Alibaba’s Dispute With Officials Highlights Lack of Transparency and Weak Rule of Law

March 27, 2015

In September 2014, Alibaba Group Holding Limited, a Chinese e-commerce company that provides a variety of sales services via Web portals, raised US$25 billion on the New York Stock Exchange in the largest Initial Public Offering (IPO) in history. The company is now facing lawsuits over alleged inadequate IPO disclosures, related at least in part to a dispute with Chinese authorities. Since at least July 2014, Alibaba has been in conflict with Chinese regulators, stemming from official allegations of counterfeit products and a large number of long-term legal violations on Taobao, Alibaba’s consumer-to-consumer platform. In January 2015, after Taobao used social media to accuse a Chinese regulator of misconduct, the regulator responded by issuing a critical report on Alibaba. Within days, the dispute appeared to come to a close after Alibaba announced steps to reduce counterfeit goods, the regulator deleted the report, and Alibaba’s CEO met with the director of the regulatory agency and agreed to cooperate and strengthen communication. Companies in China and American investors are concerned about Chinese administrative practices, but Alibaba’s non-legal approach to addressing potential regulatory misconduct through public criticism and prompt high-level meetings may not be possible for foreign companies.

  1. Transparency and Alibaba’s IPO

The Chinese government censors the media,[1] restricts foreign investment in Chinese technology companies,[2] and refuses American regulators access to auditing records of Chinese companies.[3] In September 2014, however, the Cayman Island-registered Chinese company Alibaba Group Holding Limited (Alibaba Group)[4] raised US$25 billion on the New York Stock Exchange in the largest Initial Public Offering (IPO) in history.[5] China’s sovereign wealth fund sold shares valued at approximately US$1 billion in the IPO and retained shares valued at approximately US$4 billion.[6] According to the Chinese government and official Chinese media, Alibaba and other Chinese Internet companies owe their success in part to “China’s Great Firewall” and related regulations that censor foreign Web sites and restrict foreign competition.[7] Based on contracts that may be illegal in China,[8] Alibaba Group’s finances include those of Chinese companies in which it has no equity, including Zhejiang Taobao Network Co., Ltd. (Zhejiang Taobao), which holds the license and operates China’s largest Internet shopping Web site, Taobao.[9] Alibaba’s founder and CEO Jack Ma continued to own 90 percent of Zhejiang Taobao after the IPO.[10] Alibaba Group’s IPO filings included over 40 pages of risk disclosures;[11] however, a meeting between China’s e-commerce regulator and senior Alibaba employees on July 16, 2014, to discuss five major problems which the regulator described as representing “Alibaba’s largest credibility crisis since its founding”[12] and to warn of the possibility of significant administrative fines[13] was not disclosed.[14] As of February 23, 2015, seven law firms had reportedly filed litigation against Alibaba Group in New York based on alleged inadequate IPO disclosures.[15]

  1. Counterfeit Products and Efforts by Authorities To Reduce Problems

The U.S. government and American companies are concerned about the sale of counterfeit products in and from China. In 2013, 93 percent of counterfeit goods seized by U.S. Customs and Border Protection were from China (68 percent) or Hong Kong (25 percent).[16] As recently as December 2011, the U.S. Trade Representative labeled Alibaba’s e-commerce platform, Taobao, a “notorious market” for the listing of pirated goods.[17] In January 2012, the Chinese Ministry of Commerce criticized the U.S. Trade Representative for the Taobao label and said that the United States should “make fair assessments and avoid creating unnecessary negative effects for Chinese companies.”[18] Taobao has not been listed as a “notorious market” since 2011. In March 2015, however, the U.S. Trade Representative noted concern with recent developments, including Taobao’s interactions with China’s e-commerce regulator, the State Administration for Industry and Commerce (SAIC), although Taobao was not relisted as a “notorious market” “at [that] time.”[19] Based on several hundred sample purchases, one American brand reportedly found 82 percent of its products on Taobao were counterfeit, and the up to 3,000 monthly successful take-downs of counterfeit products completed through Taobao were ineffective against the approximately 100,000 products for sale at a time.[20]

