Daily Management Review

Alibaba's founder suggest jailing counterfeiters


Chinese billionaire Jack Ma wants the Chinese legislators to increase the legal liability for manufacturers of counterfeit products. The same appeal previously came from the world's brands that accused the trading platform of harboring and indulging activities of counterfeiters.

leighklotz via flickr
leighklotz via flickr
The fifth session of the National People's Congress (NPC, Supreme Authority of China) of the 12th convocation is held in Beijing. The annual sessions address the most urgent problems of the country's socio-economic development, sum up results of the previous year and sets new goals.

Chairman of the Board of Alibaba Group Holding Ltd appealed to legislators to punish manufacturers of counterfeit, as well as drunk drivers. In an open letter published on a page in Weibo social network, Jack Ma said that current fines for unscrupulous vendors are too insignificant, so the authorities should set maximum prison terms and other penalties to deter illegal entrepreneurs.

Alibaba's public appeal to lawmakers appeared largely due to growing criticism of the world's largest e-commerce trading platform. Ma and his company are blamed for the fact that measures taken to combat counterfeiting are insufficient. Taobao Marketplace and Alibaba.com, owned by Alibaba, were previously included in the pirate blacklist, which includes markets related to intellectual property infringement.

Western firms have repeatedly sued Alibaba. For instance, Gucci America Inc. argued that Alibaba "deliberately encourages, assists and profits from sale of counterfeits". The American Apparel & Footwear Association (AAFA) sent a letter to the US Trade Representation (USTR), saying: "Alibaba is either not capable or not interested in solving this problem". 

And even the State Administration of Industry and Commerce (SAIC), which usually supports Chinese companies, accused Alibaba of insufficient counterfeiting. SAIC issued an official document, which cited five major deficiencies found in Alibaba, including weak control over goods, insufficient information about products, poor sales management and shortcomings in rating system.

Having strengthened cooperation with sellers of original products, Alibaba.com was off the list in 2011, followed by Taobao in 2012. In the summer of 2016, the holding also launched a system to detect counterfeit products. It scans more than 10 million items daily. Thus it was possible to identify 380 million lists with counterfeit goods, as well as to stop activity of 180 thousand suppliers.

Some cases of counterfeit products trafficking were brought to court. Recently, Alibaba sued two sellers of counterfeit Swarovski watches, who tried to sell their goods through Taobao online platform. The vendors are demand to pay 1.4 million yuan (about $ 200 thousand) for "breach of contract and damage to business reputation". 

After a surprise inspection, the watches were handed over for examination to representatives of Swarovski, who recognized them as a forgery. Alibaba promised keep filing lawsuits against such violators. The company says that there more than 2,000 employees and 5,000 volunteers looking for counterfeits on the company's web sites.

Owners of famous world fashion brands have repeatedly criticized Alibaba for insufficient efforts in the fight against counterfeits. Last August, more than ten industry groups, uniting brand owners from different countries, sent a letter to Alibaba. They argued that the corporation did not fulfill its promises and made no effort to fight counterfeiting. The company promised to invest heavily to fight counterfeit trade and to work more closely with brand owners.

Despite the fact that the Chinese giant is working diligently in the fight against counterfeiting, the US trade mission does not see a positive effect on the measures taken. As a result, in the past year Jack Ma sites were again added to the list of unreliable resources, along with torrent trackers.

"We have to fight counterfeits, just as we are struggling with drunk driving," Ma wrote in his letter, "No company can do it alone". The existing laws are lagging behind the current state of affairs, do not reflect real threats associated with the activities of counterfeit manufacturers and leave too many opportunities for avoiding liability".  

source: ft.com