HONG KONG — In unusually blunt criticism, a Chinese government agency on Wednesday took aim at the e-commerce giant Alibaba Group for what it said were unlicensed merchants, fake goods and other illegal practices on its hugely popular shopping websites. The news sent Alibaba’s shares down more than 4 percent in New York
China’s main corporate regulator, the State Administration for Industry and Commerce, released a report summarizing its findings of the deficiencies on Alibaba’s sites, including Taobao Marketplace and Tmall.com. In a statement on its website, the regulator said that after a thorough review, it had discovered “the long-term existence of illegal problems regarding the management of transaction activity and other issues.”
The agency said that it had presented the findings to unidentified top Alibaba executives in a July 17 meeting at the company’s headquarters in the eastern city of Hangzhou, but that it had kept the results confidential at the time so as “not to affect Alibaba’s preparations for a stock market listing.”
Alibaba went on to raise a record $25 billion in September in an initial public offering in New York.
The regulator’s report, first made public on Wednesday, said it had found 19 problems in five main areas on Alibaba’s sites. Those included a number of unlicensed or unregistered vendors selling items, including knockoffs and goods that were improperly imported or banned from sale in China. Such items included fake cigarettes, wine and mobile phones; knockoff handbags; gambling equipment; wiretapping devices; and restricted types of knives.
Because of its failure to take action against these shortcomings, Alibaba “faces its biggest credibility crisis since it was founded,” according to the regulator’s Chinese-language report.
In a response on its verified account on the social messaging service Weibo, Taobao on Wednesday said that it had been a victim of fakes and had gone to great lengths to prevent them from being sold on its site.
At the same time, the company took issue with the regulator’s approach, saying that it “welcomes fair and just supervision” but that the agency had not been objective.
Taobao went further still, and in a rarely seen public criticism of a government official, it accused Liu Hongliang, a bureau chief at the administration for industry and commerce, of using inappropriate procedures in carrying out his investigation. The company said it would file a formal complaint to the agency.
Mr. Liu “used mistaken methods to arrive at an conclusion that was not objective, causing very serious negative effects on Taobao and on China’s e-commerce industry participants,” the company said in its statement.
Taobao, Alibaba’s largest site, operates as a marketplace where small vendors and individuals post listings for everything from car parts to Chinese medicine and footwear. In the past Alibaba has cited the sheer magnitude of the listings on Taobao as a reason it has been unable to clean up postings of fake or dangerous goods.
Last month, Alibaba said it had spent about $160 million combating the sale of fake goods on its sites in 2013 and 2014. Still, many companies complain that Alibaba can be slow to pull down listings of pirated goods. Others point out that removed listings often quickly reappear under different names.
In another move to improve its reputation abroad, Alibaba said it would cooperate with the Consumer Product Safety Commission of the United States to ensure that goods banned by the American regulator would not be available for purchase in the country.
Jack Ma, the Alibaba founder, is known for speaking directly about delicate matters and has called out regulators in the past. Most notably in an editorial written in The People’s Daily in 2013, the official mouthpiece of the Chinese Communist Party, Mr. Ma criticized China’s financial regulators, arguing that the Chinese financial system serves only major corporations and neglects small businesses.