In December 2014 and January 2015, the Chinese government published two general e-commerce monitoring studies and a critical official report specifically about counterfeits on Taobao, indicating potentially stronger government action against counterfeits; however, the report was initially delayed for months and then deleted the same day it was published. On January 28, the SAIC issued the “Regarding Alibaba Group Ongoing Administrative Guidance Work Situation White Paper” (White Paper).[21] The White Paper was based on a July 16, 2014, meeting at which Liu Hongliang, the SAIC e-commerce department director, reportedly said Alibaba could be issued fines totaling 1 percent of Alibaba’s daily transactions.[22] According to a Hong Kong-based expert on counterfeits, “[t]he frankness of the report and its condemning tone are unprecedented and speak volumes about what the SAIC found.”[23] The White Paper stated that the current situation represented “Alibaba’s largest credibility crisis since its founding” and identified five significant areas of concerns with: registration control; supervision of product information; sales management; flaws in ratings; and employee management.[24] The decision to delay publication of the White Paper in order not to influence Alibaba’s IPO[25]  was reportedly criticized by Chinese state media, which also said Alibaba should not be “bullying others by flexing their financial muscle.”[26] Previously, on January 23, 2015, the SAIC E-Commerce Supervision Department published a monitoring report that found only 37.25 percent (19 of 51) products purchased on Taobao were “genuine.”[27] A total of 22 of the 32 “non-genuine” products purchased from Taobao lacked certification or proper labels, or were not sold through authorized channels,[28] but media reports equated “not genuine” with counterfeit.[29] A December 2014 monitoring report had identified fewer counterfeits than the January 2015 report,[30] but upset Alibaba and merchants due to alleged procedural issues.[31] The White Paper was deleted from the SAIC Web site later on the same day that it was published,[32] and an SAIC spokesperson later said the White Paper was actually the minutes of a meeting and lacked “legal force,”[33] although as of March 25, 2015, the monitoring reports remain online[34] and the White Paper is still available on the People’s Daily Web site.[35]

  1. Allegations of Non-Transparent and Discriminatory Regulatory Actions

Many foreign companies have privately complained about regulatory actions in China,[36] however, Alibaba’s public criticism of the SAIC monitoring reports and White Paper was largely unprecedented.[37] On January 27, 2015, an open letter from an Alibaba employee was reposted on Taobao’s official Weibo account, titled: “Director Liu Hongliang: You Are in Violation of the Regulations, Don’t Blow a Black Whistle.”[38] Taobao employees believed that further communication with the regulator would not be productive and that there was “no other option” but to publicize the SAIC’s alleged violations.[39] The letter criticizing the SAIC’s two monitoring reports was reportedly reviewed by Alibaba’s public relations department before publication.[40] The letter asked: “[t]his type of god-like new power of regulatory enforcement that you have, you are using this public power in an emotional fashion, is that really ok?”[41] The letter alleged that the SAIC violated the “Measures for the Sampling Inspection on the Quality of Commodities in Circulation.”[42] After the SAIC responded to the letter with a statement that the monitoring was done “according to law”[43] and issued the White Paper, Taobao issued an official statement criticizing Director Liu Hongliang’s “regulatory misconduct, behavior of emotional enforcement, and using flawed methodologies to arrive at a biased conclusion.”[44] An Alibaba senior executive later said, “[w]e believe the flawed approach taken in the report, and the tactic of releasing a so-called ‘White Paper’ specifically targeting us, was so unfair that we felt compelled to take the extraordinary step of preparing a formal complaint to the SAIC.”[45] Alibaba, however, never filed a formal administrative complaint or administrative litigation,[46] and the regulation that allegedly was violated by the SAIC in the monitoring may not have been applicable.[47]

  1. Channels of Administrative Dispute Resolution Remain Challenging

While Alibaba’s dispute with regulators was resolved within days, communication with the Chinese government and responding to adverse administrative actions remain difficult.  Many foreign companies believe there is an “absence of recourse” if administrative regulators abuse their discretion.[48] The dispute between Alibaba and the SAIC appeared to come to a close after Alibaba announced steps to reduce counterfeit goods, the regulator deleted the report, and Alibaba’s CEO met with Chinese regulators.[49] By using social media to criticize the SAIC in this case, Alibaba was able to obtain substantial popular support.[50] For instance, an online Sina survey found that slightly more than 50 percent of 44,000 respondents supported Taobao in the “SAIC War With Taobao.”[51]  The use of social media to criticize government actions, however, can potentially be in violation of the PRC Criminal Law and other Chinese regulations.[52] Chinese state media reportedly accused Alibaba of “bullying” the SAIC.[53] On January 30, Alibaba CEO Jack Ma and the SAIC director met and agreed to work together and improve “communication.”[54] According to reports in the New York Times and Wall Street Journal, Alibaba may benefit from “princeling” connections, although Alibaba Group stated before the dispute that they “don’t have” and “won’t need” connections.[55]  Ma later said that “certain government officials” did not support the SAIC’s actions.[56] Some experts believe LinkedIn may have sold 7 percent of its Chinese operations to “well-connected” Chinese firms in order to improve communications with the Chinese government.[57]    

