Thousands of small business owners launched an online protest against Taobao Mall, a unit of China's Alibaba Group, over a fee hike that they claim puts them at a disadvantage to bigger businesses, the official Xinhua news agency reported.

Taobao Mall, China's largest business to consumer (B2C) e-commerce platform, said on Monday it will increase its annual membership fees from 6,000 yuan ($944) to between 30,000 yuan to 60,000 yuan depending on the type and scale of the business.

The fee hike caused thousands of Taobao Mall shop owners to protest online Tuesday night by buying up goods from bigger stores and then asking for refunds, Xinhua said. Asking for refunds would lower the rankings of the shops and prompted some big outlets to temporarily stop selling products, it said.

On Wednesday, 40,000 people claiming to be Taobao Mall businessmen gathered in an online chat room to discuss more ways of disrupting the website, the report said.

Taobao Mall said in a statement on Wednesday that the matter has been referred to the police.

We are willing to accept any views and suggestions toward our rules but we will not tolerate serious harm committed against innocent businesses because of different views, Taobao Mall said in the statement.

Alibaba Group, which is 40 percent owned by Yahoo Inc, operates Taobao, Taobao Mall and

The business owners claimed that the fee increase would cripple their businesses but will have little effect on the bigger brands that have stores on the platform, Xinhua reported.

A portion of the new fees will be returned to the shop owners if they satisfy certain standards and criteria.

Taobao Mall had 32.8 percent of China's 54.2 billion yuan B2C online marketplace in the second-quarter, according to data from Analysys International. 360buy, Taobao Mall's nearest rival, had 12.4 percent of the market.

(Reporting by Melanie Lee; Editing by Kazunori Takada)