Alibaba promises crackdown on counterfeits amid trade group controversy

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Chinese Internet giant Alibaba Group Holding Ltd.

, is promising wholesale changes in the way it tackles counterfeit products on its shopping platforms amid pressure from global brands and in anticipation of an imminent crackdown on e-commerce counterfeits by Chinese authorities.

The new measures include faster removal of counterfeit ads, according to Alibaba. Additionally, Alibaba has said it will now shift the burden of proof to sellers on its platforms to show that their products are genuine.

Alibaba’s Chinese markets handled $ 485 billion in merchandise volume in the fiscal year ended March 31, which analysts say is higher than Amazon and eBay combined. But it has long been hassled by complaints from brands that its sites are rife with fakes, which in turn generates customer traffic that could in turn benefit Alibaba.

Controversy erupted over Alibaba’s admission last month to the International AntiCounterfeiting Coalition, one of the world’s largest groups dedicated to combating counterfeit and pirated products.

American fashion brand Michael Kors Holdings Ltd.

and Gucci America Inc., the latter owned by the French Kering HER,

withdrew from the Washington, DC-based trading group over concerns over Alibaba’s commitment to tackle counterfeits, according to people familiar with the matter. Both companies declined to comment.

French luxury brand Longchamp told the IACC it will not attend the group’s annual conference next week, where Alibaba co-founder Jack Ma is the keynote speaker, and that the withdrawal of its membership “could become an option” if the IACC continues to affiliate with Alibaba. without consulting its members, according to a letter to the anti-counterfeiting group reviewed by the Wall Street Journal.

On Friday, the coalition’s board of directors said in a letter to its 250 members that it had decided to suspend a newly created category, into which Alibaba was admitted in April, “in consideration of some of the concerns raised by our members”.

Alibaba said it plans to continue its “productive” partnerships with brands and governments to address the complex issue of counterfeiting. The company declined to comment on the departure of the anti-counterfeiting group’s brands.

Michael Evans, chairman of Alibaba, said in a blog post earlier this week that the company is “part of the solution, and we will continue to cooperate with brands and industry associations, rather than resorting to tactics. unproductive “to fight against counterfeits.

Global brands have expressed concerns about how the anti-counterfeiting group is being run, citing the lack of consultation with all members prior to Alibaba’s admission as an example. The IACC board, in Friday’s letter, said the group’s chairman, Bob Barchiesi, had “his full confidence and support.”

The board said it would hire an independent firm to review and recommend ways to improve its internal controls.

China’s State Administration for Industry and Commerce is set to launch a campaign this month to strengthen policing of e-commerce sites, according to a report in the State People’s Daily newspaper. The regulator has said it will severely punish those who violate regulations governing counterfeit or low-quality products and fictitious online sales by merchants seeking to increase their visibility on e-commerce platforms.

Chinese e-commerce companies, including Alibaba and its biggest rival, JD.com,

may be subject to more regulatory scrutiny because of their size, according to Duncan Clark, author of “Alibaba: The House that Jack Ma Built.”

Alibaba said the company welcomes measures that promote a “healthy environment for the development of electronic commerce.” JD.com said it doesn’t mind the scrutiny because it doesn’t have a consumer-to-consumer marketplace, an online space where it says counterfeits dominate.

As part of its new anti-piracy efforts, Alibaba and the IACC announced this week that they will expand their joint program to quickly remove fakes from the Chinese e-commerce company’s sites, including Taobao and Tmall. The program, MarketSafe, will now be open to all brands, free of charge. Previously, it was only available to members of the Anti-Counterfeiting Coalition and cost thousands of dollars a year.

Separately, Alibaba also plans to screen lists that may relate to counterfeit products and send them to brand owners for verification, according to people familiar with the plan. Brands may still have to file a request for Alibaba to remove the listings, however, people familiar with the matter said.

Meanwhile, Alibaba has publicly informed luxury goods sellers on Taobao, a virtual bazaar where almost anyone can open a storefront, that from May 20, they will need to upload proof such as an invoice or an invoice. letter of authorization to sell branded products.

Mr Clark, the author, said Alibaba’s latest moves may be among the “most important” steps taken so far by the e-commerce giant to tackle the problem, but said that it remained to be seen how they were implemented. taken up by others.

Dean Arnold, co-founder of The Intellectual Property Group, which advises over 20 brands, said: “Alibaba’s previous initiatives also looked great on paper, but ultimately failed.

Alibaba said its efforts are reducing sales of counterfeits on its platforms. The program with the IACC has led to the closure of more than 5,000 online storefronts and the removal of more than 180,000 lists of counterfeit products in two years, he said.

Some big brands told the Journal that those numbers are paltry compared to the number of listings and stores they have managed to individually investigate and force Alibaba to remove from its sites during the same time frame.

Write to Kathy Chu at [email protected]

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