China Pushes Toward More E-Commerce Regulation

Alibaba is shaking up its e-commerce operations in China, putting all three of its major platforms under Alibaba co-founder Jeff Zhang, Reuters reported on Monday (March 9).

Zhang will head up a new China Retail Marketplaces division that will include the eBay-like Taobao, Alibaba’s largest e-commerce offering, as well as the fast-growing brand-to-consumer Tmall and the discount-retail Juhuasuan. The company said the reorganization will streamline operations and enhance efficiency. Alibaba currently handles more e-commerce than Amazon and eBay combined.

The move — and the reassignment of Yilei Wang, who formerly headed up Tmall and Juhuasuan — came as China’s market regulator, the State Administration for Industry and Commerce (SAIC), announced that it will clamp down on e-commerce problems in the country, especially counterfeit products and poor customer service, according to Tech in Asia. SAIC minister Zhang Mao told the government news agency, Xinhua, that e-commerce platforms have to take key responsibilities for promoting credibility and integrity.

“The reason why there are so many market violations is that the cost of breaking rules is too low,” he said.

SAIC was the agency that went public in January with a report that slammed Alibaba for failing to control counterfeit and substandard merchandise sold through the Taobao marketplace. Alibaba protested that the report was flawed — only 51 products were bought on Taobao last summer for the report, from among Taobao’s 7 million merchants. But the fact that the report’s publication was delayed until after Alibaba’s record-breaking U.S. IPO in September has attracted the attention of the U.S. Securities and Exchange Commission, which is now looking into the incident.

Although that January dust-up has settled down, the SAIC is still intent on improving the fake-goods situation, although with a different approach. The agency will communicate with e-commerce companies in a better way: “Listen to them, provide guidance for them and demand their self-discipline,” said SAIC’s Zhang. He also encouraged cooperation between e-commerce companies and regulators, and said SAIC had already agreed with e-commerce companies on parts of the new regulatory approach so that online shopping could continue to develop in China.

Mainland China’s online sales volume surged 50 percent year-on-year to 2.79 trillion yuan ($450 billion) in 2014, which made it roughly 10 percent of total retail sales in China, according to Xinhua.


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