Apr 20, 2021 07:59 PM

Alibaba’s Regulatory Trouble Continues With Steel E-Commerce Probe

China’s market regulator is probing a former steel trading venture between Alibaba Group Holding Ltd. and state giant China Minmetals Development Co. Ltd. (600058.SH), opening a new front in the e-commerce giant’s regulatory battle.

The State Administration for Market Regulation (SAMR) recently informed Minmetals that it was investigating a 2015 investment deal in which Alibaba took a 44% stake in the metals trading company’s e-commerce unit, which the regulator suspected may constitute an illegal concentration of market power under the Anti-Monopoly Law, the state-owned enterprise told the Shanghai bourse Monday.

Alibaba, which cashed out about 18 months ago, declined to comment on the announcement.

Minmetals established its online trading unit Minmetals E-Commerce Co. Ltd. as a wholly owned subsidiary in 2012. Alibaba’s investment three years later helped create a business-to-business steel trading platform called (五阿哥) that launched in 2016.

The e-commerce platform provides services including online trading, logistics and financing throughout the steel supply chain.

The tie-up also presented an opportunity for Minmetals to introduce Alibaba as a partner in its mixed ownership reform — in which private capital is brought in to reinvigorate state-owned companies — drawing in Alibaba’s technological and online marketing prowess.

Minmetals, one of the world’s largest metals and rare earth companies, made 600 billion yuan ($92.1 billion) in revenue in 2019, a 13.4% increase, according to its annual report. It’s involved in metals exploration, mining, processing and trading, and produced more than 450,000 tons of copper in 2019. 

Alibaba mainly provided online technology and data analysis for the tie-up, while Minmetals provided offline resources such as warehousing.

In December 2019, Alibaba transferred its 44% stake in Minmetals E-Commerce to a firm called E-Commodities (Beijing) Supply Chain Management Co. Ltd., an entity of Hong Kong-listed E-Commodities Holdings Ltd.

News of the SAMR investigation comes just over a week after the same regulator issued Alibaba a record $2.8 billion fine for anticompetitive behavior centering on exclusivity deals it inked with merchants to keep them off rival platforms.

Analysts and insiders told Caixin that Alibaba appeared to have dodged a bullet with a fine representing just 4% of its 2019 domestic revenue and no requirement to forfeit gains from its illegal practices or to divest assets.

In an emergency investor call last week, Alibaba Executive Vice Chairman Joe Tsai said he did not believe the company was the subject of any other antitrust investigations, adding “we have experienced the scrutiny and we’re happy to get the matter behind us.”

Contact reporter Flynn Murphy ( and editor Joshua Dummer (

You've accessed an article available only to subscribers
Share this article
Open WeChat and scan the QR code
Get our CX Daily, weekly Must-Read and China Green Bulletin newsletters delivered free to your inbox, bringing you China's top headlines.

We ‘ve added you to our subscriber list.

Manage subscription
Caixin China Biz Roundup: China Cuts Key Interest Rates as Economy Weakens