Counterfeit Cloud Looms Over $20 Billion Alibaba IPO
Alibaba’s Proposed “Three Strikes” policy is little deterrent.
Los Angeles, CA, June 19, 20914 - With its $20 billion IPO at stake, China’s e-Commerce giant, Alibaba, has reacted to global pressure and investor scrutiny to cut down the rampant proliferation of counterfeit products on its websites.
Alibaba’s intellectual property in-house counsel, David Ho, citing a comparison to a game of whack-a-mole, offers a “three strike” proposal for counterfeit web merchants, yet the problem is all too familiar, far more serious than a game, and financially devastating for US and global manufacturers.
Mr. Ho’s plan for Alibaba and AliExpress.com (subsidiary Taobao.com is conspicuously absent) begins only after offenders are identified; they then receive a warning, a 7-day suspension, and finally a closure of the storefront’s current identity.
This toothless “three strikes” policy is little deterrent to counterfeiters and dishonest sellers who simply continue sales, or return under different or multiple identities while Alibaba transaction fees continue to roll in.
Alibaba e-Commerce sites are ideal and successful platforms for counterfeiters and dishonest sellers to distribute the $1 trillion in counterfeit goods, 90% of which originate in China. These counterfeits destroy jobs, ruin consumer confidence and damage legitimate manufacturer’s reputations. Counterfeit products account for about 10% of global trade, yet remain relatively unnoticed by US consumers who lose billions each year to these deceptive products.
Alibaba accounts for about 80% of China’s e-Commerce, reporting $248 billion in transaction volume mostly within China. Alibaba is no stranger to counterfeit goods, having been recently 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. The United States Trade Representative named China to a watch list to April for not doing enough to fight intellectual-property crimes.
Alibaba subsidiary Taobao.com trumpeted its removal of approximately 20% of its 800 million website listings as suspected infringing listings, but didn’t identify just how many products were simply relisted for sale.
Well-known US brands still have hundreds to thousands of counterfeit copies of their authentic goods offered online, and manufactures are vocal that not enough is being done to stop counterfeiting and brand damage.
It takes no sleuthing to find fake products on the e-commerce giant’s Alibaba, English language AliExpress, and Taobao.com websites. Even products that simply never existed in a manufacturer’s product line, yet still carry a fake manufacturer’s brand, remain common on the websites.
A hard, close examination by both regulatory agencies and investors is warranted before consumers are exposed to unknowingly purchasing deceptive, hazardous or deadly counterfeit products. If China wants investor confidence and global support, a lot more is required than its laughable approach to counterfeiting, after all -- it's the consumer who ultimately gets hurt.
Website: www.TheCounterfeitReport.com
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