Alibaba's $25 Billion IPO Shadowed By Illegal Drug Sales
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The $25 billion record IPO of the Chinese business-to-business retail platform Alibaba has been shadowed by illegal drugs still available for sale on the site. Yes, you literally can buy anything on Alibaba, including the latest synthetic heroin known as MPPP. Could this be one of the reasons why the stock took a nose-dive after the initial public offering?
As reported on Japan's Kyodo News Service on September 15th, a recent synthetic version of heroin, MPPP, is listed for sale by Nanjing Fujiu Island Chem & Pharm Company. Located in the southeastern Chinese province of Jiangsu, the company advertises a multitude of wares on China's largest business-to-business matchmaker. Although the web site's product listing policy forbids the sale of "psychotropic drugs and narcotics," Nanjing Fujiu Island has found an innovative hack to cover-up its synthetic drugs.
The company chose to list its products by their chemical structure as opposed to their street name, thus appearing to be selling chemicals as opposed to drugs. With under $2.5 million in annual revenue, the company is not a major player on Alibaba or anywhere else in the booming Chinese economy. Still, they have been providing synthetic heroin to drug dealers and users at wholesale prices.
And this is only the beginning. Recent searches of Alibaba.com and its domestically oriented sister site 1688.com turned up 14 companies peddling Schedule I controlled substances, the U.S. designation for drugs that are considered highly addictive and have no recognized medical use or variants, known as analogs, that have undergone minor chemical modifications.
Jim Wang, an investment banker specializing in China, explained the challenge to Alibaba. "They've been really mindful of enforcing the rules they've set for themselves, but suppliers have become increasingly discreet and coy… It's hard for Alibaba to catch them all."
A major problem is the company's keyword list is incomplete: the product policy guide's list of forbidden substances is missing common names for several drugs that have been placed under Schedule I by the U.S. Drug Enforcement Administration since May 2013, including synthetic marijuana substitute UR-144. Such problems need to be cleared up or the validity of the company will continue to be shadowed by the presence of illegal drugs.