Wed, Dec 24, 2014 - Page 15 News List

Alibaba took down 90m fake products before IPO

Bloomberg

Alibaba Group Holding Ltd (阿里巴巴), which faced scrutiny for allegedly selling counterfeit goods on its Web sites, said it removed 90 million listings that might have breached intellectual property laws.

The product listings were taken down across Alibaba’s e-commerce platforms until September, chief risk officer Polo Shao (邵曉峰) said yesterday at a press conference in Hangzhou, China.

Alibaba, which raised a record US$25 billion in an initial public offering (IPO) in September, said it spent US$160.7 million from the beginning of last year through last month to block counterfeit products and boost consumer protection.

The strategy is part of Alibaba’s plan to build its reputation, now that the company is larger in market value than General Electric Co and Procter & Gamble Co.

Controlling the sales of fake and pirated goods will be crucial in maintaining credibility with investors and limiting risks of lawsuits, analysts said.

“Selling counterfeits has been one of the key criticisms that Alibaba has faced,” Beijing-based Forrester Research Inc analyst Vanessa Zheng said. “Even though the company’s shares have done well, it does not mean that Alibaba is not aware of the risks down the road.”

China’s largest e-commerce company has gained 60 percent since its market debut, compared with a 0.9 percent decline in the NYSE Composite Index.

The company’s efforts to fight copyright infringement are part of a larger legal issue in China.

China is host to a number of markets known for “prominent and extensive availability of counterfeit merchandise,” the Office of the US Trade Representative (USTR) said in a February report. It cited Beijing’s Silk Market and Guangdong’s Zengcheng International Jeans Market, where vendors set up stalls, as examples.

“The fact that Alibaba has a system set up to raise complaints about counterfeit products is an improvement compared with the other on-the-ground shops,” Zheng said.

Alibaba’s most popular platforms are Taobao and Tmall.com, which connect consumers to retail brands. The platforms do not sell merchandise themselves and make most of their sales from commissions and advertising.

To safeguard against infringements, vendors are required to make deposits with Alibaba to ensure that their products are genuine, allowing buyers and sellers to rate each other and helping consumers get refunds.

The company had penalized 131,000 sellers as of Sept. 30, and its cooperation with Chinese law enforcement agencies in more than 1,000 counterfeiting cases this year led to the arrests of 400 suspects, the company said.

Alibaba was removed from the US government’s Notorious Markets list in 2012.

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