Both domestic and foreign companies in China are concerned about Chinese administrative practices.[58] Foreign companies, however, face difficulty in using Alibaba’s non-legal approach to addressing potential regulatory misconduct through public criticism and prompt high-level meetings.[59] In September 2014, over two months after the SAIC began investigating Microsoft for alleged illegal conduct,[60] the SAIC director met with Microsoft’s CEO and pledged to conduct an open investigation.[61] When China joined the World Trade Organization, the Chinese government committed to “apply and administer in a uniform, impartial and reasonable manner all its laws, regulations and other measures.”[62] In December 2014, the Chinese government further agreed that Chinese agencies, “when undertaking administrative actions, [would] strictly follow statutory limits on their authority, procedures, and requirements.”[63] According to the SAIC, administrative guidance, similar to that given to Alibaba, was provided over 10,000 times in 2014.[64] U.S. officials have documented, however, that there is still limited transparency regarding Chinese administrative actions and warnings of potential fines.[65]

For further information on corporate transparency and commercial developments in China, see Section III—Commercial Rule of Law in the CECC 2014 Annual Report, pp. 149–152.



[1] Reporters Without Borders, “World Press Freedom Index 2015,” February 2015 (https://en.rsf.org/world-press-freedom-index-2015-12-02-2015,47573.html). In 2015, China ranked 176 out of 180 countries for press freedom. See also Michael Forsythe, “Alibaba Says it Relies on Markets, Not Connections,” New York Times, DealBook (blog), 21 July 14 (https://dealbook.nytimes.com/2014/07/21/alibaba-says-it-relies-on-markets-not-connections/). The New York Times has been blocked in China since 2012.

[2] Ministry of Commerce, Catalogue for the Guidance of Foreign Investment Industries (Amended in 2011), 2011  (https://english.mofcom.gov.cn/article/policyrelease/aaa/201203/20120308027837.shtml); U.S. Securities and Exchange Commission, Amendment No. 7 to Form F–1 Registration Statement Under the Securities Act of 1933: Alibaba Group Holding Limited, 15 September 14, 10–11 (https://www.sec.gov/Archives/edgar/data/1577552/000119312514341794/d709111df1a.htm).

[3] See, e.g., “The SEC Caves on China,” Wall Street Journal, 26 February 15 (https://www.wsj.com/articles/the-sec-caves-on-china-1424967173).

[4] U.S. Securities and Exchange Commission, Amendment No. 7 to Form F–1 Registration Statement Under the Securities Act of 1933: Alibaba Group Holding Limited, 15 September 14, 1 (https://www.sec.gov/Archives/edgar/data/1577552/000119312514341794/d709111df1a.htm).

[5] See, e.g., Paul Gillis, “Son of Enron? Alibaba’s Risky Corporate Structure,” Foreign Affairs, 28 October 14 (https://www.foreignaffairs.com/articles/142308/paul-gillis/son-of-enron).

[6] U.S. Securities and Exchange Commission, Amendment No. 7 to Form F–1 Registration Statement Under the Securities Act of 1933: Alibaba Group Holding Limited, 15 September 14, 250 (https://www.sec.gov/Archives/edgar/data/1577552/000119312514341794/d709111df1a.htm). Fengmao Investment Corporation sold 14,285,700 shares and retained 52,165,913 shares. See also Maureen Farrell, “Alibaba’s IPO: The Billionaires and Other Big Winners,” Wall Street Journal, Money Beat (blog), 5 September 14 (https://blogs.wsj.com/moneybeat/2014/09/05/alibabas-ipo-the-billionaires-and-other-big-winners/).

