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Executives at Alibaba Resign Over Frauds
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msg:4270053
 12:06 pm on Feb 21, 2011 (gmt 0)

Executives at Alibaba Resign Over Frauds [guardian.co.uk]
The chief executive of e-commerce group Alibaba.com has resigned after an internal investigation showed sales staff "intentionally or negligently" allowed more than 2,300 fraudsters to set up verified stores.

David Wei and chief operating officer Elvis Lee departed amid what the firm one of China's biggest internet success stories described as "systemic breakdown in our company's culture of integrity".

Its statement to the Hong Kong Stock Exchange stressed that Wei and Lee were not implicated in wrongdoing. But it revealed it took senior management at the online marketplace at least nine months to take action following a noticeable increase in fraud claims against verified vendors by foreign buyers from late 2009.


 

MrFewkes




msg:4270210
 7:36 pm on Feb 21, 2011 (gmt 0)

I can verify through experience of importing goods sourced on alibaba that you have to be careful.

Some of the tricks they use include sending second hand goods, sending faulty goods, sending the wrong goods, lying about the fact they are seconds, saying goods were damaged in transit when clearly the type of damage to the products could only have been done by a human hand!
They send fake goods, they lie on the shipping documents in order that the buyer pays less import tax, they lie about the type of products in transit so as to avoid the buyer paying tax. These are NOT the kind of tricks you want to be getting involved with - but these idiots seem to think they are doing you a favour.
They communicate via email and pretend they cannot understand the english.

I have now found ONE good source on alibaba - but it has been a very costly journey - and the one I am with still sends around 10% second hand or faulty products.

Now - is this the kind of fraud we are talking about here - or are the resignations over even worse dealings with these idiots?

Angonasec




msg:4270221
 7:51 pm on Feb 21, 2011 (gmt 0)

It requires a high degree of naivety to expect to have smooth dealings with a company naming itself "Alibaba".

Remember your nursery book readings?

"Alibaba and the Forty ..."

Fribble




msg:4270253
 8:41 pm on Feb 21, 2011 (gmt 0)

Maybe I should rethink my use of Trojan's as well.

johnnie




msg:4270317
 10:56 pm on Feb 21, 2011 (gmt 0)

Never used them, always seemed way too dodgy.

Strapworks




msg:4270335
 11:57 pm on Feb 21, 2011 (gmt 0)

Sounds like its being swept under the rug. "There was some wrong doing, but it really wasn't that bad" LOL
Its probably how they became so big so fast, just let everyone in no matter legal or not and profit!

votrechien




msg:4270397
 2:33 am on Feb 22, 2011 (gmt 0)

I have extensive experience using Alibaba and I've met many suppliers who have also become great friends through the website.

It's a medium that is used by millions across the world and like any site of that kind of popularity, it's always going to be prone some fraud and abuse (except for eBay which has no scammers of course on it ;)). The fact some of this fraud was supported internally is scary but give Alibaba credit for coming forward with it.

Unfortunately, in developing countries this sort of thing often goes with the territory but it's easy to protect yourself. The most important axiom being "if it's too good to be true, it probably is". Yes, that means the Chinese supplier who you've never even talked to on the phone, who doesn't advertise a business address, who has only been on Alibaba for a month, and who is selling iPhones for $50 (despite China being part of the WTO) probably is a fraud.

Ferro9




msg:4270491
 10:00 am on Feb 22, 2011 (gmt 0)

I tried for a long time to source some paper cups from Alibaba, but none of the dozen suppliers I asked for where willing to maintain the conditions indicated on the website: the cost was always greater, the quantity bigger, etcetera.

iThink




msg:4270502
 10:25 am on Feb 22, 2011 (gmt 0)

It requires a high degree of naivety to expect to have smooth dealings with a company naming itself "Alibaba".


So 2300 out of 140,000 vendors were engaging in fraud. That is around 1.6% of all vendors on Alibaba were bad and total fraud is for $1.7 million only. That the CEO of company has resigned is a good example of difference in business culture and ethics in the USA and in China. In 2008 when a bunch of big American banks went bankrupt, not even a single bank CEO resigned on his own. Many were sacked by their boards because they were just not willing to accept responsibility for their decisions that led to losses worth several hundred billion dollars for their banks, customers, employees, investors as well as governments around the world.

Here the CEO of a major Chinese internet company is accepting responsibility. To me it doesn't looks like a bad thing.

fintancostello




msg:4270524
 12:22 pm on Feb 22, 2011 (gmt 0)

So 2300 out of 140,000 vendors were engaging in fraud. That is around 1.6% of all vendors on Alibaba were bad and total fraud is for $1.7 million only. That the CEO of company has resigned is a good example of difference in business culture and ethics in the USA and in China. In 2008 when a bunch of big American banks went bankrupt, not even a single bank CEO resigned on his own. Many were sacked by their boards because they were just not willing to accept responsibility for their decisions that led to losses worth several hundred billion dollars for their banks, customers, employees, investors as well as governments around the world.

Here the CEO of a major Chinese internet company is accepting responsibility. To me it doesn't looks like a bad thing.


I 100% agree with this, for example, how much fraud takes place on eBay? I think the numbers would be comparable.

In terms of sourcing from China, I recommend reading "Poorly Made in China " by Paul Midler, yes there are pit-falls but it can be done succesfully.

Sgt_Kickaxe




msg:4270606
 4:30 pm on Feb 22, 2011 (gmt 0)

You don't even want to know how dangerous it was/is in the ATV sector since U.S. policy is to group ATVs in with farm equipment (lawnmowers etc). That means no ATV needs a VIN (vehicle identification number) that resolves or is accurate, any numbers will do making them untrackable.

