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 The State Administration for Industry and Commerce (SAIC), in a
report published on its website on Wednesday, said many products
sold on Alibaba's e-commerce websites and services infringed upon
trademarks, were substandard or fake, were banned or endangered
public security.
The report was later removed from the main page of the SAIC website.
(www.saic.gov.cn)
Alibaba declined to comment on the report. SAIC said the report
summarised a July 16, 2014, meeting between government business
regulators and Alibaba, and that it had delayed releasing the report
to avoid affecting the e-commerce firm's initial public offering,
which took place in September.
SAIC did not elaborate. Alibaba, which raised a record-setting $25
billion from its New York IPO, is due to release its quarterly
results on Thursday.
"Alibaba Group has long paid insufficient attention to the illegal
business activities on Alibaba platforms," the SAIC report said.
Alibaba "let that abscess fester until it became a danger", it
added.
The report said Alibaba officials, for their part, pledged during
the July meeting to take the necessary steps to rectify the
problems. The SAIC has a broad supervisory role over online trading
platforms and business in China.
Alibaba, which until a few years ago was on a U.S. list of
"notorious markets" for intellectual property infringement, has
fought hard to tackle counterfeit products to keep its reputation
from being tarnished in the run-up to, and after, the IPO, the
world's biggest ever listing.
Earlier this month, it agreed with the U.S. Consumer Product Safety
Commission to stop the sale of up to 15 illegal or dangerous toys in
the United States.
Online fakes, however, remain a big problem in China.
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Joe Simone, director of Hong-Kong based intellectual property
consultancy SIPS, said the regulator's comments about counterfeit
goods were no surprise. "The frankness of the report and its
condemning tone are unprecedented and speak volumes about what the
SAIC found in its inspection," he added.
In the report, the regulator said Alibaba had misled consumers
during sales events, including its popular Nov. 11 annual "Singles
Day" shopping extravaganza.
At last year's event, Alibaba reported a surge in sales transactions
to a record high of $9 billion, but merchants told Reuters in they
felt pressure from Alibaba's Tmall to boost their figures on the day
with heavy discounts and delayed recognition of earlier sales.
On Wednesday, Alibaba's consumer-to-consumer shopping website Taobao
said it would lodge a complaint with the SAIC over a separate
investigation by the regulator that allegedly uncovered a range of
counterfeit products on the site.
($1 = 6.2465 yuan)
(Additional reporting by Paul Carsten in BEIJING; Editing by Miral
Fahmy)
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