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Hanging some dirty laundry on line
By Ding Yining |
May 11, 2012, Friday
|
Print Edition
Print Edition
THE online world in China was shocked when Taobao, an eBay-style online shopping site affiliated with e-commerce leader Alibaba, recently acknowledged corrupt practices between some of its employees and external vendors.
In an open letter last week, Taobao said nine vendors on its Taobao Marketplace and Tmall and several of its employees were arrested on bribery charges.
It was clear that Taobao, which has prided itself on setting up rigid rules meant to avert shady dealings, hasn't been vigilant enough in monitoring what goes on. "Internet giants like Taobao and Baidu should take on more responsibility to ensure a healthy business environment, which many business owners and consumers heavily rely on," wrote Xin Haiguang, an industry commentator and columnist.
Corruption tale
The onus lies particularly heavily on a company like Taobao, which boasted more than half of China's online retail market last year. But the way the corruption tale unfolded tells a different story.
Taobao's announcement came in response to a cover story published in late April by the Guangzhou-based IT Time Weekly, which accused some Taobao service staff of helping online vendors cheat customers by removing adverse comments made about those vendors by unhappy consumers. Taobao first claimed the story was a frame-up.
The article claimed that corruption stretched into several departments, including technical staff and event planners. Pleasure houses in Hangzhou, Zhejiang Province, where Taobao and its parent Alibaba are based, are usually filled with Taobao employees every evening, who are treated as honored guests by vendors hoping to get their credit ratings lifted, it said.
Good credit ratings are critical in persuading consumers which vendors to patronize. Those with the best ratings usually get the most customers. It's a system ripe for corruption. If vendors can get Taobao staff to remove unfavorable reviews, their ratings go up.
Lack of supervision
This is not the first time Alibaba employees were found to be violating the company code of ethics. The misdoings have highlighted a lack of proper supervision, both by the company and by government watchdogs.
In March this year, Alibaba sacked Yan Limin, general manager of its Juhuasuan daily deals site, for unspecified misdeeds uncovered during an internal investigation. It also fired three employees who established privately owned companies that offered group-buying deals on Juhuasuan.
Last year, Alibaba's Hong Kong-listed wholesale shopping site said an internal probe found more than 2,300 vendors used its site to defraud global buyers. Quality control staff used loopholes in the vendor verification system and introduced under-qualified sellers to the website in order to boost sales income. Chief Executive Officer David Wei resigned in the wake of the revelations.
Taobao said its anti-corruption department has dealt with nearly 10 internal cases since 2010, but it didn't provide figures on the number of staff involved.
The company has pledged to step up efforts to fight against "improper" business dealings at Taobao, noting that such activities harm fair market competition.
"It took nine years and the efforts of thousands of employees and millions of vendors to build this site and we will not allow any individual seeking illegal profit to ruin the business," a company statement said.
Lofty ideals and fine words. But are they being put into action? Laws and regulations defining illegal activities in the online business world remain vague. It's up to the companies themselves to take on full responsibility for what goes on. But self-regulation, it seems, isn't working. The system remains vulnerable to those who want to misuse it.
I think it's time for an outside, independent monitor to be appointed to oversee vendors and employee behavior at Taobao. Complaints from consumers could be funneled through that impartial monitor to ensure they are fairly handled.
Upholding credibility among Internet companies is especially critical now that social networking sites have grown into large online communities.
Those who manage the communities have amassed sweeping powers to decide the survival or death of companies doing business online. The virtual society is in need of some virtuous overhaul.
In an open letter last week, Taobao said nine vendors on its Taobao Marketplace and Tmall and several of its employees were arrested on bribery charges.
It was clear that Taobao, which has prided itself on setting up rigid rules meant to avert shady dealings, hasn't been vigilant enough in monitoring what goes on. "Internet giants like Taobao and Baidu should take on more responsibility to ensure a healthy business environment, which many business owners and consumers heavily rely on," wrote Xin Haiguang, an industry commentator and columnist.
Corruption tale
The onus lies particularly heavily on a company like Taobao, which boasted more than half of China's online retail market last year. But the way the corruption tale unfolded tells a different story.
Taobao's announcement came in response to a cover story published in late April by the Guangzhou-based IT Time Weekly, which accused some Taobao service staff of helping online vendors cheat customers by removing adverse comments made about those vendors by unhappy consumers. Taobao first claimed the story was a frame-up.
The article claimed that corruption stretched into several departments, including technical staff and event planners. Pleasure houses in Hangzhou, Zhejiang Province, where Taobao and its parent Alibaba are based, are usually filled with Taobao employees every evening, who are treated as honored guests by vendors hoping to get their credit ratings lifted, it said.
Good credit ratings are critical in persuading consumers which vendors to patronize. Those with the best ratings usually get the most customers. It's a system ripe for corruption. If vendors can get Taobao staff to remove unfavorable reviews, their ratings go up.
Lack of supervision
This is not the first time Alibaba employees were found to be violating the company code of ethics. The misdoings have highlighted a lack of proper supervision, both by the company and by government watchdogs.
In March this year, Alibaba sacked Yan Limin, general manager of its Juhuasuan daily deals site, for unspecified misdeeds uncovered during an internal investigation. It also fired three employees who established privately owned companies that offered group-buying deals on Juhuasuan.
Last year, Alibaba's Hong Kong-listed wholesale shopping site said an internal probe found more than 2,300 vendors used its site to defraud global buyers. Quality control staff used loopholes in the vendor verification system and introduced under-qualified sellers to the website in order to boost sales income. Chief Executive Officer David Wei resigned in the wake of the revelations.
Taobao said its anti-corruption department has dealt with nearly 10 internal cases since 2010, but it didn't provide figures on the number of staff involved.
The company has pledged to step up efforts to fight against "improper" business dealings at Taobao, noting that such activities harm fair market competition.
"It took nine years and the efforts of thousands of employees and millions of vendors to build this site and we will not allow any individual seeking illegal profit to ruin the business," a company statement said.
Lofty ideals and fine words. But are they being put into action? Laws and regulations defining illegal activities in the online business world remain vague. It's up to the companies themselves to take on full responsibility for what goes on. But self-regulation, it seems, isn't working. The system remains vulnerable to those who want to misuse it.
I think it's time for an outside, independent monitor to be appointed to oversee vendors and employee behavior at Taobao. Complaints from consumers could be funneled through that impartial monitor to ensure they are fairly handled.
Upholding credibility among Internet companies is especially critical now that social networking sites have grown into large online communities.
Those who manage the communities have amassed sweeping powers to decide the survival or death of companies doing business online. The virtual society is in need of some virtuous overhaul.
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