Alibaba Group Holding Ltd (NYSE:BABA) has been fined by the Chinese government over pricing issues with respect to products sold on its online marketplaces dating to Singles’ Day in 2013. The Chinese authorities have fined Alibaba for alleged pricing irregularities related to Singles’ day sale in the past two years.
The event “Singles’ Day” on November 11 is the Chinese counterpart to Valentine’s Day but celebrates singlehood as opposed to togetherness in Valentine’s Day. The event has become as popular as Black Friday in United States.
Alibaba in a release stated that though pricing by a third party cannot be regulated, it would take steps to regulate its pricing rules and regulations. The rules, the company added, would be in place well before Singles Da 2015.
The Chinese authorities have fined $81,000 on matters related to third party sellers on Alibaba’s marketplace and a further $48,000 with respect to other promotions.
Single’s day has become China’s biggest online shopping day. Alibaba has copyrighted the phrase “Double 11”, the phrase is a reference to the single status of people.
In 2011, the company was scandalized when its sales staff colluded to defraud foreign customers leading to the resignation of Chief Executive, David Wei. The company has been publicly rebuked by regulators for not being able to control the sale of counterfeit products on its marketplace.
In February, the SEC had sought more information about the talk between Alibaba’s executives and Chinese State Administration for Industry and Commerce on the topic of the sale of counterfeit products. This news was not mentioned in the company’s IPO prospectus before listing.
Shares of Alibaba Group Holding Ltd (NYSE:BABA) have fallen by more than a 20% this year due to concerns regarding the sale of counterfeits and lacklustre 3Q earnings. The investor interest has also waned since the IPO launch in September last year.
