China-based e-commerce megasite Alibaba is catching heat in its home country following a government report that scolds the company for lax controls over the sale of bogus goods to consumers, along with allegations of bribery and using its size to bully merchants from working with Alibaba’s competitors.
“Alibaba Group hasn’t been paying enough attention to the mismanagement of the Alibaba Internet transaction platforms for a long time,” reads a white paper from the State Administration of Industry and Commerce, according to a translation by the Wall Street Journal, “and hasn’t implemented effective controls to solve the problems.”
SAIC criticizes Alibaba and its eBay-like subsidiary Taobao for selling, or allowing the sale, of products that infringe on trademarks, are of substandard quality. The paper says consumers can buy fake cigarettes and booze, cellphones with bogus brand names, and equipment — like knives and wiretapping devices — that should not be available to the general public.
Merchants who sell items on Alibaba were allegedly bullied into not participating with competing online platforms’ promotions for big holiday sales in China, according to the paper.
The government also alleges a “concentrated eruption of Alibaba staffers taking commercial bribes” to unfairly promote certain suppliers’ goods and hurt their competition. The Journal’s China RealTime blog reports that some of the alleged bribes involved manipulating Taobao search results.
It’s not just fake brand-name goods that are allegedly being sold on Alibaba. The SAIC paper alleges that some merchants are using fake transactions to boost their credibility ratings. Additionally, merchants are reportedly deleting negative reviews and leaving fake negative reviews for their competitors.
A statement from Taobao says that the site is “willing to assume the responsibility of fighting fakes,” while also saying it plans to file a formal complaint with the SAIC regarding the investigation. The site claims that a top SAIC official demonstrated “procedural misconduct during the supervision process” and that SAIC obtained a “biased conclusion using the wrong methodology.”
As Alibaba, already the world’s largest online marketplace, attempts to become a major e-tail player for American consumers, it’s come under more scrutiny for its apparent hands-off approach to third-party sellers.
However, the company recently announced a deal with the U.S. Consumer Product Safety Commission that is intended to curb the import of toys and other goods that may not live up to American safety regulations.
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