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China to strictly regulate online commerce

Source: Xinhua | March 9, 2015, Monday | Online Edition

China's market regulator said Monday the government will strictly regulate online commerce, amid a heated public dispute over China's largest online shopping platform Taobao.com which was found to match-make transactions of a great number of shoddy commodities.

E-commerce platforms have to take "key responsibilities" for promoting "credibility and integrity," Zhang Mao, minister of the State Administration for Industry and Commerce (SAIC), said at a press conference on the sidelines of China's annual parliamentary session.

Underlining that the Internet is not a "lawless heaven," Zhang said government regulators would take more measures on protecting the legitimate rights of online shoppers, including proposing new legislative bills and building up online database for stricter supervision over e-commerce.

Results of a SAIC sample test released on January 23 showed that only 37.25 percent of surveyed commodities sold on Taobao.com were authentic, lower than a 58.7-percent average of major online shopping platforms.

The U.S.-listed online business giant Alibaba, which runs Taobao, butted heads with the SAIC over product quality after the release of the findings. Alibaba executive chairman Jack Ma met with Minister Zhang on Jan. 30, drawing a line under the quarrel by mutual concession.

"The reason why there are so many market violations is that the cost of breaking rules is too low," Zhang said when taking a question on the Taobao dispute, adding that the market will fundamentally improve if companies find such costs unaffordable.

China's online sales volume surged 50 percent year on year to reach 2.79 trillion yuan (about US$450 billion) in 2014, accounting for about 10 percent of the country's total retail sales.

Zhang admitted that the SAIC should take a new approach to regulate booming sectors such as online commerce.

The SAIC will communicate with e-commerce and ICT firms in a better way, Zhang said. "Listen to them, provide guidance for them and demand their self-discipline."

He also said companies and the regulators should cooperate more, adding that the SAIC and some e-commerce firms have agreed that the market must be regulated so that online shopping could continue developing.

Alibaba has been involved in a series of frictions with domestic and overseas regulators for quite a period of time. In a latest episode, Taiwan's investment regulator accused the company's local branch of being improperly registered and threatened to oust it from the island.

The Alibaba Group would provide Taiwan authorities with the information they have demanded, Ma responded on Tuesday.

According to its financial report, Alibaba registered a 40-percent growth in its fourth-quarter revenue to reach 26 billion yuan. Sales on its Tmall and Taobao reached 787 billion yuan in the same period.

But shares of Alibaba on the latest trading day fell about 30 percent from its highest after being listed.

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