Trendwatch: Chinese students set up fake Taobao stores to circumvent bank fees

Screenshot of Taobao site. ? All rights reserved.

NEW YORK, Sept 30 ? A new kind of online store is appearing on Taobao, China?s largest e-commerce marketplace.

At cursory glance, these Taobao stores look like ordinary online shops. In reality, they are selling ?living expenses? and are managed by Chinese students who use the e-commerce website to receive allowances from their parents in a bid to avoid paying bank fees for fund transfers.

Alibaba-owned Taobao, an online shopping site similar to eBay, is China's largest e-commerce platform with estimated market share of up to 70 per cent, and has 500 million registered users.

According to Chinese media, these online stores number in the thousands on the e-commerce marketplace. These shops offer ?products? that are usually priced at between 500 and 1,000 yuan (RM243 to RM486). To facilitate a fund transfer through the e-commerce website, parents of the students need simply ?purchase? the product and pay into the seller?s Alipay account, an online payment platform in China that is the equivalent of China?s Paypal. The funds received in Alipay will then allow the store seller to spend it elsewhere on Taobao, or at other Chinese e-commerce sites. Anyone can set up a Taobao store, which is free of charge so long as the seller has an Alipay account.

By transferring funds through these fake Taobao stores, students can avoid bank transfer fees as Alipay users can transfer up to 10,000 yuan every month free of charge. By contrast, most banks in China charge a fee of 1 per cent of the funds transferred, reported the Chinese-language Xinhua08.com.

False trading is not allowed on Taobao and it is unknown how many such stores have been shut down to date. In the first six months of 2012, Taobao removed 45.2 million products for alleged copyright or brand violations, including 2.3 million in response to qualified complaints from rights holders, reported Reuters Thursday.

China has more than 29 million tertiary-level students, with 75 per cent of them spending 18 per cent of their time daily online, according to a study by media research firm GroupM Knowledge last year. Notably, 52 per cent of these university students enjoy shopping online, which is a rate much higher than the overall 20 per cent surveyed among Chinese netizens. ? AFP-Relaxnews

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