Too Big to Behave, Alibaba Relaxes Counterfeit Enforcement

Despite Claims, Alibaba Counterfeit Enforcement is a Facade

May 17, 2014, Los Angeles, CA - When it comes to protecting consumers and product manufacturers from the risks and harmful effects of the global trafficking of counterfeit goods, Alibaba’s avalanche of counterfeit goods lack enforcement and oversight.

The Chinese Government recently rebuked Alibaba for selling fakes, bribery and corruption;

The scathing report by the Chinese Government’s State Administration for Industry and Commerce (SAIC) accused Alibaba of selling fakes, allowing merchants to operate without required business licenses, running unauthorized stores that co-opt famous brands and allow inflated and false feedback. Alibaba employees took bribes, and the e-commerce giant didn’t fix flaws in customer feedback or internal credit-scoring systems, the report said.

The United States Securities and Exchange Commission (SEC) launched an inquiry of Alibaba;

“The SEC wants background facts and other information related to our interaction with one of our Chinese regulators, the SAIC, and related matters,” said Alibaba. 

Alibaba is no stranger to counterfeit goods distribution, having only recently been removed from the US Government's 2013 "Notorious Markets" list which identifies select online and physical marketplaces that reportedly engage in, and facilitate substantial piracy and counterfeiting.

Plaintiff Kering SA, whose brands include popular Gucci, Saint Laurent and Bottega Veneta products alleged;

"The Alibaba Defendants, facilitate and encourage the sale of an enormous number of Counterfeit Products through their self-described "ecosystem," which provides manufacturers, sellers, and buyers of counterfeit goods with a marketplace for such goods, and provides online marketing, credit card processing, financing, and shipping services that effectuate the sale of the Counterfeit Products."

Taiwan simply told Alibaba it has 6 months to cease operations and leave the country.

Despite the lawsuit and ongoing criticism, Alibaba subsidiary Taobao.com, the wild west of fakes, was in the global spotlight last week for dozens of alleged counterfeit listings for the new Apple Watch; except the authentic Apple Watch won’t be released until April 24th.

Alibaba snubbed the criticism and has relaxed its already laughable counterfeit policy;

The new Alibaba Counterfeit Policy claims;

“…to protect the rights entitled by the intellectual property rights holders, we shall firmly fight against serious infringements of intellectual property rights and further intensify the relevant penalties accordingly. “

Except it’s not true. Alibaba previously claimed harsh enforcement of counterfeit listings on its websites by removing merchants that were caught a very forgiving three times with infringing listings. Alibaba’s new policy relaxes the standard to four successful complaints* before an account is terminated. Ousted merchants can simply relist under new identities.

“There is a bit of irony here since Alibaba loves to tell the world about how strict it is on piracy and how it moves quickly to shut down sites that sell fake goods,” said Doug Young, the Shanghai-based author of “The Party Line: How the Media Dictates Public Opinion in Modern China.”

Alibaba and subsidiaries Taobao.com and AliExpress.com have a “credibility crisis” fueled by a failure to crack down on shady merchants, counterfeit goods, bribery and misleading promotions using its online malls, the Chinese government said.  It’s the consumer that’s being duped out of billions.

Investors in Alibaba’s $26 billion IPO are also learning a hard lesson; in the December quarter, Alibaba (BABA) posted disappointing revenue growth and the stock is down 30 percent.

* Multiple complaints based on a single intellectual property within a day shall be counted as one serious infringement. The new policy shall be effective April 1, 2015, and the current policy shall remain effective before then.