Cosmetics retailer Jumei apologises over fake product sales in China

By Simon Pitman contact

- Last updated on GMT

Cosmetics retailer Jumei apologises over fake product sales in China

Related tags: Retailing, Stock market, China

Online cosmetics retailer Jumei International Holdings has made an apology after media reports focused on the fact that it was selling fake luxury goods in China.

The company, which is listed on the New York Stock Exchange, stated that it had shut down the offending third party online store and removed all products from sale, according to a report in The South China Morning Post.

The company in question had been able to provide Jumei with product authentication and customs certificates, which the it says is now the key focus of an internal investigation into the shortcomings.

“We sincerely apologise to all customers who bought from the supplier and will provide non-conditional product return services,”​ the company said.

Forged product authentication and customs certificates

The media report stated that the offending retailer had managed to forge product authentication and customs certificates for a large range of luxury products that were being sold on other online retailer sites in China, including JD.com and Amazon.com.

When news of the report broke on Monday, JD.com and Jumei were first to react, with JD.com taking action to stop the sale off all products by the third party retailer with immediate effect.

Brands that were copied and sold through the third party retailer included Armani, Hermes and Burberry, according to the investigative report carried out by China technology news provider tech.qq.com.

Jumei share prices take a tumble

Back in April, Jumei announced that it had filed an IPO that aimed to raise up to $400 million. Following news of the fake product sales, shares in the company dropped by about 5% to reach US$30.17 by close of business Tuesday, following the announcement on Monday.

The company is behind over a fifth of online beauty sales in the China, and has over 10.5 million active customers and 1,700 suppliers, according to the prospectus it has filed with the US Securities and Exchange Commission (SEC).

The Beijing-based brand describes itself as the “no. 1 online retailer of beauty products in China​”, and hopes to take advantage of the apparent rise in investor enthusiasm for China stocks taking place at the moment.

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