ALIBABA's $2.8 billion fine.

[Walter Hay]

An article in the Wall Street Journal has provided information about the whopping $2.8 billon dollar fine imposed on Alibaba by Chinese corporate regulators.

Here is an extract: "China’s antitrust regulator imposed a fine equivalent to $2.8 billion against Alibaba Group Holding Ltd. for abusing its dominant position over rivals and merchants on its e-commerce platforms, a record penalty in the country that comes amid a wave of scrutiny on the business empire of company founder Jack Ma.

China’s State Administration for Market Regulation said Saturday in Beijing that Alibaba punished certain merchants who sold goods both on Alibaba and on rival platforms, a practice that it dubbed “er xuan yi”—literally, “choose one out of two.”

This news explains something that has been puzzling me for some time. Over the past 6 months I have found it more and more difficult to track down information on suppliers. The most basic question I am often asked is: "Is this company a manufacturer?"

What I have been finding is that almost every Alibaba listed company whose details I am searching no longer advertise anywhere but on Alibaba. This is a result of Alibaba's policy of downgrading their listings and by other means punishing companies that dare try to sell outside Alibaba. This even extends to those who have their own websites. Those individual company wesbites have simply disappeared.

Somehow Alibaba has managed to ensure that even Chinese equivalents of companies like Bloomberg no longer publish any information about Chinese companies that sell on Alibaba! What power Jack Ma has!!!

Fortunately I still manage to sort many of the pretenders out from among the small number of genuine manufacturers, but please don't anybody tell Jack.

Walter

 

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[spreng]

I just love how the stock popped many percentage points on the news of this fine because that means Jack Ma is still alive. You can't fine a dead man!

 

[Walter Hay]

Doesn't the Chinese government own Alibaba?
I recall reading that they'd "confiscated" it.
Or maybe it was Tencent, it was a while back.

From its inception Alibaba has been mollycoddled by the Chinese Communist Party. Much of its mind boggling growth rate has been a consequence of that platform being used by one government business to buy from another government business.

With such a huge revenue to disclose, it is not surprising that the first shares offered publicly sold like bargains on Black Friday.

So, they haven't "confiscated" the business, they have acted more like foster parents.

Jack Ma fell out of favor at times, and the most recent action by the Chinese antitrust regulator is just evidence that he may have gotten too big for his boots again.

Walter

 

[alexkuzmov]

An article in the Wall Street Journal has provided information about the whopping $2.8 billon dollar fine imposed on Alibaba by Chinese corporate regulators.

Here is an extract: "China’s antitrust regulator imposed a fine equivalent to $2.8 billion against Alibaba Group Holding Ltd. for abusing its dominant position over rivals and merchants on its e-commerce platforms, a record penalty in the country that comes amid a wave of scrutiny on the business empire of company founder Jack Ma.

China’s State Administration for Market Regulation said Saturday in Beijing that Alibaba punished certain merchants who sold goods both on Alibaba and on rival platforms, a practice that it dubbed “er xuan yi”—literally, “choose one out of two.”

This news explains something that has been puzzling me for some time. Over the past 6 months I have found it more and more difficult to track down information on suppliers. The most basic question I am often asked is: "Is this company a manufacturer?"

What I have been finding is that almost every Alibaba listed company whose details I am searching no longer advertise anywhere but on Alibaba. This is a result of Alibaba's policy of downgrading their listings and by other means punishing companies that dare try to sell outside Alibaba. This even extends to those who have their own websites. Those individual company wesbites have simply disappeared.

Somehow Alibaba has managed to ensure that even Chinese equivalents of companies like Bloomberg no longer publish any information about Chinese companies that sell on Alibaba! What power Jack Ma has!!!

Fortunately I still manage to sort many of the pretenders out from among the small number of genuine manufacturers, but please don't anobody tell Jack.

Walter

Its like these sort of events are inevitable and periodic.
Not the fine, but the attempt to stifle free trade.
As soon as a company gets big enough, it tries to control its niche whichever way it finds to do it.

I wonder if this is natural, like a natural progression.
Or is it always deliberate?

 

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[Deleted78083]

I wonder if this is natural, like a natural progression.
Or is it always deliberate?

It is a good question.

Capitalism is based on competition.

If you let capitalism be without any interferences, you ll eventually end up with monopolies, which kill the capitalist system.

This is why states have laws to "regulate" capitalism AKA avoiding monopolies.

Unchecked capitalism, ironically, is self-destroying over time.

Really interesting.

 

[The-J]

I'm very interested in how China is deciding to do capitalism. I wasn't expecting the CCP (the most powerful entity in China) to take this stance, because I always expected them to be more interested in controlling large monopolies.

Guess I don't know Jack (lol) about China. They have the ability to levy harsh punishments against anyone who runs afoul of the party, no matter how powerful their organization has become globally. I still don't quite understand what their goal is.

@Walter Hay you've been doing business with China since China started doing capitalism. How would you say dealing with China has changed over that time? Do you think this punishment against Alibaba makes sense from what you know about how China does things?

 

[Walter Hay]

@Walter Hay you've been doing business with China since China started doing capitalism. How would you say dealing with China has changed over that time? Do you think this punishment against Alibaba makes sense from what you know about how China does things?

It has definitely changed a lot. Part of the change is not apparent to most Westerners, and that is the development of labor laws that have made life a lot easier for the mostly rural peasants who have migrated to the cities to get work.

On my earliest visits I saw labor conditions that were like the worst of the industrial revolution in places like Great Britain, the USA, and other Western industrial countries.

Here's one image that sticks in my mind. It was a worker operating a steel stamping machine in a filthy little space below a staircase. He was sitting on a low wooden stool, crouching over the press, with no safety guards on the machine, no protective gear, and with dust swirling around him.

