Playing the blame game over fake goods sold on China's Taobao

As a diehard fan of English indie bands, Hong Kong-based shopper "Lin" was upset to find that her favourite customised smartphone-case shop on Etsy, a peer-to-peer American e-commerce site, closed last year over complaints of selling unauthorised merchandise.

But fans like Lin are willing to pay, even though the bands' managers have filed complaints to Etsy over copyright violations.

"There's no authorised iPhone case of the indie band I like as it doesn't bother to produce it," Lin said. "I would have bought it on Taobao if I were in mainland China."

There are hundreds of merchants with similar offerings on Taobao, known as the Chinese eBay. Popular customised products include smartphone cases with pictures of Disney cartoon characters, which are effectively counterfeits ripped off from Walt Disney Animation Studios.

The failure to shut down such unauthorised stores - like Etsy did - is one of many irregularities at Taobao that the mainland commerce regulator pointed out in a white paper published on Wednesday that led to the shares of the e-commerce giant falling more than 4 per cent in a day.