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Alibaba Sells Shoddy Goods Says China Watchdog

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A Chinese regulator has launched an extraordinary attack on e-marketplace Alibaba, accusing it of failures including bribery and selling fake goods- reported th SkyNews.


The critical report was reportedly withheld to avoid disrupting its US stock market debut last year.

The State Administration for Industry and Commerce said it had found that many products on Alibaba's platforms infringed trademarks, were substandard, illegally imported, had been banned or even endangered public security.

"Illegal business exists on Alibaba Group's trading platforms, and for a long time the company has failed to pay adequate attention and failed to take measures to stop it," the report said.

"This not only is the biggest crisis of integrity faced by the company since its founding, but also has hurt other Internet companies that try to operate legally."

It said Alibaba allowed "illegal advertising" that misled consumers with false claims about low prices and other details, claimed  some Alibaba employees took bribes and the company failed to deal effectively with commercial fraud.

An Alibaba spokesman said the company was preparing a public statement.

Its services include Taobao, a consumer-to-consumer platform, and Tmall for consumer brands.

The company went public in New York in September after raising a record $25bn in an initial public offering.

Investors bought into the surge in online shopping in China, alongside the expansion plans of its founder Jack Ma who wants to take Alibaba to other emerging markets, Europe and the United States.

Its last financial results showed that profits were hit by investment though revenue soared 54%.

Chinese shoppers are predicted to triple their online spending between 2011 and 2015 though the country's economy is currently slowing.

Yahoo! bought into Alibaba a decade ago and is reaping the benefits of that investment.

Its chief executive Marissa Mayer confirmed on Tuesday that she was to spin off the company's remaining stake, currently worth $39bn (£25.7bn), and create a new investment vehicle called SpinCo.

The move enables Yahoo! to avoid paying billions of dollars in future taxes as SpinCo's gains from the sale of Alibaba stock would be taxed at a lower rate than if Yahoo! had held on to it.

The move helped Yahoo! shares gain more than 7% in extended trading.



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