Counterfeit Products: The Biggest Problem Alibaba is facing

Counterfeit Products: The Biggest Problem Alibaba is facing

    As the world’s biggest online retailer, Alibaba proved its commercial power again on 11 November. The Single Day Festival was at first celebrated by single people, but then Jack Ma (Ma Yun, the president of Alibaba Group) found a huge market there by changing it into a ‘Shopping Festival’. At midnight on 11 November, millions of Chinese people sit before their computers and put all the products from their wish lists into shopping carts. However, they all ignored one thing - those exquisite handbags and the seemingly delicate jewelry might be fake products manufactured by small workshops in countryside in China.

l  The Lack of The Protection of Intellectual Property in China

    Counterfeit products are a long-standing problem in the Chinese market. Even before the foundation of Alibaba, in the beginning of 1980s, Chinese businessmen especially those from Wenzhou (a southern city of China) have began to manufacture and produce counterfeit products. Fifteen years ago, the foundation of Alibaba gave them a better and larger platform to expand their market. In fact, this issue could be due to the rapid growth of China’s economic ascent. Once after the Chinese Reform and Opening Policy, Chinese people were freed from the planned economy. Factories making all sorts of consumer goods sprouted from the country’s rice paddies into the mainstream market. Millions of people gained huge benefits from the market economy at the beginning of the 1990's. However, relevant laws and regulations could hardly keep up with the pace of market growth. According to the U.S. Department of Homeland Security, quoted on Net East China on 2015, nearly $1.1 billion worth of counterfeit goods from China and Hong Kong were seized entering this country in fiscal 2014 – 88% of the total it uncovered.

Jack Ma seems to pay less effort on this problem

    Faced with the prosecutions of foreign brands, especially of luxury brands such as Gucci and Yves Saint Laurent, Jack Ma said that he would rather lose the case than settle. His decision is reasonable. After he successfully pulled off the world’s biggest IPO last year on the New York Stock Exchange ($ 25 billion), Alibaba’s revenue then doubled over its last two fiscal years (NetEase China, 2015). If Ma Yun chooses to fight against the counterfeits, he will go broke. He can’t afford to lose his clients, a majority of whom sells fake products. On the other hand, current trend of final customers force Alibaba to solve this problem. It’s obviously that one fake product leads to a loss of more than one customer, which is more destructive.

   Thus, Jack Ma needs to carefully handle the relation between final customers, merchants and the brands. To protect its customers its customers more efficiently, TaoBao (one of the B2C online retailers of Alibaba) create a rating system, in which customers rate the merchant from 1 to 5 (from the worst to the best). Once they identify fakes, they can write their opinion in the feedback area and return their products without extra charges by presenting evidence. Alibaba will shut the shop after auditing the realness of information. Despite this, those sellers who get banned can still resume their sales by reregister a new shop under a different name.

  As to the protection of those Brands’ property, TaoBao also offer a system called “Good Faith” to aide brands making file-take-down requests (request to eliminate fake sellers) to Taobao once they spot fakes on the site. In fact, this system has been modified several times. At first, it even didn’t have an English version website which were totally unreadable for foreign brands. Later, after the system has improved, it greatly reduced the time it takes to remove a shop from around four days to one to three days.

    To completely eliminate counterfeit products in China, these efforts are far from enough. Although it should be the government’s job, Jack Ma must stand out, and as a citizen, as the most powerful businessman in China, he must help China to get rid of this bad reputation. Regard to the continued development of Alibaba, Jack Ma also needs to do this, sooner or later. It is likely that the western markets will not trade with a retailer who sells fakes.

Source related: EaseNet China, 20/11/2015

Wang Yifan