On January 23, the State Administration for Industry and Commerce of China(SAIC) published an internet-based investigation report entitled "The directional monitoring result of internet trading commodities in the second half year of 2014 by the SAIC". The report shows that the rate of qualified products on Taobao.com is the lowest among all the e-commerce websites, measured at 37.25%.
Taobao's Statement
The report apparently irritated Taobao.
On January 27, Taobao responded to SAIC's report fiercely on Weibo, saying Liu Hongliang, the official who is in charge of online regulation, is "being biased".
"What we have failed to understand is why different standards and peculiar logics were used in different investigations and reports. Mr Liu Hongliang, you have crossed the red line; stop being biased." Taobao said in its statement.
Taobao noted that among the SAIC's survey sample of 92 batches of goods, some non-Taobao eCommerce companies were only assessed on a single batch of goods and from this data the SAIC drew the conclusion that the rate of genuine merchandise was zero. Other appliance manufacturers were assessed based on three sample batches, and the SAIC concluded that the rate of genuine articles was 100%. A sample of 51 commodities was evaluated on Taobao, yielding a rate of 37% for genuine articles.
Taobao stressed that its total daily online merchandise exceeds 1 billion items, and offers a huge platform for millions of business operations, so it should not be grouped together and compared with other B2C businesses. Taobao indicated that the SAIC's move was not negligent and must have been intentional.
SAIC Hits Back
On January 27, The spokesperson of the SAIC said the sample was only the data of one investigation and should not be overinterpreted. Yet on the following day, the SAIC published a white paper on its administrative investigation at Alibaba, showing no sign of compromising.
The White Paper was the minutes of an internal meeting half a year before. "For the purpose of not affecting Alibaba's flotation, this meeting was conducted internally. Given the current situation of regulation, in order to inform the public rightly, the authorities hereby disclose the internal meeting as it was," according to the White Paper.
The White Paper thinks Alibaba's online commerce platforms have not done enough to verify who is qualified to enter its marketplaces and what can be sold there. It also thinks its management of sale is poor and there are flaws in its credit system as well as the management of its own staff. The White Paper sets out some requirements for Alibaba to improve on those issues.