[7] Editorial: What Impact Does the Internet Firewall Bring to China [Sheping: Fanghuo qiang dai gei zhongguo hulianwang naxie yingxiang], Global Times, 28 January 15 (https://opinion.huanqiu.com/editorial/2015-01/5526579.html);“MIIT Responds to VPN Block: Unhealthy Information Should Be Managed According to Chinese Law” [Gongxingbu huiying VPN bei feng: buliang xinxi ying an zhongguo falu guanli], Guangming Daily, reprinted in China Internet Information Center, 28 January 15 (https://www.china.org.cn/chinese/2015-01/28/content_34672826.htm). Te-Ping Chen, “China Owns ‘Great Firewall,’ Credits Censorship With Tech Success,” Wall Street Journal, China Real Time Report (blog), 28 January 15 (https://blogs.wsj.com/chinarealtime/2015/01/28/china-owns-great-firewall-credits-censorship-with-tech-success/).

[8] U.S. Securities and Exchange Commission, Amendment No. 7 to Form F–1 Registration Statement Under the Securities Act of 1933: Alibaba Group Holding Limited, 15 September 14, 48–49 (https://www.sec.gov/Archives/edgar/data/1577552/000119312514341794/d709111df1a.htm); Senator Robert P. Casey, Jr., “Casey to SEC: Protect U.S. Investors in Chinese IPOs; Transactions Could Leave U.S. Investors With Few Safeguards if They Invest in Shell Corporations” 11 July 14 (https://www.casey.senate.gov/newsroom/releases/casey-to-sec-protect-us-investors-in-chinese-ipos-transactions-could-leave-us-investors-with-few-safeguards-if-they-invest-in-shell-corporations).

[9] U.S. Securities and Exchange Commission, Amendment No. 7 to Form F–1 Registration Statement Under the Securities Act of 1933: Alibaba Group Holding Limited, 15 September 14, 216 (https://www.sec.gov/Archives/edgar/data/1577552/000119312514341794/d709111df1a.htm).

[10] Ibid., 12. 

[11] Ibid., 25–68.

[12] State Administration of Industry and Commerce, E-Commerce Regulation Department, “White Paper on Alibaba Group Holdings Administrative Guidance Work Situation” [Guanyu dui Alibaba jituan jinxing xingzheng zhidao gongzuo qingkuang de baipishu], reprinted in People’s Daily, 29 January 15 (https://ip.people.com.cn/n/2015/0128/c136655-26464771.html); U.S. Securities and Exchange Commission, Amendment No. 7 to Form F–1 Registration Statement Under the Securities Act of 1933: Alibaba Group Holding Limited, 15 September 14, 25–68 (https://www.sec.gov/Archives/edgar/data/1577552/000119312514341794/d709111df1a.htm); Mu Nan, “Liu Hongliang Clearly Required Penalties for Alibaba: Target Set At 1 Percent of Daily Transactions” [Liu hongliang mingque yaoqiu chufa ali: zhibiao wei meitian jiaoyi e 1%], Sina, 29 January 15 (https://tech.sina.com.cn/i/2015-01-29/doc-icczmvun5543619.shtml).

[13] Mu Nan, “Liu Hongliang Clearly Required Penalties for Alibaba: Target Set At 1 Percent of Daily Transactions” [Liu hongliang mingque yaoqiu chufa ali: zhibiao wei meitian jiaoyi e 1%], Sina, 29 January 15 (https://tech.sina.com.cn/i/2015-01-29/doc-icczmvun5543619.shtml).

[14] See Telis Demos, “Alibaba Dealings With Chinese Regulator Draw SEC Interest: Request Comes After Company Didn’t Disclose Interactions With Agency,” Wall Street Journal, 13 February 15 (https://www.wsj.com/articles/sec-seeks-info-from-alibaba-on-china-probe-1423865120).

[15] Zhang Ruijie, “Chinese E-Commerce ‘Forced’ to Combat Fakes” [Zhongguo dianshang bei “daobi” dajia], China Economic Weekly, reprinted in People’s Daily, 23 February 15(https://paper.people.com.cn/zgjjzk/html/2015-02/23/content_1536695.htm).

[16] U.S. Department of Homeland Security, “Fiscal Year 2013 Seizure Statistics,” Prepared by U.S. Customs and Border Protection, Office of International Trade,” 2014 (https://www.cbp.gov/sites/default/files/documents/ipr_annual_report_2013_072414%20Final.pdf). Note percentages are based on MSRP values.

