Western brands have often complained about counterfeit goods being sold on online marketplaces, particularly in China. Now it appears the Chinese government is taking some steps to address those complaints.
China’s State Administration for Industry and Commerce, or SAIC, announced this week that 10.6% of products from well-known Western brands it tested on Nov. 11, a major Chinese online shopping festival known as Singles’ Day, were counterfeit, possibly counterfeit or in some way substandard.
In this inspection, SAIC bought shoes, bags, fashion, gifts, cosmetics and electronics from marketplace sellers on Alibaba Group’s Tmall.com; JD.com; Yhd.com, which is 51% owned by Wal-mart Stores Inc.; Amazon.com Inc.’s Amazon.cn; Suning.com; Jumei.com, Vip.com and its subsidiary Lefeng.com. Products checked came from such major brands as New Balance, Adidas, Burberry, Zippo, Estee Lauder, Elizabeth Arden, Kingston, Coach, Montblanc, and Sigg.
Of the 207 products it sampled, eight were deemed outright counterfeits, seven suspected counterfeits and another seven had quality issues, such as the products were not as described.
SAIC says it found the eight fakes on five online marketplaces: three counterfeits on Tmall.com, two on Yhd.com and one each on Lefeng.com, Suning.com and Amazon.cn. In each case, SAIC says the counterfeit items were being offered by outside merchants selling on these marketplaces, and not by the marketplace operators themselves.
An Alibaba spokeswoman says “Tmall.com has always had a zero tolerance policy toward fake goods on its platform. Companies who are caught selling fakes face store closure, a full revocation of their security deposit and a permanent ban from the platform. Merchants selling on Tmall, which is oriented to larger retailers and brands must post a 50,000 yuan ($8,000) deposit, which is not required on Alibaba’s more wide-open Taobao shopping portal. “After being informed by the SAIC about the sampling results, Tmall worked quickly to take down the fake items, and then froze the stores mentioned in the report,” she added. “We will conduct a thorough investigation of this matter and then follow protocol to proceed with the shutdown of the stores.”
Yhd also said it would shut down the stores caught selling counterfeit goods.
Amazon did not immediately respond to a request for comment.
As it prepared for what turned out to be a record-breaking initial public offering stock (Alibaba raises $25 billion in IPO) in September, Alibaba has in recent years emphasized its efforts to keep fakes and unauthorized goods off of Tmall and Taobao. The Chinese e-commerce giant, whose online marketplaces account for 80% of online retail purchases in China, has been working with such organizations as the International Anti-Counterfeiting Coalition (IAAC) to make it easier for brands to report violations. Alibaba in August agreed to work to prevent the sale of counterfeit goods from such brands as Stella McCartney and Gucci owned by French company Kering S.A., and Kering dropped Alibaba from a suit over the alleged sale of fake products on Tmall and Taobao.
However, Alibaba could do more to streamline the process for brand owners reporting illegal products, according to Intellectual property protection agent The NetNames Group. It can takes days to register a complaint about fake goods on Alibaba’s sites because brand owners need upload so many legal documents, including Chinese trademark certificates, NetNames says.
JD.com ranks No.1 in the Internet Retailer China 500, as it’s the largest direct seller of goods to online shoppers in China. (Alibaba is not ranked because it a marketplace operator and not the seller of record for goods purchased on Tmall and Taobao.) Suning.com is No. 2 in the China 500, Amazon.cn No. 4, Yhd.com No. 6, Vip.com No. 8 and Jumei.com No. 11.