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Jack Ma back in headlines over counterfeits

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Ma: treat them like “drunk drivers”

In the struggle to defend Shangganling Mountain in 1952, two Chinese soldiers sacrificed themselves in the battle to hold off the American forces. One was said to have used his body to block machine gun fire, while another burned to death without a word, refusing to give up the location of his comrades.

Or did they? The heroics from the Korean War feature in school textbooks, but in recent years there have been questions about how genuine the stories really are (even producing a court case, see WiC341).

So it may have been a more apt metaphor than Jack Ma intended when the Alibaba founder suggested that his company is fighting on the Shangganling frontline in the battle to defeat counterfeiters.

Alibaba’s warrior language may also be news to some of the world’s leading brands, which have regularly accused it of failing to do more to counter sales of fake goods. Last May, brands led by Michael Kors, Gucci and Tiffany resigned their International Anti-Counterfeiting Coalition memberships after the board proposed Alibaba for membership, forcing that body to back down.

Ma says the criticism is unfair and he flagged Alibaba’s anti-counterfeiting efforts in a Sina Weibo post timed to coincide with the annual National People’s Congress (NPC), which concluded last week. All the same, it was his strongest acknowledgement yet that Alibaba has a problem with fakes.

His message was clear. Alibaba cannot deal with the challenge alone and it wants the government to draft laws which make counterfeiting a much riskier proposition.

Ma said Alibaba had employed data techniques to uncover 4,495 potential fraudsters in 2016, but that only 469 were held to account and of those, half received fines less than Rmb10,000 ($1,449).

“There is a lot of bark around stopping counterfeits, but no bite,” he complained. “This reality only encourages more people to produce and sell fake goods.” He added that the punishments must be more severe, calling for penalties “as tough as those for drunk driving”.

The call to arms was taken up by other business leaders. Xiaomi’s Lei Jun and New Hope’s Liu Yonghao likened counterfeiting to a cancer eating away at society, and Lenovo founder Liu Chuanzhi suggested that tougher laws could eradicate the tumour in three years.

Zhang Mao, director of the State Administration for Industry and Commerce, told an NPC press conference that the government is going to strengthen intellectual property laws. But Alibaba’s call for a review can be judged in two main ways. On the one hand, it may have been backed into a corner. In December, the US government put Alibaba’s C2C site, Taobao, back on its “notorious markets” list and previous allegations about fake goods have also had a detrimental impact on Alibaba’s share price. Yet it could also be a sign that Ma thinks Alibaba is strong enough to weather the short-term hit as it forces the fakers off its online platforms.

Ma’s rival Richard Liu at JD.com is much more scathing. In 2016, he compared his platform’s policy of one strike and you’re out with Alibaba’s three or four strikes. He flagged Alibaba’s stance on counterfeiting as akin to “killing your parents and then asking for mercy on the grounds of being an orphan”.

It isn’t just a Chinese problem: Amazon is building a system that forces vendors to prove they have trademark permission before listing on its site. Still, Alibaba realises that it needs to bare more teeth. In January, it launched its first-ever civil case against vendors said to be selling fake Swarovski watches. Last week, it launched a second action against a pet food producer.

More of Ma’s critics will need to be convinced. Bharat Duke, the boss of Singapore-based Strategic IP Info, tells Forbes that half of the products on Taobao are fakes or infringe IP in some way. And last year the US Chamber of Commerce estimated that the counterfeit goods market in China was equivalent to about 1.5% of the country’s GDP.

In Ma’s message urging greater punishment he was perhaps thinking of a line from My Motherland, a famous song from the 1956 film about the battle at Shangganling. “If the wolves come, those who greet them have big guns.”


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