He was ankle deep in scrap metal. It must have inflicted many cuts on him.

Fast forward....... Even factories operating heavy equipment that produce scraps and generate noise and dust are a picture of cleanliness. The floors are often coated in epoxy paint for better cleaning. Lines are marked so that moving equipment doesn't risk injuring workers at their machines. There is no rubbish lying around and no dust in the air.

Machines have state of the art automatic protection grills, and the workers have excellent protective gear.

Meal breaks are taken in clean, well equipped cafeterias, and hours worked have to meet government regulations.

In addition to all that, free health care is provided for workers and creches are provided by the factories for mothers to leave their children while they work.

If this reads like a promotional bulletin for China, it is simply reporting what I have seen with my own eyes, and what an old friend in China tells me. He operates several factories employing now about 6,000 workers.

He reminisces about the "good old days" and thinks the government has gone overboard. To some extent he may be right, but he still makes a huge amount of profit. He also agrees that productivity is better, and quality problems due to poor workmanship have diminished.

As for the goverment's treatment of Alibaba, I see it as a shot over the bows so that other Billionaires will tread more carefully.

Walter

 

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[OldFaithful]

If you let capitalism be without any interferences, you ll eventually end up with monopolies, which kill the capitalist system.

This is why states have laws to "regulate" capitalism AKA avoiding monopolies.

Unchecked capitalism, ironically, is self-destroying over time.

I appreciate your sentiments, but I'm afraid that I must disagree with your conclusions. I think it is clear from Walter's comments that the monopoly was created with the support of their government.

Ludwig von Mises and others from the Austrian school of economics can better explain the forces at play.

 

[StrikingViper69]

It is a good question.

Capitalism is based on competition.

If you let capitalism be without any interferences, you ll eventually end up with monopolies, which kill the capitalist system.

This is why states have laws to "regulate" capitalism AKA avoiding monopolies.

Unchecked capitalism, ironically, is self-destroying over time.

Really interesting.

Partially true. Meritocracy monopolies will exist (e.g. economies of scale to get a better price), but any monopoly relying on it's size will eventually get toppled by someone inventing a better way.

 

[Walter Hay]

Today I set out to respond to a member's request for help. The question was the same one that I have until recently found answers for on countless occasions. Is the company being considered as a supplier really a manufacturer? But no such luck!

Apart from references to the company on Panjiva and Import Genius, nothing could be found outside of Alibaba. Search engines can otherwise only find the name when Alibaba is connected to it, so Alibaba have managed to even further tighten their stranglehold on exporters.

I believe that the inevitable loss of business that has hit those exporters hard over the past couple of years is a major reason why many thousands of Chinese manufacturers and traders are selling on Amazon and eBay.

What can be done?

My first suggestion is to ignore Alibaba and use the other two Chinese B2B sites. GlobalSourcing.com and Made-In-China.com. ( Do not use MadeInChina.com)

It is still necessary to take great care when buying through those platforms. Their "Verification" processes are as flawed as those used by Alibaba. Don't believe what you read on those platforms.

My second suggestion is to put in some effort and source in other countries.

Walter

 

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[alexkuzmov]

Today I set out to respond to a member's request for help. The question was the same one that I have until recently found answers for on countless occasions. Is the company being considered as a supplier really a manufacturer? But no such luck!

Apart from references to the company on Panjiva and Import Genius, nothing could be found outside of Alibaba. Search engines can otherwise only find the name when Alibaba is connected to it, so Alibaba have managed to even further tighten their stranglehold on exporters.

I believe that the inevitable loss of business that has hit those exporters hard over the past couple of years is a major reason why many thousands of Chinese manufacturers and traders are selling on Amazon and eBay.

What can be done?

My first suggestion is to ignore Alibaba and use the other two Chinese B2B sites. GlobalSourcing.com and MadeInChina.com (Do not use Made-In-China.com).

It is still necessary to take great care when buying through those platforms. Their "Verification" processes are as flawed as those used by Alibaba. Don't believe what you read on those platforms.

My second suggestion is to put in some effort and source in other countries.

Walter

I think we can help each other on the forum with getting contacts for quality manufacturers from our own countries.

For example, since I'm from Bulgaria, its easy for me to find quality manufacturers of rose oil. So if someone wants to import and sell that, I can help with that.

Maybe thread should be started? Something like "Import Help"

 

[Walter Hay]

I think we can help each other on the forum with getting contacts for quality manufacturers from our own countries.

For example, since I'm from Bulgaria, its easy for me to find quality manufacturers of rose oil. So if someone wants to import and sell that, I can help with that.

Maybe thread should be started? Something like "Import Help"

It would be good if such a thread was possible, but I doubt that it would be approved by the moderators.

The best suggestion I can offer is you get yourself listed on the Bulgarian export site that I have linked in my 2021 edition of ProvenGlobalSourcing .

For the benefit of others who are struggling for find reliable genuine manufacturers in China, it contains links to legitimate export sites specific to Argentina, Armenia, Australia, Azerbaijan, Bangladesh, Belarus, Brazil, Bulgaria, Cambodia, Canada, Chile, Czech Republic, Estonia, Georgia, Germany, Greece, Hungary, India, Israel, Italy, Japan, Malaysia, Mexico, Nepal, Pakistan, Philippines, Poland, Portugal, Romania, Singapore, Slovakia, Slovenia, South Korea, Srilanka, Taiwan, Turkey, Ukraine, United Kingdom, USA, Vietnam, Other Unlisted Countries.

Most companies listed on those sites are manufacturers. If there are manufacturers somewhere in the world wanting to export, those links will help you find them.

Walter