Consumer group accuses Alibaba and other firms of fake Singles Day discounts

Attendants celebrate in front of a screen displaying the total value of goods sold during Alibaba Group's 11.11 Singles' Day global shopping festival in Shenzhen, China, November 12, 2016. REUTERS/Bobby Yip/Files

BEIJING (Reuters) – A Chinese state-backed consumer group says almost 17% of discounts offered during the country’s multi-billion dollar Singles Day online sale event were fake, calling on the government to intervene and punish platforms and merchants.

A report released by the Chinese Consumers’ Association on Monday says companies, including Alibaba Holdings and Amazon, were guilty of hiking prices before the shopping festival, held annually on Nov. 11, in an attempt to lure customers with sharp discounts.

“There is a large number of false discounts and other price misleading behavior,” said the CCA in an emailed statement.

The group said it had referred the cases to relevant government departments and recommended “severe punishment for price violations and price dishonesty.”

Chinese authorities have ramped up efforts this year to stamp out dodgy sales tactics as the country’s top e-commerce firms take market share from traditional “brick-and-mortar” stores and look to improve their image in international markets.

In November, China’s top business regulator said it warned firms including Alibaba, Amazon and against falsifying figures and selling counterfeit goods ahead of the mass shopping event, which has become a yardstick for China’s retail appetite.

Alibaba recorded 120.7 billion yuan ($17.49 billion) in sales during Singles’ Day in 2016. It is being investigated by the US Securities and Exchange Commission over accounting practices related to its 2015 figures for the event.

The US-listed firm, which denies any wrongdoing, is one of several local e-commerce companies hoping to tap buyers outside of China as growth in local markets begins to slow.

“We have strict measures in place to crack down on false sales discounting,” an Alibaba spokeswoman told Reuters, saying the company penalises merchants depending on the severity of the falsified discount.

The CCA study recorded price changes on 12 platforms between Oct. 20 and Nov 25.

Of all the discounted products surveyed, 35% of them on Amazon still cost more than regular non-sale retail prices, the highest of any platform, followed by at 26.8%.

Almost 19% of surveyed discounted items on Alibaba’s Tmall were above regular, according to the report.

A spokesman declined to comment. Amazon did not respond to emailed requests for comment.

($1 = 6.9000 Chinese yuan renminbi)

(Reporting by Cate Cadell; Editing by Kim Coghill)

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