In a statement on its website late Friday, China’s State Administration for Industry and Commerce said that its top official, Zhang Mao, met with Alibaba’s executive chairman, Jack Ma , that same day. It said the two agreed to tackle fakes and boost consumer protection online.
In a separate statement, the SAIC appeared to play down a white paper that it posted on its site on Wednesday accusing the company of allowing fakes to be sold on its platforms and alleging that Alibaba employees took bribes from merchants in exchange for better placement there. SAIC said the statement was an account of a July conversation between SAIC and Alibaba officials and not a formal white paper.
SAIC officials didn’t immediately respond to requests for additional comment. On Thursday it pulled the white paper from its website, without citing a reason.
An Alibaba spokesman said, “the most recent SAIC posting speaks for itself. We feel vindicated.”
Alibaba’s New York-traded shares on Friday were up 1.4%. On Wednesday, the day the SAIC released its report, Alibaba’s New York-traded shares fell 4.4%. They fell an additional 8.8% on Thursday after Alibaba reported disappointing revenue growth in the quarter ended in December.
The statements may resolve a dispute that had put Alibaba—which dominates e-commerce in China and last year raised $25 billion in the U.S. in the largest-ever initial public offering—under a cloud. The company has long grappled with allegations that its Taobao sales platform is home to a large number of counterfeit products.
At the same time, the dispute could also be a precursor to additional pressure on Alibaba as China drills down on intellectual-property protection in its effort to overhaul the economy, pumping up consumption and reducing reliance on cheap labor, exports and big-ticket spending projects.
Such pressure could hurt Alibaba’s results more immediately, but could pay off down the road if handled correctly, said investment advisory firm JL Warren Capital. The company wants to shift more business to its Tmall platform, on which more-established businesses sell goods to consumers, from its Taobao platform, which allows smaller mom-and-pop firms to sells their products to Chinese customers. While Taobao is more dependent on ad sales, Tmall generates more sales commissions, so it pays off as online stores become more established, the firm said.
The SAIC’s broadside against Alibaba was its most aggressive move yet against a major company. It comes as observers say the agency is trying to increase its profile and protect its turf against other Chinese agencies. The SAIC is increasingly flexing its muscles in Chinese e-commerce, a more than $500 billion market by KPMG’s estimate, following complaints by businesses of the alleged availability of widespread fakes.
“They realized that international online trade is growing and it’s going to hit a critical mass,” said Joe Simone, director of Hong-Kong based intellectual property consulting firm SIPS.
The agency oversees a broad array of matters involving market order in China. That includes certain business licenses as well as trademark administration. It also keeps voluminous records on businesses in China, though it makes only partial data available outside of official and legal circles.
Last year it raided Microsoft Corp. offices in China as part of its investigation into how it sells and bundles it software. Microsoft has said it is cooperating. The SAIC also has probed the offices of foreign drug makers, though it never publicly levied any punishments.
The SAIC began working on its Alibaba white paper last year, after China’s State Council, the government’s highest decision-making body, gathered about 30 representatives from foreign and domestic companies to ask them about doing business online in China, Mr. Simone said.
Mr. Simone, who attended along with representatives of other companies, said some told officials that they weren’t doing enough to tackle fakes. Companies recommended that the SAIC police the biggest offenders, he said. Mr. Simone said he told officials, “we have an elephant in the room, and I’m going to name them: Ali.”
An Alibaba spokesman said it has an aggressive antifake effort that removed more than 90 million counterfeit items from its platforms over the past two years.
Experts say that much of the SAIC’s recent moves have been attempts to assert its power and justify its existence. Leaders have stripped some of its powers away in recent years, including food safety oversight. It has waged turf wars with China’s National Development and Reform Commission, the country’s economic planner, over antimonopoly law enforcement, according to attorneys. Last year, the Ministry of Commerce and the NDRC spearheaded probes of prominent auto makers like Audi, BMW, and Mercedes-Benz parent Daimler.
Legal and industry experts say that the SAIC tends to be fairly open with businesses, meeting regularly with corporate heads to discuss problems and proposed action plans. In December, Mr. Zhang, the SAIC chief, spoke at a reception held by the American Chamber of Commerce for China, which U.S. Ambassador to China Max Baucus also attended. “The huge market of China and the capabilities and advantages of the Unites States in terms of human resources and technology are bonding us closer together,” Mr. Zhang said. “Harmonious cooperation will benefit both sides.”
Mr. Zhang said in an interview with China’s state-owned broadcaster China Central Television that SAIC posted on its website earlier this month that the agency would be pushing for better service and consumer protection online, where he says he also shops. The SAIC accepted 50,000 consumer disputes for online problems in the first 11 months of last year, Mr. Zhang said in the interview.
“Originally it was all young people, but now middle-aged and older people have entered e-commerce,” he said, adding that “problems are not few” for the sector.
—Kersten Zhang and Yang Jie contributed to this article.
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