[17] Office of the U.S. Trade Representative, “Out-of-Cycle Review of Notorious Markets,” 20 December 11 (https://ustr.gov/sites/default/files/uploads/gsp/speeches/reports/2011/Notorious%20Markets%20List%20FINAL.pdf).

[18] Owen Fletcher, “China Objects to U.S. ‘Notorious Markets’ Designation for Taobao,” Wall Street Journal, 19 January 12 (https://www.wsj.com/articles/SB10001424052970203735304577168473341149692).

[19] Office of the U.S. Trade Representative, “2014 Out-of-Cycle Review of Notorious Markets,” 5 March 15, 13–14  (https://ustr.gov/sites/default/files/2014%20Notorious%20Markets%20List%20-%20Published_0.pdf).

[20] Sophia Yan, “Alibaba Has a Major Counterfeit Problem,” CNN, 12 September 14  (https://money.cnn.com/2014/09/11/technology/alibaba-counterfeit-ipo/).

[21] State Administration of Industry and Commerce, E-Commerce Regulation Department, “White Paper on Alibaba Group Holdings Administrative Guidance Work Situation” [Guanyu dui alibaba jituan jinxing xingzheng zhidao gongzuo qingkuang de baipishu], reprinted in People’s Daily, 29 January 15 (https://ip.people.com.cn/n/2015/0128/c136655-26464771.html). A partial English translation of the White Paper is available on Quartz. Zheping Huang, “The Chinese Government Has Erased a Damning Report on Alibaba, But You Can Read It Here,” Quartz, 29 January 15 (https://qz.com/335675/the-chinese-government-has-erased-a-damning-report-on-alibaba-but-you-can-read-it-here/#).

[22] Mu Nan, “Liu Hongliang Clearly Required Penalties for Alibaba: Target Set At 1 Percent of Daily Transactions” [Liu hongliang mingque yaoqiu chufa ali: zhibiao wei meitian jiaoyi e 1%], Sina, 29 January 15 (https://tech.sina.com.cn/i/2015-01-29/doc-icczmvun5543619.shtml).

[23] John Ruwitch, “China Regulator Blasts Alibaba for Illegal Business on Its Websites,” Reuters, 28 January 15 (https://www.reuters.com/article/2015/01/28/alibaba-group-government-idUSL4N0V728K20150128).

[24] State Administration of Industry and Commerce, E-Commerce Regulation Department, “White Paper on Alibaba Group Holdings Administrative Guidance Work Situation” [Guanyu dui alibaba jituan jinxing xingzheng zhidao gongzuo qingkuang de baipishu], reprinted in People’s Daily, 29 January 15 (https://ip.people.com.cn/n/2015/0128/c136655-26464771.html).

[25] Ibid.

[26] Andrea Chen, “State Media Side With Regulator in Widening Row Against Alibaba Group,” South China Morning Post, 29 January 15 (https://www.scmp.com/news/china/article/1694747/state-media-side-regulator-widening-row-against-alibaba-group).

[27] State Administration for Industry and Commerce, E-Commerce Supervision Department, “SAIC Releases E-Commerce Monitoring Results for Second Half of 2014” [Guojia zongju fabu 2014 nian xiabannian wangluo jiaoyi shangpin dingxiang jiance jieguo], 23 January 15  (https://www.saic.gov.cn/zwgk/zyfb/qt/xxzx/201501/t20150123_151599.html).

[28] Ibid.

[29] Lawyer Lei Teng, “Alibaba White Paper “Distortion in Transmission” [Ali baipishu shijian zhongde “chuanbo niuqu xiaoying”], Sina, 2 February 15 (https://tech.sina.com.cn/zl/post/detail/i/2015-02-02/pid_8470916.htm).  

[30] State Administration for Industry and Commerce, E-Commerce Supervision Department, “SAIC Verification Promise, Some E-Commerce Platforms Still Sell Counterfeits” [Guojia gongshang zongju yanzheng chengnuo bufen dianshang pingtai rengcun shoujia], 11 December 14 (https://www.saic.gov.cn/ywdt/gsyw/zjyw/xxb/201412/t20141211_150448.html). See also Wang Zhuoqiong and Meng Jing, “Online Firms Urged to Step Up Quality Checks,” China Daily, 12 December 14 (https://europe.chinadaily.com.cn/business/2014-12/12/content_19070278.htm).

