Alibaba’s View on Counterfeit Goods

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Alibaba is against the ropes again, with the U.S. Trade Representative (USTR) on call out to sanction Taobao for being “synonymous with counterfeits” in terms on online shopping. The American Apparel & Footwear Association (AAFA) has fingered it for selling knock-offs. This time it may be global shopping King Jack Ma that gets the bloody nose.

What the U.S. Trade Representative Could Do to Alibaba

The AAFA is asking the USTR to put Ali and Taobao back on its Notorious Markets List. According to the agency’s website, this lists markets that “exemplify the problem of marketplaces dealing in infringing goods and helping to sustain global piracy and counterfeiting”. Taobao listed previously but received temporary reprieve in 2012, after it promised to be more vigilant in detecting counterfeit goods.

Why Jack Ma Should be Concerned About This

Alibaba shares list on the New York Stock Exchange. News Oracle reports NYSE stock value dropped 2.01% yesterday. With Ali market capitalisation standing at $175.48 billion, $3.52 billion is a tidy sum to lose. The American Government’s dislike for Alibabacounterfeit goods, and growing investor suspicion of Ali’s long-term intentions could result in Jack Ma finding his next round of funding a little harder to secure.

Ma himself seems to be heading for the moral high ground. He told China Daily on Tuesday that he could shed five customers for each incident of counterfeit goods sold on his site. He clearly understood the growing problem when he added, “I don’t believe success can built on dishonesty.”

Baba and China Have Become Conjoined Twins

Ma also understands the relationship between ecommerce and the economy, and that a blow to one is a blow to the other. He believes that without a large number of small sellers his business would not have a future. Counterfeit goods leave “visible wounds on Alibaba,” he said, but they could severely dent the economic transition.

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Social Brand Watch (SBW) is a collection of experts in digital, mobile and social media in China. SBW was created to complement Resonance's China Social Branding Report, a bi-weekly report focusing on modern marketing methods of the world's top brands in China.

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