Alibaba blasts Chinese government over report accusing company of illegal business practices

An Alibaba executive leveled sharp criticism at the Chinese government today for publishing a report that accused the e-commerce giant of allowing widespread sales of counterfeit goods and running phony sales promotions.

“Alibaba is a company with strong values,” said Joe Tsai, Alibaba’s executive vice chairman on an earnings call with reporters and analysts. “We believe this report was false and was based on arbitrary methodology.”

The escalating feud between Alibaba, which held the biggest tech IPO in history last year, and the Chinese government became public yesterday after a government agency, the State Administration for Industry and Commerce, published a white paper containing the accusations. (For a copy and translation, see this report from Quartz.)

According to the report, officials from the SAIC met with Alibaba officials in the months leading up to its IPO last year to flag issues regarding “selling banned, dangerous, and counterfeit goods, dealing with unlicensed vendors, holding misleading sales promotions during its having a flawed credit ranking system for sellers, and lax internal staff controls,” according to Quartz.

While the white paper was subsequently taken down from the SAIC website, it could still be seen here today. The report sent Alibaba’s stock down 4.36 percent on Wednesday.

During the call today, Tsai said the company was planning to file a complaint against the SAIC for the substance of the report and its disclosure. He added that while the company continues to fight to weed out fraudulent products, the fact that new buyers are flocking to its service indicates that overall there is a high degree of trust and satisfaction on the part of customers.

“We feel compelled to respond when there are inaccurate reports published about us,” Tsai said. “We have zero tolerance for these kind of activities on our platform.”