Alibaba Group Holding Ltd (NYSE:BABA) sued by price bureau

Alibaba Group Holding Ltd (NYSE:BABA) sued by price bureau

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Alibaba Group, Chinese e-commerce giant, was convicted of violations by third-party sellers during promotions events on its e-commerce platforms and consequently price bureau eastern Zhejiang province put a penalty of 800,000 yuan($129,000) on Alibaba Group.

Alibaba started an online shopping festival in 2009 after the success of “Singles’ Day”, a November 11 Chinese response to Valentine’s Day. Alibaba captured a huge audience from this innovation and the event becomes as famous as Cyber Monday and Black Friday in the United States.

The company sold $9 billion products during last year event.

“The company has been fined 500,000 yuan ($81,000) for matters related to Singles’ Day pricing by third-party sellers on our Tmall marketplace in 2013 and 2014 and 300,000yuan($48,000) for pricing in other promotions in 2013 and 2015,” Alibaba Group said in a statement on Friday.

While pricing is handled by third parties, not directly by Alibaba, the group said, it would nevertheless reinforce pricing rules and regulations with sellers to protect consumers.

27,000 retailers associated with the platform of Alibaba Group Singles’ Day event sites expect to up surge sales of products and attract more customers, but some are not optimistic due to discounts and cut-throat corporate competition which dent the profit margins.

Alibaba faced many irregular difficulties in regulating its extensive e-commerce business including online markets such as Taobao; Tmall, a stage for large retailers associated to Taobao; group-buying site Juhuasuan and the main operating platform which connects exporters with foreign buyers is Alibaba.com.

Scandals also derail the position of Alibaba in market. In 2011, Alibaba was accused of deceiving foreign customers, originally the Alibaba official site was hacked by professional hackers who control the site, resulting in multiple arrests of members of Alibaba Group afterwards CEO David Wei resigned from the company.

Alibaba was also punished by regulators regarding the issue of failing to control the sales of fake products through its platforms, an allegation indicated by trade groups and regulators in the U.S., where Alibaba also operates.

Alibaba said in February that U.S. Securities and Exchange Commission has asked for more information on the control of sales of counterfeit goods after a comprehensive discussion between Alibaba’s officials and China’s State Administration for Industry, as the firm didn’t stated on its IPO prospectus before listing of products.

Shares of Alibaba lost ground and declined more than fifth this year, resulting in an anxiety among analysts regarding counterfeits along with dull third-quarter earnings and investors are also thinking otherwise.

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