Alibaba vows to fight fakes - and China's government
BEIJING — Billionaire entrepreneur Jack Ma, who practices China's traditional martial art tai chi, has delivered fighting talk this week as his Internet giant, Alibaba, boldly moves to counter strong criticism by the Chinese government of its operations that has hurt its share price.
Wednesday, Ma promised to establish a 300-person "fake-fighting special operations battalion" to join thousands of Alibaba employees the firm says are already engaged in the struggle against counterfeit goods on Alibaba's hyper-popular online marketplaces, Taobao and Tmall.
Counterfeits are not made by Taobao, which provides a platform for independent, often tiny retailers, but the company has a responsibility to fight this scourge together with the whole of society, Ma said in a statement on Taobao's official Weibo account, a micro-blog service like Twitter, which is banned in China.
At the same time, Alibaba is challenging a recently issued report by the State Administration for Industry and Commerce (SAIC) that accused the firm of multiple illegal activities, including bribery and allowing the sale of fake and forbidden goods. During its inspection last year, the industry watchdog found just 19 of 51 items bought on Taobao.com were genuine.
"Alibaba hasn't paid enough attention to illegal operations on its platform and hasn't effectively alleviated the situation," said the SAIC in a report, whose public issue was delayed for months to avoid affecting the firm's NYSE listing. "Alibaba faces not only the biggest credibility crisis since its founding, but also casts a negative influence for other e-commerce operators," it said.
In response, Alibaba intends to file a formal complaint accusing the SAIC's lead inspector of procedural misconduct, the company said on Sina Weibo Wednesday. SAIC director Liu Hongliang showed "irrational enforcement of the law" and reached a "biased conclusion," said the firm.
The public spat is highly unusual in China, where authorities have often praised Alibaba as an innovative, private-sector leader, and most companies keep their complaints behind closed doors for fear of upsetting powerful government bodies. Many Chinese appear to be relishing the confrontation.
"Commercial Aircraft Carrier versus the Power Center, the 2015 new year movie blockbuster officially comes out!" joked Zhang Xiao, an employee at telecom firm Xiaomi, on Sina Weibo. "In China, the entrepreneurs will just follow the orders from the government, they could never win the battle," wrote Shi Libin, a manager at a Beijing film company. "Is this a breakthrough? Let's wait and see."
Other Chinese posters to online sites hoped Jack Ma would do more to curb the counterfeit problem. "The whole world will laugh at (Alibaba), a model for rich people in China but relying on counterfeits," wrote Wang Shunyin, manager of a consultancy firm in southwest Chengdu city.
Alibaba and Taobao responded so forthrightly because "they felt they are not treated fairly, then they asked for help from public opinion," said Hu Xingdou, a professor of economics in Beijing. "It's not wrong for SAIC to strengthen supervision, but they should do it in a strict, precise, objective and fair way, not making decisions casually, it seems they are aiming at one particular company," he wrote.
People's Daily, the mouthpiece of China's ruling Communist Party, attempted a positive spin late Wednesday on its Weibo account. "The quarrel shows our social progress, the government is no longer standing high above the masses, the companies are no longer obsequious, if you order me to conduct lawful operations, you must manage according to law," it said. Only if authorities and companies jointly fight the "enemy" — fake products — will consumers benefit, said the paper.
Contributing: Sunny Yang