Recent reports indicated that the Chinese government is turning against the country's largest online marketplace company Alibaba Group Holdings. The state-run media has been reportedly highlighting negative aspects of the company since last week.
Business Insider published a comprehensive report on how the government might be using the state-run media to throw shades towards the company. Usually, the state media doesn't criticize domestic companies, considering the country's nature whereas the government is tightly controlling the media.
The attack from media first happened to Alibaba last week when state-run broadcaster CCTV released a documentary of its investigation towards the company. CCTV reported that Alibaba is selling fake goods on its website. The issue has emerged from outside the country months ago, but it had just become an issue in China. The company claimed that it spends hundreds of millions of dollars to combat this problem.
Another criticism came from the Chinese government to Alibaba's new business Ele.me, an online food delivery service. The new business quickly became a key player in the fast-growing market with a 33.7 percent market share. However, the government expressed their allegations that the company is allowing unqualified vendors to sell food on the platform. The company is now being investigated regarding the matter as state-run media are broadcasting the accusations.
The report is remarkable for two reasons, as noted by Fortune. First is because the state-run media usually doesn't criticize domestic companies. In previous years, critics from the media are directed towards foreign companies such as Apple and Starbucks. The second reason that makes this remarkable is that the stock price was hardly affected by the news. The shareholders seem to have shrugged off the news easily as traders no longer appear as sensitive to evidence of fraud as before.
The reports didn't do much to damage Alibaba in terms of sales and shares. According to TechinAsia, CCTV's attack on Apple three years ago also hasn't done much to hurt the company's sales in the country. Alibaba has responded by thanking CCTV for calling attention to the problem and called for a united effort to address the issues.
There's no evidence on this, but many believe that the government is turning against Alibaba because of an anti-Xi Jinping article published on the company-owned news site. Ever since state-run media has been reporting against the company in an unusual move to criticize domestic companies. However, the company hasn't seemed to take much damage from the criticism as the stock price and sales remain unchanged.
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