Cash-strapped Star Wars fans can pick up Darth Vader figurines and light sabers for as little as US$4.59, Tom Brady jerseys go for about a 10th of those on the National Football League’s store, a pair of red Beats Solo headphones can be had for just US$107 —- about half its official price.
It is bargains galore at Alibaba Group Holding Ltd’s (阿里巴巴) Taobao: the eBay-like bazaar where buyers meet up with sellers.
Billionaire chairman Jack Ma (馬雲) is struggling to shake the company’s reputation as a haven for cheap knock-offs and unauthorized merchandise, 21 months after calling counterfeits cancerous.
He heads into next year after a bruising year that saw more than US$50 billion wiped off its market value amid lawsuits and criticism from Chinese and US regulators.
Cleaning up its image next year is crucial to Alibaba’s goal of winning the trust of merchants and shoppers overseas, from where Ma wants to get more than half the company’s revenue within a decade.
A cooling Chinese economy makes that effort even more pressing. JD.com Inc is winning customers partly because it holds the inventory itself and sells directly to consumers, similar to Amazon.com, Inc, a business model easier to police and regulate, Bloomberg Intelligence analyst Michelle Ma said.
“By now, management should have eliminated this problem,” said Cyrus Mewawalla, managing director of London-based CM Research. “The fact that they haven’t is a worrying sign for investors.”
Alibaba’s struggle with fakes and questionable products is part of a larger issue in China, where piracy is rampant and knock-offs of everything from DVDs to appliances flourish.
Yet over time, the nation’s growing middle class are likely to demand higher-quality goods, placing the onus on Alibaba to clean up its act.
Alibaba makes money from Taobao through advertising revenue, with third-party merchants holding the products for sale, from toys and food to medical equipment. Since the goods are not in Alibaba’s possession, it is harder to verify if they are legitimate.
Still, Alibaba says it is trying to crack down.
Alibaba “is committed to the protection of intellectual property rights and the fight against counterfeiting,” the company said in an e-mailed statement on Friday. “Counterfeiting is an issue all global e-commerce companies face, and we are doing all we can to address and fight it.”
The company has a task force of more than 2,000 monitoring for fraud and removed 90 million product listings before its initial public offering last year.
Brand owners can use an online complaint platform to report infringements, while those accused of selling frauds have three days to refute allegations with evidence or face delisting, according to Alibaba’s Web site.
Alibaba has also worked with brands, including Nike and Adidas, to remove fake athletic shoes, watches and bags on Taobao and thousands of sellers have been penalized.
That has not stopped criticism.
Last week, the US Office of the Trade Representative (USTR) warned the company it had to do better to stay off the “Notorious Markets” blacklist it escaped only in 2012.
The federal agency issued a stern warning that Alibaba’s efforts to fight piracy and respond to complaints would be monitored in the coming year.
The regulator reported that rights holders have criticized Alibaba’s enforcement program as too slow, difficult to use and lacking transparency.
While it did not relist Taobao, the USTR’s recommendations included simpler processes to register and request enforcement, and reduced timelines for taking down listings and issuing penalties.
Rejoining the name-and-shame list would damage Alibaba’s reputation in the US, where its shares trade and the company is trying to cultivate relationships with retailers and entertainment companies.
While Alibaba is the largest operator in China, that has also made it highly dependent on its home market, which generates more than 80 percent of revenue. With the domestic economy slowing, the ability to grow in the rest of the world is likely to be critical.
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