The possible reason behind fall in price of Alibaba shares

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Pic courtesy: Newsy Business.  Retrieved November 26, 2015, from https://www.youtube.com/watch?v=HQFGUt2K78Y

A reason of this fall in price is counterfeit problem.  Many customers purchase goods on Alibaba, Taobao, Tmall, etc. Sellers on those websites deliver counterfeit or poor quality productsto their customers.  This issue has a negative impact on the reputation of all platforms of Alibaba and itself. Customers start to lose their faith in Alibaba because of counterfeit problem. Now Alibaba faces huge fall in price of company shares after several news of counterfeit products and bad reputation.

Pic courtesy: Newsy Business.  Retrieved November 26, 2015, from https://www.youtube.com/watch?v=HQFGUt2K78Y


Despite of facing this situation, Alibaba still fails to be fully responsible to their customers.  Their customers are unfortunately receiving no help from Alibaba and merchants. Alibaba cannot help customers to change or return products.  Furthermore, Chinese government is already had an eye on it.  In January 2015, State Administration for Industry and Commerce hold a testof online purchasing.  The result is the rate of receiving real products purchased from Taobao is only 37.25%.  


Pic courtesy: CNN.  Retrieved November 26, 2015, from https://www.youtube.com/watch?v=1E4Bxe83n-c


After being accused of selling counterfeits, infringing trademarks and other dubious business practices from China’s State Administration for Industry and Commerce and announceddisappointing earnings, Alibaba were sued by their shareholders in America.  In April, American Apparel & Footwear Association filed a complaint to Office of the United States TradeRepresentative and United States Securities and Exchange Commission, accusing counterfeit problem on Taobao.  Then, AFAA suggested the U.S. government to consider putting Taobaoon its list of “Notorious Markets.”  Unfortunately, the lawsuit with shareholders in America andcomplaint from AFAA are not the only problems it faced.  Luxury brands also sued Alibaba over counterfeit goods.  No matter it won those lawsuits or not, those lawsuits and accusing were already had a negative effect on company reputation.     

Lesson from this phenomenon is electronic commerce companies have the responsibility to monitor products quality and prevent online fraud on their platforms.  It is companies' duty toprovide goodquality products and after-sales service to solve any customers' problems.  In this case, a big company like Alibaba failed.  Hope in the future, electronic commerce companies can take lessen from this and evolve them to be 100% dedicated to their buyers and provides 100% authentic, good quality products



虎嗅網. (October 12, 2015). 上市一年後,阿里巴巴電商的擔子更重了. Retrieved November 19 , 2015, from http://finance.technews.tw/2015/10/12/alibaba-e-commerce/

Wikipedia.(November 3, 2015)淘寶售賣假貨事件. Retrieved November 19, 2015, from https://zh.wikipedia.org/wiki/%E6%B7%98%E5%AF%B6%E5%94%AE%E8%B3%A3%E5%81%87%E8%B2%A8%E4%BA%8B%E4%BB%B6

Kevin LaCroix. (February 3, 2015). Chinese Internet Giant Alibaba Gets Hit with IPO-Related U.S. Securities Class Action Lawsuit. Retrieved November 19, 2015, from http://www.dandodiary.com/2015/02/articles/securities-litigation/chinese-internet-giant-alibaba-gets-hit-with-ipo-related-u-s-securities-class-action-lawsuit/

Alison Frankel. (February 4, 2015). Shareholders suing Alibaba face high bar to prove fraud. Retrieved November 19, 2015, from http://blogs.reuters.com/alison-frankel/2015/02/04/shareholders-suing-alibaba-face-high-bar-to-prove-fraud/

Financetime.net. Alibaba Has A Main Counterfeit Problem. Retrieved November 19, 2015, from http://financetime.net/alibaba-has-a-main-counterfeit-problem



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