(Yicai Global) March 18 -- Midea Group has fined the e-commerce platform JD.com on which it sells its wares CNY200,000 (USD31,522) for offering promotions on some of its products that went against the Chinese home appliance giant’s marketing strategy.

Two types of air conditioners were sold from a Midea shop on JD.com at a substantial discount using coupons, disrupting market order, Yicai Global learned from a notice the white goods maker released on March 15. The MJC3 model, for example, was available for CNY5,299 (USD832), CNY500 (USD78) less than elsewhere.

Midea has halted supply of the two air conditioner models to JD.com with immediate effect, it said. Beijing-based JD.com must cancel all existing orders and bear the responsibility for not being able to fulfill them. No mention was made of the amounts sold.

Midea will take action against any of its outlets that disturb good market order as this is the premise for steady market development, the Foshan, southern Guangdong-based province said. While platforms usually have the upper hand and dictate terms to their merchants, it is very unusual for the vendor to penalize the platform.

JD.com has yet to respond. The news comes just a week after the two parties signed an agreement to co-operate on manufacturing, digital supply chains and services.

Many companies have raised the price of home air conditioner units this year due to the soaring price of raw materials, Ma Xiaoru, an analyst at research institution ChinaIOL said earlier this month. It now costs 20 percent more to make air conditioners than it did in July 2020.

Most aircon makers had a tough time last year and end demand is weak, he said. This year they will likely shift their priority from scale to profit, he added.

The sales volume this year is likely to be the same or a little bit higher than last year and revenue will rise, Peng Xiandong, general manager of the home appliance division of GFK Zhongyikang, told Yicai Global.

Companies must merge or find other ways to hike their market share in order to profit, he added.

Editor: Kim Taylor