China eased away from a confrontation with Alibaba Group Holding Ltd., saying last week’s report criticizing the e-commerce company for failing to root out counterfeit goods didn’t have “judicial effect.” Jack Ma, Alibaba’s billionaire chairman, on Friday met Zhang Mao, chief of State Administration for Industry and Commerce, or SAIC, promising to step up anti-piracy spending, according to a statement on the regulator’s website. “We will actively cooperate with the government and increase investment to strengthen our existing anti-counterfeit team,” Ma said, according to the SAIC statement. “We’ll enhance daily online and offline inspection and spot-check to solve the problem with the authorities together.”
The meeting may mark an easing of tensions between the company and the government. The SAIC issued a “white paper” this week that accused Alibaba of allowing merchants to operate without required licenses, to run unauthorized stores that co-opt famous brands and to sell fake wine and handbags. Alibaba employees took bribes, and the company didn’t fix flaws in customer feedback and internal credit-scoring systems, SAIC said.
The SAIC now says the report is essentially a meeting memo without “judicial effect,” according to a separate statement from the regulator. The government said earlier that the SAIC meeting that prompted the report happened in July, but that publication was delayed to this week to avoid affecting Alibaba’s $25 billion initial public offering in September.
Zhang on Friday said Alibaba has an important role in e-commerce and increasing job and entrepreneurship opportunities, according to the SAIC. Alibaba pledged to enhance communication with the government to strengthen marketplace management, according to the statement.
Alibaba had earlier said government inspectors applied standards inconsistently and didn’t give merchants enough time to respond to accusations. Alibaba has worked to get rid of counterfeits as it expands internationally, saying it removed 90 million listings for products that breached intellectual-property rights before its IPO. The crackdown is part of Alibaba’s effort to build its reputation after becoming Asia’s largest technology company.