Report: China criticizes Alibaba for fake merchandise

Hangzhou, China – The Chinese regulatory agency State Administration for Industry and Commerce (SAIC) has reportedly criticized Alibaba Group Holding Ltd. for not making enough effort to prevent the sale of counterfeit items on its e-commerce platform. According to the Wall Street Journal, the SAIC issued a report starting Alibaba offers insufficient product information and does not use an effective system to rank sellers.



“Alibaba Group hasn’t been paying enough attention to the mismanagement of the Alibaba Internet transaction platforms for a long time, and hasn’t implemented effective controls to solve the problems,” the SAIC stated in the report.



The Alibaba Taobao e-commerce platform issued a response accusing the SAIC of misconduct.



“We believe (SAIC) director Liu Hongliang’s procedural misconduct during the supervision process; irrational enforcement of the law; and obtaining a biased conclusion using the wrong methodology has inflicted irreparable and serious damage to Taobao and Chinese online businesses,” Taobao said in a statement.



The U.S. previously included Taobao on a list of known counterfeit markets but removed it in 2012. Alibaba warned investors it may face legal sanctions or reputational damage due to the sale of counterfeit items in its prospectus for its U.S. IPO in September 2014. SAIC said it plans to work with Alibaba on reducing the sale of counterfeit goods.