Alibaba Criticized For "Lax" Operations

Counterfeits A Longstanding Issue

Alibaba CriticizedAlibaba has been “far too lax” in its business operations, according to a report just released by the Chinese government. The State Administration of Industry and Commerce (SAIC) accuses the e-commerce giant of ignoring illegal activity, and turning a blind eye to the sale of counterfeit goods that include designer bags and smartphones.

Regulators say the report stems from a July meeting between the company and government officials, but it wasn’t released earlier to avoid interfering with Alibaba’s $25 billion IPO in September.

Counterfeits are a longstanding issue for Alibaba, which operates a number of popular online shopping sites, including Taobao and Tmall. “Taobao has done a tremendous amount of work towards fighting counterfeits, but it is far from complete,” said Bob Christie, a spokesman for Alibaba, in response to the just-released report. “We need more law enforcement agencies to join us in the fight and eradicate the cancer at the roots.” Alibaba plans to file a complaint to the SAIC.

Alibaba signed several anti-piracy agreements with luxury brands and industry groups to appease investors’ concerns prior to its IPO. It also launched a policy on some of its platforms to ban sellers after three counterfeiting violations. Two years ago, the company removed 114 million product listings from Taobao over a period of 10 months. Alibaba said recently that it has spent $160 million combating the sale of fake goods.