Alibaba CEO Praises Counterfeits, Snubs Global Manufacturers

China’s bad-boy of counterfeits shirks responsibility, blames quality fakes

June 16, 2016 - Los Angeles, CA – Imagine you are a manufacturer of a well-known global product or pharmaceutical brand. You have spent millions, perhaps billions, researching and building your products, reputation, advertising, distribution, staff, storefronts, warranty service, customer base and shareholder confidence.

Then Jack Ma, CEO of Alibaba, the world’s largest e-commerce website, declares “The problem is that the fake products today, they make better quality, better prices than the real products, the real names.”

But, that claim doesn’t have substance and snubbed global manufacturers, resulting in a fire storm of disbelief. “For some individual cases what he’s saying might be true, but it’s wrong to generalize the phenomenon.” Cao Lei, director of the China E-Commerce Research Center in Hangzhou.

In a rare move amid rising discontent over increasing supply of fake goods through online retail, the Chinese Government’s National Peoples Conference Standing Committee (NPC) publicized a report on implementation of the Law on the Protection of the Rights and Interests of Consumers, identifying over 40% of China’s online goods as shoddy, counterfeit, and raising questions over credibility of the online e-commerce giants like Alibaba. So much for Jack Ma’s claim. Consumer complaints rose 356%

Appropriately named after the folk tale “Ali Baba and the Forty Thieves” Alibaba continually draws scrutiny from both investors and international brands over its reputation as a haven for counterfeits.

• The US Securities and Exchange Commission (SEC) launched an investigation into  Alibaba Group Holding Ltd.’s (BABA.N) accounting practices to determine whether they violated federal laws
• “Together, the Alibaba Defendants and the Merchant Defendants are an enterprise whose intentional and repeated sales of Counterfeit Products into the United States constitute a pattern of racketeering pursuant to 18 U.S.C. § 1962(c).”– Kering S.A. et seq., Plaintiffs v. Alibaba Group Holding Ltd. - 14 CV 5119
• Its membership in the International Anti-Counterfeiting Coalition (IACC), a nonprofit global organization that fights counterfeit products and piracy, was suspended in May.
• Alibaba’s removal of an astonishing 115-million infringing products in just 9 months from its website illustrates the enormity of the problem, but, how many were simply relisted? Alibaba’s websites are awash in counterfeit and fake goods.

Could you identify these counterfeit products purchased on Alibaba subsidiary AliExpress.com?

Image: All Counterfeit -- Clockwise from left; Bose Quiet Comfort QC15 Headphones, Gillette Mach 3 Razor Blades, Otterbox Defender Cell Phone Case, Supra “Justin Bieber” Muska Skytops, MAC Mineralize Blush. Various Fragrances: Chanel Chance and Coco, Acqua Di Gio, Daisy, Infusion D’Iris, Gerber Bear Grylls Ultimate Knife, Invicta Pro-Diver Watch, Montblanc Meisterstuck Pen. (Photo TheCounterfeitReport.com)

Counterfeiters will produce an estimated $1.7 trillion in counterfeit products this year for sale on e-commerce websites, exchanged for authentic products in retail stores, or returned for warranty claims that manufacturers can’t honor. US manufacturer sales are dropping and consumers are losing confidence in genuine products, some may even be injured or killed. Government regulation and consequence is notably absent, and the burden and financial loss falls directly to manufacturers and consumers, while US workers lose over 750,000 jobs.

With over 90% of consumers looking to e-commerce websites for good deals on nationally branded products, e-commerce websites including Alibaba (BABA), Amazon (AMZN) and eBay (EBAY) will reap billions in revenue from unsuspecting consumers who mistakenly place their confidence in these websites. Consumers often unknowingly purchase hazardous or deadly counterfeit products that are very deceptive in appearance, while e-commerce sites rake-in transaction fees.