Alibaba share price down, US retailers urge lawmakers to take action

A coalition of companies warned in a new ad that online retail giants, like Alibaba Group Holding Ltd, will “decimate” local retailers unless Congress passes a bill to prevent online buyers from avoiding sales tax.

The ad from a campaign group, including companies like Target, Best Buy, Home Depot and JC Penney, threatened Alibaba and said they are ready to go into a political conflict before it even has launched its English-language interface of its most famous website Taobao.

“Thanks to the online sales tax loophole this Chinese company will decimate our local retailers. Unless Congress ends special tax treatment for Alibaba and other online giants, Main Street will never look the same,” says the ad.

The group is called Alliance for the Main Street Fairness, a professional public relations campaign group being operated by Washington, DC and whose members include thousands of small stores, but also major retailers like Wal-Mart and Sears.

A Spokesman for the group said: “We believe it’s just a matter of time before Alibaba exploits this loophole.” The ad is just the beginning of a six-figure campaign by the group, the spokesman said.

The commercial began running on Sundays political talk shows, cable televisions and the internet, between the two US shopping holidays Black Friday and Cyber Monday, when the biggest online discounts are offered. Information gathered from the first few days of sales shows that 2014 will be yet another year in which online shoppers jump in numbers while brick-and-mortar shops suffer from revenue losses.

Last month regarding the bill, which allows states to collect tax over online sales from e-commerce retailers based outside their jurisdiction, John Boehner, the Republican Speaker of the House of Representatives, hinted it was not going to pass, unlike it did last year.

However, Alibaba said: “This advertisement is not fact-based,” it said. “The Alibaba Group pays its taxes according to the laws in the country it does business and the US is no exception. The Alibaba Group remains focused on providing US-based companies the opportunity to bring their products and services to the Chinese market through our various online properties.”

“We’re not against Alibaba competing in the retail market. I think all retailers welcome competition. We just believe competition has to occur on a level playing field,” Mr. Baca said.

Alibaba Group Holding Ltd lost 0.91% on Friday and closed at $111.64 in New York. On Monday the stock dropped 4.86% to trade at $106.21. The company is valued at $277.50 billion. According to the Financial Times, the 34 analysts offering 12 month price targets for Alibaba Group Holding Ltd have a median target of $120.45, with a high estimate of $148.00 and a low estimate of $75.00. The median estimate represents a 7.89% increase from the last close price of $111.64.