Stop Selling Counterfeit Goods, SAIC Admonishes Alibaba
The E-commerce tycoon of China, Alibaba, faced a shameful criticism of living in ‘credibility crisis.’ A report issued by the State Administration of Industry and Commerce (SAIC) accused Alibaba for its inability to curtail the sales of counterfeit goods on its websites.
SAIC further inculpated Alibaba for misleading the consumers with propagation of false information.
The panel session took a more horrible twist when the head of Alibaba cross fired regulators blaming them for being biased and misconduct. As reported by the Forbes, the company has decided to advance a complaint against director of the federal agency for condemning its business practices without any evidences.
Such an open confrontation is a rare case in China. The timing of such a report with stringent implications is susceptible.
It has been reported that SAIC had written this report in July. They also met with the group’s management. However, the unusual delay in publishing the report is sort of incomprehensible. During this period, Alibaba raised $25 billion in its September IPO and never disclosed any of such investigations being done by the agency.
The recent controversy has thrown Alibaba’s traded shares about 4% in New York Stock market. Plus it may have serious implication on Yahoo’s business strategies as the tech firm holds a 15% stake in Alibaba group.
Consider ramifications of today’s controversy only: it had snipped off about $1 billion from Yahoo’s stakes value. The company, certainly compelled to do so, has decided to spin off the Chinese company shares later in the current year.
Counterfeit goods selling is not a new tag for Alibaba. It has been having a history with similar allegations. For example, from 2008 to 2011 Alibaba along with Taobao were in the list of U.S.’s “notorious markets.” Now once again, after three years from getting removed from that list, Alibaba is accused for such unethical patterns of selling, which is likely to have serious repercussions for somewhat ill-famed company.
This time the situation is even more alarming for Alibaba as it is being blamed by its home agency.
SAIC has a history of aggressive attitude towards regulating businesses in China. Many foreign companies have complained of its unfair treatment. The agency pursued antitrust in investigations against Microsoft last year, and also raided the offices of IT firm Accenture, one of the software giant’s consulting partners.
“Maybe SAIC is making the point that it can go after domestic companies as well as foreign companies,” says Nicholas Lardy, a China specialist at the Peterson Institute for International Economics.