I hear Alibaba did quite well for themselves with ATVs and ATV parts.

votrechien




msg:4270625
 5:04 pm on Feb 22, 2011 (gmt 0)

I hear Alibaba did quite well for themselves with ATVs and ATV parts.


I can never understand why people make disparaging remarks about a company they know nothing about. Alibaba is essentially a go-between for Chinese suppliers and foreign buyers. It is not Alibaba's responsibility to ensure quality standards for every factory in China.

Is it Facebook's responsibility too that one of your friends on Facebook is an A-hole?

moTi




msg:4270648
 6:02 pm on Feb 22, 2011 (gmt 0)

no problems with alibaba as the intermediary platform so far. maybe i've been a bit lucky, but i've immediately found a reliable chinese manufacturer for my goods and i'm in continuous talks with the employees per email and skype. they are very friendly and helpful. the good guys care about their reputation.

in any forum thread that deals with alibaba, there is at least one of the commenters who repeats that mantra of "don't ever do business with a company with that name". that's so completely dumb by now, that i really don't want to comment on this.

on the other hand, as far as i'm concerned with my personal business, the sceptics are welcome to keep prevailing. less competition is always a good thing for a merchant.

wheel




msg:4270670
 6:36 pm on Feb 22, 2011 (gmt 0)

The banks you're talking about weren't engaging in fraud. It's not the same thing at all, even if you really dislike what the US banks were doing.

iThink




msg:4270689
 7:15 pm on Feb 22, 2011 (gmt 0)

The banks you're talking about weren't engaging in fraud. It's not the same thing at all, even if you really dislike what the US banks were doing.


Goldman Sachs settled a civil fraud case with SEC last year. The U.S. government (SEC) that brought the charges was pretty sure about the fraud that happened. Court case for fraud against a Goldman employee named "fabulous fab" in the media is still on. This is just one example.

This is not the appropriate forum but you can google statements made by CEO of Citigroup, weeks before he was let go by board, understating the subprime debt held by Citi.

Wachovia CEO went on CNBC (the famous "Mad Money" with Jim Cramer) to say all is well, weeks later Wachovia entered in a shotgun wedding with Wells Fargo, courtesy FDIC because it was essentially insolvent when its CEO was misleading investors, customers and employees of his bank.

This may not be a fraud as per U.S. laws but in any other country on earth such CEOs would have been charged with fraud.

You can read the testimony of Lehman CEO that he gave to FCIC. Years after his company went bankrupt under his watch, he is still blaming everyone but himself. This is the biggest bankruptcy in the world till date and the CEO is not taking full responsibility for his actions. He clearly failed in ensuring prudent risk management in his company. Whatever happened to the concept of accepting responsibility for one's actions?

In this instance CEO of a Chinese company is accepting responsibility and paying the price. Notice the difference?

wheel




msg:4270696
 7:25 pm on Feb 22, 2011 (gmt 0)

Whatever. Comparing the bank fiasco to deliberate fraud centered around alibaba is a bit simplistic if you ask me. It hardly makes the head of alibaba a fine fellow, and it doesn't excuse the fraudulent actions.

iThink




msg:4270709
 7:55 pm on Feb 22, 2011 (gmt 0)

Whatever. Comparing the bank fiasco to deliberate fraud centered around alibaba is a bit simplistic


I agree that it is not an apple to apple comparison. All of the top players responsible for bank "fiasco" in the U.S. were never made to pay for their actions.

Here the board of a Chinese company is making its CEO and COO accept responsibility and leave. Still people argue that Alibaba is less than honest because of its name.

I rest my case. Thanks.

Angonasec




msg:4270791
 11:18 pm on Feb 22, 2011 (gmt 0)

"Alibaba and the Forty..."

Following the Melamine-in-baby-milk-powder scam last year, the Chinese government "clamped down" on food standards. One or two CEOs were executed, and the wise avoided all Chinese processed foods for life.

This week we discover the Chinese milk-powder industry has found the addition of "hydrolysed leather" (think, caustic soda digested cow-hides) to milk powder is a fine replacement for Melamine.

A few bad apples?

Nuff sed!

votrechien




msg:4271212
 8:52 pm on Feb 23, 2011 (gmt 0)


"Alibaba and the Forty..."

Following the Melamine-in-baby-milk-powder scam last year, the Chinese government "clamped down" on food standards. One or two CEOs were executed, and the wise avoided all Chinese processed foods for life.

This week we discover the Chinese milk-powder industry has found the addition of "hydrolysed leather" (think, caustic soda digested cow-hides) to milk powder is a fine replacement for Melamine.

A few bad apples?

Nuff sed!


A few bad apples in a country with 1.2 billion is a lot of bad apples. Guess what? Statistically there's bound to be 400% more bad apples in China than the U.S.

China is a developing country and you cant expect to do business in it the same way you do in the West. If you expect strict government regulation and a strong judicial system to protect you, you need to examine your strategies and knowledge in dealing with such countries.

Successful business in these countries is defined by trust and relationships more than anything else (for both the buyer and supplier). If you're not comfortable with this style of business, that's fine, but don't paint an entire country with a brush of evil.

MushHak




msg:4271373
 7:16 am on Feb 24, 2011 (gmt 0)

I had to a find a supplier from China in 2010 and starting from June 2010 to November I was scanning and scanning. How many times I was already going to send money over and only in the very last minute reconsidered.

Finally in November found a service company in China that provided let's say "background check" solutions. A little overcharge but I received goods working and all complete.

I'll bring over my stats from Alibaba or Aliexpress. 6 of 10 suppliers I talked were professional fraudsters.. and AliExpress (an Alibaba Company) does not verify or guarantee anything, though it supposed to do escrow there - it does not!

There should be common sense to avoid this guys, however there are some very professional ones.

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