[31] “Tmall Vendors to SAIC: Killed, Please Help Us Understand Why We Died!” [Tianmao shangjia zhi gongshang zongju: si, yeqing rang women si ge mingbai!], Sina, 29 January 15 (https://tech.sina.com.cn/i/2015-01-29/doc-ichmifpx6020979.shtml); “Tmall Stores Protest Against Regulator’s Quality Report,” Xinhua, reprinted in China Daily, 30 January 15 (https://europe.chinadaily.com.cn/china/201501/30/content_19449090.htm). 

[32] See, e.g., “SAIC Deletes Public White Paper From Internet, Does Not Respond to Taobao’s Formal Complaint” [Gongshang zongju guanwang chexia baipishu, weidui taobao tousu zuo huiying], Sina, reprinted in Jinghua News, 29 January 15 (https://tech.sina.com.cn/i/2015-01-29/02399986406.shtml).

[33] State Administration for Industry and Commerce, “SAIC Spokesperson Responds to Reporters’ Questions on Administrative Guidance” [Guojia gongshang zongju xinwen fayanren jiu xingzheng zhidao da jizhe wen], 30 January 15 (https://www.saic.gov.cn/ywdt/gsyw/zjyw/xxb/201501/t20150130_151776.html).

[34] State Administration for Industry and Commerce, E-Commerce Supervision Department, “SAIC Releases E-Commerce Monitoring Results for Second Half of 2014” [Guojia zongju fib 2014 nian xiabannian wangluo jiaoyi shangpin dingxiang jiance jieguo], 23 January 15  (https://www.saic.gov.cn/zwgk/zyfb/qt/xxzx/201501/t20150123_151599.html); State Administration for Industry and Commerce, E-Commerce Supervision Department, “SAIC Verification Promise, Some E-Commerce Platforms Still Sell Counterfeits” [Guojia gongshang zongju yanzheng chengnuo bufen dianshang pingtai rengcun shoujia], 11 December 14 (https://www.saic.gov.cn/ywdt/gsyw/zjyw/xxb/201412/t20141211_150448.html).

[35] State Administration of Industry and Commerce, E-Commerce Regulation Department, “White Paper on Alibaba Group Holdings Administrative Guidance Work Situation” [Guanyu dui alibabajituan jinxing xingzheng zhidao gongzuo qingkuang de baipishu], reprinted in People’s Daily, 29 January 15 (https://ip.people.com.cn/n/2015/0128/c136655-26464771.html).

[36] See, e.g., European Union Chamber of Commerce in China, “European Chamber Releases Statement on China AML-Related Investigations,” 13 August 14 (https://www.europeanchamber.com.cn/en/press-releases/2132/european_chamber_releases_statement_on_china_aml_related_investigations). 

[37] Chris Johnston, “Alibaba in Row With Chinese Regulator Over Fake Goods,” Guardian, 28 January 15  (https://www.theguardian.com/technology/2015/jan/28/alibaba-in-row-with-chinese-regulator-over-fake-goods).

[38] Taobao, Weibo post, 27 January 15, reprinted in Sina (https://finance.sina.com.cn/chanjing/gsnews/20150127/144521408992.shtml); Olivia Geng, et. al, “On Carbuncles, Battalions and Crows: Choice Words in Alibaba’s Fakes Fight With Beijing,” Wall Street Journal, China Real Time Report (blog), 29 January 15 (https://blogs.wsj.com/chinarealtime/2015/01/29/on-carbuncles-battalions-and-crows-choice-words-in-alibabas-fakes-fight-with-beijing/).

[39] Ibid.

[40] See, e.g., Zhu Yinling, “Behind Taobao’s Challenge to SAIC: Who  is the Young Taobao Operator?” [Taobao zhiyi guojia gongshang zongju beihou: taobao yunying xiao er shi shei?], Qianjiang Evening News, reprinted in Xinhua, 29 January 15 (https://news.xinhuanet.com/fortune/2015-01/29/c_127435105.htm).

