China’s Alibaba, Tencent, Baidu Team Up to Fight Online Fraud

June 27, 2013 Leave a comment

June 26, 2013, 9:59 a.m. ET

China’s Alibaba, Tencent, Baidu Team Up to Fight Online Fraud

PAUL MOZUR

BEIJING—China’s largest Internet companies vowed to share information and cooperate to fight online fraud, highlighting a developmental difficulty facing China’s fast-growing e-commerce market.

The companies—including Alibaba Group Holding Ltd., Tencent Holdings Ltd.,0700.HK +2.47% and Baidu Inc. BIDU +1.55% and 18 others—established an e-commerce protection framework under the guidance of China’s Ministry of Public Security, according to a statement posted by Alibaba.Alibaba’s involvement in the initiative signals how the company is striving to project a clean image and increase oversight as China’s largest e-commerce platform moves toward an expected initial public offering.

“We hope to work together to create a safer environment for online transactions,” Internet-search provider Baidu said Wednesday. Tencent, which runs online-game and social-media sites, didn’t respond to requests for comment.

The agreement marks new involvement by the government and rare cooperation among China’s biggest Internet companies to clamp down on a problem that has hit China’s e-commerce market particularly hard. Common scams involve posting fake ads to draw unsuspecting consumers, selling shoddy knockoffs or accepting payments for products that are never delivered.

Chinese online shoppers were defrauded of more than 30 billion yuan, or roughly $5 billion, in the year through last June, according to the China Electric Commerce Association.

E-commerce has exploded in China in recent years, and some analysts say the growth has outpaced by the abilities of companies and the government to regulate and support the industry. The industry also faces difficulties delivering an ever-greater number of goods across the vast country.

China’s total online sales are expected to rise to $356.1 billion in 2016 from $169.4 billion last year, according to Forrester Research. U.S. online retail sales meanwhile are forecast to rise to $327 billion from $226 billion.

Alibaba has beefed up security in recent years. The company said it has 2,000 employees dedicated to monitoring the security of online transfers.

But Alibaba also said that tracking criminal activity can be challenging. It described how scammers will find a gullible customer on an e-commerce website then lead the person to switch to sites run by other companies to evade tracking.

Filed under TMT Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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