Chinese regulator accuses Alibaba of ‘illegal advertising’
Chinese online retailer Alibaba has come under fire from regulators on its home turf just months after debuting on the New York stock exchange, with authorities accusing the firm of failing to provide adequate consumer protection against fake and dangerous products.
In a highly critical report The State Administration for Industry and Commerce accused the business of ‘illegal advertising’ by making false claims and also documented instances of products being sold by Alibaba which infringed trademarks, failed to meet minimum quality standards or which posed a danger to the purchaser.
The report read: “"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.
"This not only is the biggest crisis of integrity faced by the company since its founding, but also has hurt other Internet companies that try to operate legally."
These troubles amount to one of the first signs of vulnerability in what had seemed an unstoppable behemoth after raising a record breaking $25bn IPO amodst the emergence of China’s high spending middle class.
Alibaba’s travails came following an announcement by Yahoo that it was to spin-off its 15 per cent stake in the e-commerce giant, estimated to be worth around $39bn.