In Ep. 27 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma discuss the latest scandal to come out of Chinese internet -- fake reviews on one of China’s leading travel websites, Mafengwo. Mafengwo had $1.5 billion in sales last year, 63k transactions, and over 100 million monthly active users.  It’s already backed by some of the best investors in the business, including Temasek, Hillhouse, General Atlantic and Capital Today, and in August, it was leaked that it was in the middle of raising $300mm at a valuation up to $2.5Bn.

It all started when analytics firm Shenzhen Hurui and a Wechat official account known for their exposés of the tech industry published a blog that claimed 85%  -- 18mm out of 21 mm -- of Mafengwo’s user reviews were faked or plagiarized from other sites. Outrageously, some of them were so poorly plagiarized that they still retained the origin website’s URL, or in other cases, scripts indicating that the review was translated using an online translator. Mafengwo immediately denied the accusations and even filed a lawsuit claiming defamation.

Our co-host this week is Eva Woo, a former business journalist at SCMP, Bloomberg, and Caixin. Together with Eva, Rui and Ying-Ying unravel the tangle of accusations leveled against Mafengwo and explain why the company has taken such a strong stance against them -- hint: its very business model depends on it.  We also briefly go into why the purported victims from which Mafengwo was alleged to have plagiarized from -- Dianping, Ctrip, et al. -- have made any complaints. Another hint: the entire industry could be guilty of such behavior based on questionable incentives, and plus, there exists an entire shadow paid-poster economy that is thriving with the growing reliance on user-generated content as key building blocks for driving traffic.

Listen to the newest episode of TechBuzz China and join Rui, Ying-Ying and Eva in exploring: How did this exposé come about and why are users so outraged?  What can we learn from the Mafengwo incident and should we be more wary of the numbers coming out of other Chinese companies? What are the responsibilities of investors in such instances, or do they have reasons to be complicit in accommodating such bad behavior?  

As always, you can find these stories and more at pandaily.com. Let us know what you think of the show by leaving us an iTunes review, liking our Facebook page, and tweeting at us at @techbuzzchina to win some swag! Finally, a huge shoutout to our new listeners over at dealstreetasia.com.