Ever wondered how many fake products there are on TaoBao and other Alibaba platforms? 40%, according to a recent study published by the State Administration for Industry and Commerce (SAIC). This groundbreaking report, if found to be true, could cause serious damage to Alibaba and TaoBao in particular, which already in the past had to defend itself from allegations of selling fake products. The publication led Alibaba’s stock to fall 4% in New York.
Alibaba has invested a huge amount of money in order to clean its marketplaces from counterfeit and unauthorised products, not only to please the Chinese crowds, but also to improve its reputation abroad and especially in the US, by cooperating with the Consumer Product Safety Commission.
Yet, results are far from being ideal. Creating new listings, or even new shops is very easy and common on TaoBao, and although Alibaba has announced the creation of a new department in order to tackle the problem, it is highly unlikely that a task-force of 300 experts will make the difference in a marketplace populated by almost a billion listings.
To publish the report, SAIC ordered random products found on the main pages of various popular ecommerce websites, such as TaoBao, Tmall, JD, Yhd, and Jumei. Out of all of them, TaoBao scored the worst.
Interestingly, Alibaba disputed the report not only by stating that the procedure was incorrect and unfair, but even directly pointing the fingers at Liu Hongliang, a bureau chief at the administration for industry and commerce, accusing him of using wrong procedures during the inspection.
Alibaba is not new to direct accusations: in the past Jack Ma had already criticised China’s financial regulators, accusing them of neglecting small businesses in favour of major corporations. For many observers, this dispute may be the first of many fierce disagreements.