[41] Taobao, Weibo post, 27 January 15, reprinted in Sina  (https://finance.sina.com.cn/chanjing/gsnews/20150127/144521408992.shtml). Olivia Geng, et. al, “On Carbuncles, Battalions and Crows: Choice Words in Alibaba’s Fakes Fight With Beijing,” Wall Street Journal, China Real Time Report (blog), 29 January 15 (https://blogs.wsj.com/chinarealtime/2015/01/29/on-carbuncles-battalions-and-crows-choice-words-in-alibabas-fakes-fight-with-beijing/).

[42] Taobao, Weibo post, 27 January 15, reprinted in Sina  (https://finance.sina.com.cn/chanjing/gsnews/20150127/144521408992.shtml); See State Administration of Industry and Commerce, Measures for the Sampling Inspection on the Quality of Commodities in Circulation [Liutong lingyu shangpin zhiliang choucha jianyan banfa], issued 14 February 14, effective 15 March 14 (https://www.saic.gov.cn/zwgk/zyfb/zjl/xxzx/201402/t20140214_141795.html).

[43] State Administration for Industry and Commerce, “SAIC Responds to Matter of 2014 Second-Half E-Commerce Monitoring Results” [Gongshang zongju huiying 2014 nian xiabannian wangluo jiaoyi shangpin dingxiang jiance jieguo fabu yishi], 27 January 15 (https://www.saic.gov.cn/ywdt/gsyw/zjyw/xxb/201501/t20150127_151679.html).

[44] Taobao, Weibo post, 28 January 15, 14:58, reprinted in Sina (https://tech.sina.com.cn/i/2015-01-28/doc-iawzunex9478513.shtml).

[45] Alibaba Group, “Joe Tsai Addressed Recent Interaction With SAIC,”   29 January 15, reprinted in U.S. Securities and Exchange Commission (https://www.sec.gov/Archives/edgar/data/1577552/000110465915005216/a15-3356_1ex99d2.htm).

[46] See Lulu Yilun Chen, “Jack Ma Says Alibaba Resolved Conflict With China Regulator,” Bloomberg, 2 February 15 (https://www.bloomberg.com/news/articles/2015-02-03/jack-ma-says-alibaba-resolved-conflict-with-china-regulator). According to Jack Ma, the dispute was resolved “at the first stage.” See also Laura Zhou and Teddy Ng, “Regulator Vows to Be Bold But Prudent After Spat With Alibaba,” South China Morning Post, 5 February 15 (https://www.scmp.com/news/china/article/1702778/stay-vigilant-fake-goods-chinese-government-watchdog-tells-officials). The article notes that Alibaba had threatened to file a dispute.

[47] Yuan Jin and Chen Yanni, “Half of Online Purchases Are Fake? Taobao ‘Boy’ War of Words With SAIC” [Wanggou yiban shi jiahuo? taobao xiaoer shezhan gongshang zongju], National Business Daily, 28 January 15 (https://www.nbd.com.cn/articles/2015-01-28/893867.html).

[48] See, e.g., Covington & Burling LLP, “Measures and Practices Restraining Foreign Investment in China, Prepared for the European Commission Directorate-General For Trade,” 10 August 14, 63–64 (https://trade.ec.europa.eu/doclib/docs/2014/august/tradoc_152739.08.10.pdf).

[49] See Yang Zheyu and Zhou Dongxu, “Closer Look: Alibaba Meets With Regulator, But Its Problems Remain,” Caixin, 1 February 15 (https://english.caixin.com/2015-02-02/100780848.html).

[50] “SAIC War with Taobao, Who Do You Support?” [Gongshang zongju dazhan taobao, ni zhichi shei?], Sina, 28 January 15 (https://survey.tech.sina.com.cn/result/107044.html). As of March 23, 2015, among survey respondents, 22,274 (50.4 percent) supported Taobao; 16,766 (37.9 percent ) supported SAIC; and 5,179 (11.7 percent) supported neither.

[51] Ibid.

[52] PRC Criminal Law [Zhonghua renmin gongheguo xingfa], passed 1 July 79, amended 14 March 97, effective 1 October 97, amended 25 December 99, 31 August 01, 29 December 01, 28 December 02, 28 February 05, 29 June 06, 28 February 09, 25 February 11, art. 246. See also U.S. Securities and Exchange Commission, F–1 Registration Statement Under the Securities Act of 1933: Weibo Corporation, 14 March 14, 36 (https://www.sec.gov/Archives/edgar/data/1595761/000119312514100237/d652805df1.htm). Under Chinese regulations, “internet content providers and internet publishers are prohibited from posting or displaying over the internet content that, among other things, impairs the national dignity of China … .”

