Alibaba Unveils Wall of Shame
By Paul MozurFor several years now Alibaba Group Holding Ltd. has been making billions of dollars of loans to the small merchants that use its services.
On July 1, the company released a list of more than 100 vendors who recently failed to pay back loans on its Taobao forum site with details including the vendors’ identification numbers and full names. Below the list is a link to a site, which the company said has been running since 2010, that has a complete list of borrowers Alibaba said has broken loan agreements with the company along with the amounts each owes. If borrowers pays back their loans, their names are removed from the list, according to the company.
Given the lack of transparency about nonperforming loans in China, in some ways the list could be seen as a gesture toward transparency. The list is also a reminder of how underdeveloped access to formal loans is for smaller businesses in China, where loans are typically extended only to the largest and most well-connected companies. As Alibaba increasingly pushes to extend financial services to its customers, who are a blend of under-banked and savvy serial entrepreneurs, it is in part forced to teach the ins and outs of the services it is providing.