A new Chinese internet shopping law may hit Alibaba profits if it is properly applied. Under this law, Chinese authorities will slap large fines on internet shopping sites that falsely advertise their products. Such falsehoods take two major forms:
- They delete negative reviews about their products on their websites.
- The fake positive reviews writing their own reviews on their sites that promote their products.
Some may even post fake negative reviews onto their competitors’ websites. The ultimate result of this can be disastrous to honest vendors in that the public might believe that all online sales sites falsify reviews. Those that publish honest positive reviews on their websites could be tarred with the same brush as those that falsify reviews.
New Chinese Internet Shopping Law for Singles Day
China has brought in a new law that tackles this form of dishonesty. Internet shopping websites that falsify reviews, or publish positive reviews made up by themselves, will face heavy fines. Such fines can start at a minimum $30,000 (£23,000).
China’s Singles Day commences shortly. This is the busiest day for online shopping in the country. Last year, Singles day saw sales totaling $18 billion in one day from 657 million orders in China. Most vendors look on Singles Day as being their most lucrative. They tend to sell online using China’s own Alibaba. Jack Ma’s Alibaba group makes a lot of money during this period.
Chinese Online Market Could Be Hit
Alibaba has been accused by many as failing to help police and prevent the falsehoods published on Singles Day websites. Much of this relates to falsehoods regarding reviews of the quality of their goods. All of this relates to a shift by Chinese retailers towards internet selling, a market that they find very lucrative. However, should the world note that claims made regarding product quality are false, then this could hit the Chinese online market very hard.
People do not like being cheated by companies selling online. This may be one of the reasons why the Chinese authorities are beginning to look closely at this practice. The new Chinese shopping law could be rebound, not only on sales but also on share prices of the companies concerned including Alibaba.
What is Chinese Singles Day?
Alibaba posted a 56% rise in its quarterly revenue in August and is an important factor in the Chinese economy. Singles day is also known a Double Eleven, because it is traditionally held on November 11. It was created a celebration day for people being single but is now more like Black Friday. Alibaba has turned November 11 into the world’s biggest shopping bonanza even though it is only for the Chinese! Alibaba is promising that online orders will be delivered within 2 hours!
Little wonder, then, that many companies are falsifying their reviews. Their potential revenue is enormous: Alibaba has sold more in one day over the past few Singles Days than Cyber Monday and Black Friday in the US combined. Should the new Chinese shopping law by the Chinese authorities have any effect, then it could hit Alibaba share prices hard. Time will tell!
