In the wake of a fraud scandal involving some suppliers on Alibaba, Chinese e-commerce giant Alibaba’s CEO and COO announced their resignation and another high-ranking administrator was degraded on Monday. Following the shocking administrative reshuffle, Alibaba suspended the service provided by 1107 Chinese suppliers. The co-founder of the largest E-business company in China responded to the fraud scandal, saying “Development of E-business in China largely relies on trust. A third party monitoring system is badly needed not only for accepting customer’s requests, but also for checking up the criterion of internet business portals like Alibaba. Jiang Fang, Co-founder, Alibaba Com.Ltd, said, “In all the cases we are now investigating, no customer has been found to use payment ensured by a third party. They just believed the sellers’ promise of an extremely low price for the products and an attractively high profit, which eventually led to a great loss for the customer.”

Alibaba launched an investigation more than a month ago, which showed about 1,200 suppliers in 2009 and 1,100 suppliers in 2010 had acted fraudulently. Nearly 100 sales representatives of the company allegedly collaborated in the fraud or failed to properly assess the defrauding suppliers. They have been fired or received other penalties.

Published on: March 17th, 2011