Chinese e-commerce giant Alibaba has complained of 'misconduct' after local regulators accused the company of turning a blind eye to the sales of counterfeit goods on sites such as Taobao and Tmall.

A report published by the Chinese government body SAIC (Trade and Commence) claimed that Alibaba allowed “illegal advertising” on its sites, especially during larger sales events such as ‘Singles Day,’ which misled customers with false pretences concerns low prices and other information. The report also said that Alibaba allowed unlicensed sellers to use its sites and failed to protect customers rights.

“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,” said government report. “This not only is the biggest crisis of integrity faced by the company since it's founding, but also has hurt other internet companies that try to operate legally.”

Alibaba responded to the report on Wednesday in a statement which accused the Chinese regulators of ‘bias and misconduct,’ adding that they will file a complaint with the agency. “We welcome fair and just supervision, and oppose selective omissions and malicious actions,” read the statement from Alibaba. “Obtaining a biased conclusion using the wrong methodology has inflicted irreparable and serious damage to Taobao and Chinese online businesses.”

The Chinese e-commerce company did not specify exactly what it felt was ‘misconduct’. Although the report in question was the result of a meeting in July between the regulators and Alibaba’s management, the report was withholding from publication until now to avoid any adverse effect towards the online company’s New York IPO last September. SAIC has since removed the report from its website.


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