not come from authorised supply sources.
Wu himself has not been immune to the downturn. Between 2024 and 2025, VATS Liquor Store reported declining net profits and, in some periods, losses, as we have reported. The company said in financial filings that the decline was partly due to inventory write-downs. A company insider also said it has been clearing some stock through discounted sales.
As chairman of baijiu brand Zhenjiu Lidú, Wu has previously imposed strict rules on distributors, including prohibitions on selling below official guide prices and on selling through online platforms. However, with consumption weakening and online discounts becoming widespread, many distributors now face pressure to join price competition or risk stagnating sales.
The shift toward online purchasing is accelerating fast.
According to data cited by domestic industry media, orders for alcoholic beverages on one instant retail platform rose more than 60% year-on-year during the recent Lunar New Year holiday. At the same time, securities firm indicates that orders through traditional offline channels fell by about 10%.
Slower inventory turnover, longer payment cycles and mounting stock levels are putting increasing financial strain on offline distributors.
As competition intensifies, the balance between online and offline channels remains a growing challenge for China’s liquor industry.
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