Chinese regulators fine Alibaba for pricing violations

The company will have to pay $129,000 for violations durings Singles Day in 2013 and 2015

Financial trends and news by Steven Loeb
April 20, 2015
Short URL: http://vator.tv/n/3d43

This past "Singles Day," was a great one for Alibaba, as the company easily broke the record for the largest shopping day in history. Now, however, that triumph has been marred just a bit, by regulators who have fined the company over pricing violations committed during the holiday.

The price bureau in eastern Zhejiang province is forcing Alibaba to pay 800,000 yuan, or $129,000, for violations committed by third-party sellers on its plaform during Singles Day promotions last year, according to a report out from Reuters. 

For those who don't know, November 11th is what is known as "Single's Day" in China. It is supposed to serve as almost an anti-Valentine's Day, in which bachelors and bachelorettes get to celebrate being single.

The day, which has been around in some capacity since the 90s, having supposedly been invented by a bunch of college kids, but has now been successfully commercialized. It was popularized by Alibaba in 2009, then copyrighted in 2012, and has now become a big shopping holiday in the country, growing bigger and bigger each year, becoming the world's largest single sales day.

Alibaba has been the biggest recipient of that increased interest.

The total fines actually stretch back to 2013. 500,000 yuan, or $81,000, is related to Singles' Day pricing by third-party sellers on its Tmall marketplace in 2013 and 2014. The other 300,000 yuan, or $48,000, os for pricing in other promotions in 2013 and 2015.

Aliaba should have no problem paying the fine; it brought in $9.3 billion during SIngles Day 2014 alone, breaking the record it had set the previous year when $5.78 billion was spent during the holiday. 

The actual amount of the fine is beyond the point, though. While the price bureau admitted that Alibaba does not actually control those third parties, it was still going to levie the fine in order to stress the point that the rules need to be enforced in order to protect consumers. It wants Alibaba to take a stronger stance with its sellers.

More than 27,000 brands and merchants participated in the event last year, including Costco, Muji, Desigual, ASOS, and The North Face, with buyers from 217 countries and regions participating in this last year’s Single's Day sales.

This is the latest setback for Alibaba, which is not having a great year. 

Alibaba revealed that it was contacted by the Securities and Exchange Commission earlier this year after it came to light that the company had been talking to China's State Administration for Industry and Commerce regarding sales of counterfeit goods. The company failed to disclose this information on in its IPO prospectus prior to going public last year.

The company has also seen its stock tumble, dropping from $104 a share at the beginning of this year to $81.90 as of the end of trading Friday. In September, the IPO priced at $68, raising $21.8 billion. That made it the biggest U.S. IPO in history and company founder Jack Ma the richest man in China. 

(Image source: wired.com)

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