Pangdonglai, a widely known retail chain despite operating just 13 stores in a mere two cities in Henan province, shut down its official website on Tuesday.

The shutdown was seen by many as linked to the chain's founder Yu Donglai's comments on social media platform Douyin on Saturday, in which Yu pointed to a public and legal battle with an online video blogger who "arbitrarily accused" the enterprise of profiting excessively from jade products.

In a short video posted by the blogger in early April under user name "Chaiduidui", he alleged that the company sold jade items worth only a few hundred yuan for thousands of yuan or even tens of thousands of yuan, and questioned the quality of such products.

Pangdonglai responded to the allegations on April 8, issuing a statement addressing three separate cases of alleged online defamation, including the dispute with Chaiduidui. On April 30, the company announced it had received a court appearance notice, confirming that it had filed a lawsuit on April 25 against blogger Chaiduidui for alleged commercial disparagement and defamation at the Intermediate People's Court of Xuchang in Henan.

Noticing the online comments regarding the retailer, the Xuchang market regulation bureau conducted an inspection of Pangdonglai's jade unit — Weichu Jewelry — during the just-concluded May Day holiday, said a Xuchang Daily report on Monday.

Inspection officials reviewed the company's jade sales data and randomly audited 13 pieces of Hetian jade. The team found that it sold 4,177 jade items from January to April, generating total sales of 29.59 million yuan ($4.1 million), with an average gross profit margin not exceeding 20 percent.

All sampled items had complete documentation, including purchase records and valid certificates from licensed appraisers, the bureau said.

Yu also doubled down on his stance during the May Day holiday, frequently posting on social media his take on the matter. On Saturday, Yu vowed to leave Pangdonglai permanently if similar smear campaigns like the blogger in question's go unpunished, claiming that he will voluntarily shut down or leave the enterprise forever.

As of late Tuesday, videos of blogger Chaiduidui, who has about 200,000 followers on Douyin and posts content mainly about jade, have all been removed from the social media platform, including one in which he responded to Yu's comments by demanding Pangdonglai compensate those who purchased items such as Qinghai and Russian jade products, as they were "overpriced or of low quality".

According to media outlet Lanjinger, Chaiduidui's livestream sales over the past 90 days totaled between 500,000 yuan and 750,000 yuan.

The incident has drawn widespread national attention regarding efforts to protect the legal rights of private businesses, particularly their rights to safeguard their reputations and honor.

In an open letter, Yonghui Superstores, a major retailer that recently adopted the Pangdonglai model at its stores, expressed its strong commitment to ethical business principles. "We firmly oppose any publicity-seeking actions that undermine business ethics," said the letter from Yonghui.

The controversy also highlights the growing tensions between traditional retailers and social media influencers in China's evolving e-commerce landscape, said industry observers.

Douyin announced on Saturday that it had received a complaint from Pangdonglai's Yu regarding Chaiduidui's content. Apart from removing 29 of his videos containing potentially libelous content over the matter, the platform also restricted his account for one month and plans to escalate measures if further violations occur.

Douyin also said it would await the court's decision regarding Pangdonglai's lawsuit. If the court rules in Chaiduidui's favor, the blogger may appeal to have the platform's penalties reversed.

The role of platforms like Douyin in amplifying public disputes is also a factor that should be closely monitored, analysts said. "Knowing that praising a well-known enterprise attracts only a few clicks, while criticizing without solid proof for wider attention — and the harsher the criticism, the better — is a behavior that should be punished," said Jason Yu, general manager of CTR Market Research.

Already a public icon, Pangdonglai should also employ more scientific and effective methods to manage its reputational risks.

"Utilizing public data, legal measures and third-party institutions to protect its rights is essential," Yu said.