BEIJING — The Chinese government isn’t easing up pressure on Alibaba Group about counterfeits.
A top government official has issued a warning to Alibaba’s executive chairman Jack Ma that the company’s alleged selling of counterfeit and low-quality goods on its online platforms is potentially damaging China’s reputation overseas as well as Chinese consumers’ confidence in purchasing products online.
In a statement released Tuesday, China’s General Administration of Quality Supervision, Inspection and Quarantine, also known as the AQSIQ, said that Zhi Shuping, director-general of AQSIQ, told Ma during a meeting Monday that the e-commerce giant has a social responsibility to “combat counterfeiting problems” on its online retail platforms, which include Taobao.com, China’s largest consumer-to-consumer site, and Tmall.com, the country’s biggest business-to-consumer e-commerce site.
“We must pay close attention to the existence of fake products on e-commerce sites,” Zhi said to Ma, according to AQSIQ. “The Communist Party and the government attach great importance to quality and safety issues. The popularity of fake or poor quality goods must not be promoted online.”
An Alibaba spokeswoman said in an e-mail to WWD that the company did not have any further comment beyond what was said in Tuesday’s press release from AQSIQ.
Counterfeit as well as low-quality products will “not only harm consumers but also damage the reputation of the country,” Zhi said. “It will ruin the future of e-commerce development.”
The official added that within Alibaba’s business, there are “still gaps and deficiencies” with selling fake or low-quality products.
Zhi’s remarks are the latest in a string of problems China’s e-commerce darling has faced recently, among which were a market capitalization dive by $25 billion in a single day last month when third-quarter earnings fell short of Wall Street estimates.
At the end of January, a lawsuit was filed in New York against Alibaba, claiming the e-commerce giant made misleading statements and hid the fact that it met with Chinese regulators months before the company’s IPO in New York in September. The plaintiffs are alleging Alibaba met with China’s State Administration of Industry and Commerce in July 2014, just two months before its IPO, and that regulators raised concerns about possible illegal business practices.
The 23-page complaint that was filed in Manhattan federal court asserted that Alibaba violated securities laws by not raising regulatory concerns flagged during the July meeting.
Just before that lawsuit was filed, the SAIC released a report accusing Alibaba employees of taking bribes and criticizing the company for not doing enough to crackdown on the sale of counterfeit products. A few days after that report was released, Chinese regulators seemed to take a step back from their criticism of Alibaba and issued a new statement. The original report was removed from SAICs website. SAIC has since pledged to work with Alibaba to better regulate China’s burgeoning e-commerce industry.
During an event in Hong Kong last week, Ma said he is not worried about the lawsuit as well as regulatory issues emerging in China. “We need to face it. We welcome it,” he said. “Doing business anywhere you have to talk, communicate, listen, change and push. We don’t want to be misunderstood by the rest of the world that we are not transparent or that Taobao is a platform selling fake products.”