Business / Companies

Alleged Taobao scandal stirs sensation

(Xinhua) Updated: 2012-05-01 16:20

HANGZHOU - Some employees at, China's largest online retailer, have reportedly conspired with business owners to cheat consumers, sparking outcry online.

IT Time Weekly, a Chinese commercial magazine, reported on April 20 that some employees at Taobao, a unit of Alibaba Group, have taken bribes from online shop owners and secretly helped them remove consumers' malicious comments and raise credit ratings.

The story also reported that some employees misused advertising tools on the Taobao transaction platform, and some have even started their own businesses to reap hefty but illegal profits.

Such corruptions have extended from individual employees to the whole company, including staff, technicians and project planners, the story claimed.

"This has become the biggest obstacle for Taobao to conduct online business transactions on a level playing field," the story suggested.

Although the validity of the accusation is yet to verified, it has been forwarded and commented on by over 10,000 tweets on Sina Weibo, China's most popular Twitter-like site.

"I don't know who I should believe, because Internet shop owners may sell some inferior-quality products online as long as they have personal relationships with Taobao employees," a "tulip" wrote on Sina Weibo.

Taobao, invested by Alibaba Group in 2003, boasted over 400 million users early 2011 and registered an annual sales revenue of 600 billion yuan ($95.5 billion) in 2011, accounting for 80 percent of China's online shopping.

As the largest online retailer in China, Taobao sees more than 8 million express parcels delivered each day, accounting for 60 percent of the country's total shipping volume, according to statistics released by the company at the end of 2011.

Tao Ran, vice president of Alibaba Group, responded to the scandal in an interview with Xinhua.

"As Taobao is like a virtual society, it is unavoidable for some businessmen to obtain illegal profits there by getting involved in bribery," Tao said. "People sometimes get lost when being faced with the temptation of money, but they are just the minority."

Wang Shuai, chief marketing officer of Alibaba Group, wrote in tweets that Taobao had not accepted any interview from IT Time Weekly.

Taobao has refused the magazine's advertisement requests during the past eight years, so it has always become the target of the magazine's negative coverage, Wang said.

"We will hold on to integrity in our rapid development, which is the basis for the survival and growth of the company and the online business," Tao said, adding that the company would be daring enough to expose its own scandals.

The company set up a department of integrity in 2010 to handle customers' reports on illegal activities concerning Taobao employees.

Members of the company senior management resigned or were dismissed over suspicions of fraud during the past two years.

The company also promised to come up with more effective rules in the near future to prevent corruption and regulate behaviors of online merchants.

However, some worry that regulations imposed by the company could hardly solve problems at a time when the country's e-commerce sector is evolving into a complicated situation.

"Only by implementing strict laws can it be possible for us to eradicate corruption," an "Old Young" wrote on Sina Weibo.

During the 2012 sessions of the National People's Congress (NPC) and the Chinese People's Political Consultative Conference, NPC deputy Zhou Xiaoguang suggested that legislation regarding online transactions should be made to stipulate rights and obligations of buyers and sellers as well as rules on online transactions and payment platforms.

"Most of Taobao employees I know are warm-hearted and patient, though I have also heard of some corruption cases," a "Qianqianxue," who sells women's dresses on Taobao, told Xinhua in an online interview.

The company's courage to confront its own problems is praiseworthy, but a better oversight system is needed to solve the problems and promote the healthy development of the company, she said.

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