(Bloomberg)—French luxury group Kering said it will drop its lawsuit against Alibaba Group Holding Ltd., agreeing to work with the Chinese e-commerce emporium to fight the sale of fake products.
The owner of Gucci and Saint Laurent has established a joint task force with Alibaba to take action against sellers of counterfeit products on- and offline, the companies said in a statement. Kering is No. 436 in the Internet Retailer 2017 Global 1000.
The deal is a breakthrough for Alibaba as it tries to convince brands that it will step up efforts to counter fakes. Accusations of Alibaba’s unwillingness or inability to eradicate illegal merchandise culminated in a lawsuit filed in the U.S. by Kering in 2015 against the Chinese e-commerce giant.
“It’s clear that Alibaba wants to become a more serious player in luxury,” said Luca Solca, an analyst at Exane BNP Paribas. “To do that they need to show luxury brands they’re ready to play ball in terms of controlling distribution and prices.”
Alibaba is the biggest online merchant in China, with sites including TMall and Taobao, and gets most of its revenue from its home market. As China’s economy matures, the company has been under more pressure to expand globally and has tried to shake its reputation as a haven for cheap knock-offs.
Kering isn’t the only company that has complained. Criticism also came from the American Apparel & Footwear Association, which counts Levi Strauss & Co., No. 200 in the Internet Retailer 2017 Top 500, and Under Armour Inc. (No. 36 in the Top 500) as members. Alibaba in January reached an agreement with LVMH’s Louis Vuitton and other brand owners to cooperate in the fight against piracy. LVMH is No. 153 in the Global 1000.
Prison sentences
Alibaba’s billionaire founder Jack Ma this year called on China’s top lawmakers to come down harder on counterfeiters, pleading for tougher prison sentences and penalties. Ma has already worked with brand owners including Nike Inc. and Adidas AG to remove fake athletic shoes, watches and bags on Taobao, Alibaba’s eBay-like bazaar.
Amazon.com Inc. (No. 1 in the Top 500) clinched a deal with Nike Inc. (No. 37) last month to sell the athletic-shoe maker’s products by agreeing to block unauthorized resellers from the site.
Louis Vuitton and Gucci recently launched e-commerce sites in China to try to capitalize on a rebound in luxury sales in the country following a multi-year slump amid a crackdown on corruption.