[53] Andrea Chen, “State Media Side With Regulator in Widening Row Against Alibaba Group,” South China Morning Post, 29 January 15 (https://www.scmp.com/news/china/article/1694747/state-media-side-regulator-widening-row-against-alibaba-group).

[54] State Administration for Industry and Commerce, “SAIC Director Zhang Mao Meets Alibaba CEO Jack Ma” [Guojia gongshang zongju juzhang zhangmao huijian ali baba dongshi ju zhuxi mayun], 30 January 15  (https://www.saic.gov.cn/zzjg/zjld/zm/zyhd/201501/t20150130_151779.html).  

[55] “Alibaba’s Political Risk,” Wall Street Journal, 19 September 14 (https://www.wsj.com/articles/alibabas-political-risk-1411059836); Michael Forsythe, “Alibaba Says it Relies on Markets, Not Connections,” New York Times, DealBook (blog), 21 July 14 (https://dealbook.nytimes.com/2014/07/21/alibaba-says-it-relies-on-markets-not-connections/).

[56] Lulu Yilun Chen, “Jack Ma Says Alibaba Resolved Conflict With China Regulator,” Bloomberg, 2 February 15  (https://www.bloomberg.com/news/articles/2015-02-03/jack-ma-says-alibaba-resolved-conflict-with-china-regulator).

[57] Paul Mozur and Vindu Goel, “To Reach China, LinkedIn Plays by Local Rules,” New York Times, 5 October 14 (https://www.nytimes.com/2014/10/06/technology/to-reach-china-linkedin-plays-by-local-rules.html).

[58] See Office of the U.S. Trade Representative, “2014 Report to Congress on China’s WTO Compliance,” December 2014, 3–4 (https://ustr.gov/sites/default/files/2014-Report-to-Congress-Final.pdf). See also Hearing on the Foreign Investment Climate in China: Present Challenges and Potential for Reform, Hearing of the U.S.-China Economic and Security Review Commission, 28 January 15, Testimony of Dan Harris, Founder/Partner, Harris Moure  (https://www.uscc.gov/sites/default/files/Dan%20Harris%20FINAL%201%2030%2015_0.pdf).

[59] Office of the U.S. Trade Representative, “2014 Report to Congress on China’s WTO Compliance,” December 2014, 88 (https://ustr.gov/sites/default/files/2014-Report-to-Congress-Final.pdf).

[60] Paul Carsten, “China Regulator Announces Anti-Monopoly Probe of Microsoft,” Reuters, 29 July 14  (https://www.reuters.com/article/2014/07/29/us-microsoft-china-idUSKBN0FX0TY20140729).

[61] Charles Hutzler, “China and Microsoft Agree to Fair and Cooperative Antitrust Investigation,” Wall Street Journal, 28 September 14 (https://www.wsj.com/articles/china-and-microsoft-agree-to-fair-and-cooperative-antitrust-investigation-1411947696).

[62] World Trade Organization, Protocol on the Accession of the People’s Republic of China, WT/L/432, 10 November 01, Part I, 2(A), 2 (https://docsonline.wto.org/dol2fe/Pages/SS/DirectDoc.aspx?filename=t%3A%2Fwt%2Fl%2F432.doc&).

[63] U.S. Department of Commerce, “U.S.-China Joint Fact Sheet on 25th Joint Commission on Commerce and Trade,” 29 December 14 (https://www.commerce.gov/news/fact-sheets/2014/12/29/us-china-joint-fact-sheet-25th-joint-commission-commerce-and-trade).

[64] State Administration for Industry and Commerce, “SAIC Spokesperson Responds to Reporters’ Questions on Administrative Guidance” [Guojia gongshang zongju xinwen fayanren jiu xingzheng zhidao da jizhe wen], 30 January 15 (https://www.saic.gov.cn/ywdt/gsyw/zjyw/xxb/201501/t20150130_151776.html).

[65] See Office of the U.S. Trade Representative, “2014 Report to Congress on China’s WTO Compliance,” December 2014, 88 (https://ustr.gov/sites/default/files/2014-Report-to-Congress-Final.pdf).