On Nov 2, a report on the implementation of the law on the protection of the rights and interests of consumers was presented to a standing committee of National People’s Congress (NPC) of China. The report outlined the flaws and shortcomings in country’s mounting online retail businesses. According to the report, China has leapfrogged US to become the world’s largest online retail market with $442 billion, which is 40% more than $332 billion of US. With industry’s giants like Alibaba and JD.com, China hosts more than four companies in top ten online retail companies. Though the size of China’s industry is ever increasing, the quality that they promise to deliver has always been questioned.
62% of Products Listed On Alibaba Are Fake
The report was basically aimed at determining the quality of products such online businesses deliver to their customers. The report was presented to the committee by Yan Jiuqi, vice chairwoman of the standing committee of the National People’s Congress, China’s top law-making body. She said that in China, only 58.7% of items in online trade were of acceptable quality and more than 40% of goods were of inferior quality.
Alibaba, the largest eCommerce player in China, is being accused of selling a maximum number of fake products through its e-store Taobao. More than 62% of products listed on the site were either counterfeit or bad quality.
The growing online sales of fake products are causing an enormous challenge for shoppers as well. The report further says that Commerce authorities all over the country received 77,800 complaints last year with respect to online trades. This is a jaw-dropping increase of 356.6% in complaints as compared to previous years.
Reaction from various segments
This resulted in strong reactions from various segments of the society including civil society, legislators, media and various consumer segments. Chinese and Western media generally disgusted about the findings and emphasised on devising better mechanisms for quality check and control. Senior legislators like Zhang Dejiang have expressed serious concerns over the findings of the report and have urged for stern regulatory mechanisms.
Importance of online trade to Chinese Economy
China has greatly benefited from online trade and has emerged as a market leader, but recent findings can be a major setback to country’s online trade. It can adversely affect the sales of market ‘giants’ like Alibaba because of the failure to comply with international standards of quality. Alibaba went through a crisis earlier this year when it had to lobby to prevent blacklisting in US due to the counterfeits it supplied. Online trade is a major component of the Chinese economy and contributes a major proportion of its total GDP.
The online Chinese retail market received unprecedented growth in the last year. Online sales reached $441 billion, a 40% growth compared to the previous year.
The other side of the picture
The Chinese government decided to publicise the report and decided to expose sales of inferior or shoddy items. It has caused serious resentment in the ranks of retail business companies like Alibaba and JD.com. They claim that the report is based on the survey that was conducted last year (2014) by State Administration for Industry and Commerce (SAIC). They published its report on their website. This was mentioned by Yan herself when she was presenting the report.
The point that the other side has raised is also pretty valid. SAIC only examined 92 products and published its findings based on these results. They found out that only 54 items were of good quality and hence derived the figure that only 58.7% of the online products are of acceptable quality and remaining 41.3% were shoddy goods.
Another interesting feature is that the products that were bought from these sites only belonged to six categories. These categories include: Phones, Toys, Auto Parts, Clothing, Makeups, and Fertilizers. SAIC or people who conducted the survey have never given an explanation about why they only chose these six categories and how results that were based on these categories could be generalised for other categories as well.
It is actually pretty interesting. Firstly, SAIC only took 92 products to give its findings for the world’s biggest online retail market. Secondly, it only took these products from six categories and there is absolutely no explanation on why they limited their survey to these six categories. It gets even more interesting and baffling when SAIC assumes similar behaviour for each and every product.
This should not be deemed as an argument to legitimize or a way to provide moral grounds to companies like Alibaba who have a reputation for delivering counterfeits, but in fact, it’s an effort to provide a clearer picture of the whole scenario. Surely, there should be concrete checks on the quality delivered and sound policies that can ensure consumer’s stakes, but that doesn’t give any organization to present findings that seem to be away from reality.