Alibaba Group Holding Ltd (BABA): China To Tighten E-Commerce Regulation

China’s government is aiming to tighten its regulation of electronic commerce in a move that will directly affect digital commerce giants like Alibaba Group Holding Ltd (NYSE:BABA) in the country.

According to a report from the Chinese state news agency Xinhua, Minister Zhang Mao of the State Administration for Industry and Commerce (SAIC) said at the sidelines of the country’s annual parliamentary session that his agency is seeking for tighter control on electronic commerce in order to fight counterfeiting.

“The reason why there are so many market violations is that the cost of breaking rules is too low,” Zhang is quoted as saying in a briefing.

The minister said that the market will improve if companies find the cost of having other people and organizations post counterfeit goods on their platforms to be unaffordable.

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Zhang said that electronic commerce platforms such as those being run by Alibaba Group Holding Ltd (NYSE:BABA) should have “key responsibilities” that promote “credibility and integrity”.

SAIC just released last month a damaging report about the state of counterfeit merchandise on electronic commerce platforms in China. In the report, the Chinese government agency said that only 37.25% of goods on Taobao, a site operated by Alibaba Group Holding Ltd (NYSE:BABA), are authentic.

Minister Zhang said that SAIC will be collaborating more with companies in order to “listen to them, provide guidance for them and demand their self-discipline.”

Among the steps SAIC will be taking will be to push for new legislative bills and building online databases for internet commerce regulation. SAIC’s head recently met with Alibaba Group Holding Ltd (NYSE:BABA) founder and CEO Jack Ma to hash out their differences and plan how to attack the problem of counterfeit goods, Xinhua reports.

Rob Citrone’s Discovery Capital Management owned about 9.25 million Alibaba Group Holding Ltd (NYSE:BABA) shares by the end of the October-December quarter.

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