China Accuses Alibaba of Lax Oversight of Merchants

Alibaba Group Holding Ltd. has a “credibility crisis” fueled by a failure to crack down on shady merchants, counterfeit goods, bribery and misleading promotions using its online malls, the Chinese government said.

The scathing report by the State Administration for Industry & Commerce accused Alibaba of allowing merchants to operate without required business licenses, to run unauthorized stores that co-opt famous brands and to sell fake wine and handbags. Alibaba employees took bribes, and the e-commerce giant didn’t fix flaws in customer feedback or internal credit-scoring systems, the report said.