China’s Biggest Online Shopping Holiday Plagued by Rampant Fraud
Annie Wu, 9 Nov 17
       

Employees watch the live broadcast of sales transactions during the Nov. 11 shopping promotion at Alibaba headquarters in Hangzhou, China, on November 11, 2013. (VCG via Getty Images)

Chinese consumers are serious when it comes to shopping. On the Cyber Monday-like online sales holiday held on Nov. 11, China’s largest online retailer, Alibaba, has made billions of dollars in sales. In 2016, Alibaba apparently made US$17.8 billion in sales in the span of just 24 hours, according to the MIT Technology Review.

The online shopping spree began on Nov. 11, 2009 as a special sales event on Taobao Mall, an online retail platform operated by Alibaba (which would later be renamed as Tmall.com). Its immense popularity led to the date becoming an official sales holiday every year.

But a recent exposé has revealed that much of these sales could have been fake.

Meanwhile, the widespread occurrence of scams and fake products from past years has made consumers nervous about what they might face this time around.

Fake Transactions

In a report published in the Shandong Daily on Nov. 5, an investor in a major furniture store in China described how the store’s online operations made up fake transactions totaling 25 million yuan (about US$3.8 million) during last year’s Nov. 11 sales holiday.

The company, called Jia Zhuang in Chinese, has 500 physical locations spanning 20 different counties and cities, which also fill customers’ online orders via its regional online stores on Tmall.com. In the days leading up to Nov. 11, 2016, each online store was tasked with making a set number of fake transactions, according to the investor, named Zhou Dongdong.

He explained that the fake transactions were made under fake names, in order to increase the company’s sales volumes and popularity ranking—in the hopes of attracting real customers to make purchases.

The report also mentioned that the company offers interior decorating services. Many customers who hired the company complained of construction that would stall indefinitely without explanation.

Other online vendors pay for positive reviews of their products, or delete negative feedback, in order to gain a competitive edge.

Workers prepare packages for delivery at a sorting center in Lianyungang, Jiangsu Province during the Nov. 11, also known as Single’s Day, online shopping festival on November 11, 2016. (STR/AFP/Getty Images)

According to Caixin, a Chinese business news publication, the country’s top prosecutor’s office has found 680 websites and more than 500 instant messaging groups in 2014 that offered to conduct fake transactions, leave positive comments on clients’ products and services, and post critical comments on their clients’ rivals. The combined value of fabricated sales amounted to more than 600 billion yuan (about US$90 billion).

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