Chinese fakes better than originals: Alibaba

Alibaba's collaboration with Chinese law enforcement last year led to the arrest of 300 people, the destruction of 46 places where counterfeits are made and the confiscation of US$125 million, says its president, Mr Michael Evans.
Alibaba's collaboration with Chinese law enforcement last year led to the arrest of 300 people, the destruction of 46 places where counterfeits are made and the confiscation of US$125 million, says its president, Mr Michael Evans.PHOTO: REUTERS

Founder of Chinese e-commerce giant explains why it's hard to root out counterfeits

BEIJING • Alibaba Group Holding founder Jack Ma said Chinese- made counterfeit goods today have become better than the genuine article, complicating the effort to root out fakes on the country's largest online shopping services.

Global brands have long relied on China and other low-cost manufacturing bases to beef up margins. But these same factories have become savvier and are now using the Internet - including Alibaba's platforms - to sell their own products straight to consumers, Mr Ma told the firm's investor conference on Tuesday.

Still, Alibaba is the best in the world at fighting the sale of counterfeits, he added.

The problem is fake goods today have "better quality, better prices than the real products, the real names", Mr Ma said in Hangzhou, China. "It's not the fake products that destroy (makers of luxury products), it's the new business models."

He added that makers of fake products use the same factories and "the exact raw materials" as the original luxury goods manufacturers.

 

Failing to clean up its image could stop merchants and shoppers overseas from trusting the Chinese tech giant. Mr Ma wants to get more than half the company's revenue from outside China within a decade and a cooling domestic economy makes that effort more pressing.

Its membership in the International Anti-Counterfeiting Coalition (IACC), a non-profit global organisation that fights counterfeit products and piracy, was suspended last month after questions were raised about conflicts of interest involving the coalition's president.

"We would love to work with the branded companies," said Mr Ma. "We cannot solve the problem 100 per cent because it's fighting against human instinct. But we can solve the problem better than any government, any organisations, any people in the world."

Alibaba pleaded its case to IACC members that it has the data, technology and desire to help keep fake brands off its online marketplaces.

The firm's collaboration with Chinese law enforcement last year led to the arrest of 300 people, the destruction of 46 places where counterfeits are made and the confiscation of US$125 million (S$170 million) worth of goods, Alibaba president Michael Evans told IACC last month.

Alibaba expects to reach 423 million online shoppers worldwide this year, mostly via its Tmall.com and Taobao Marketplace sites. It aims to have two billion consumers by 2036 and double gross merchandise volume to six trillion yuan (S$1.2 trillion) by fiscal 2020.

Mr Ma said reaching two billion users would require more success in rural China, which he estimated had 700 million people. While there is merit in calls for expansion in Malaysia, Indonesia and India, he said the domestic approach would be more successful as his firm understands the local market better.

He told investors that more than 90 per cent of key company meetings, decisions and events have been recorded on video to be analysed by future generations studying Alibaba.

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A version of this article appeared in the print edition of The Straits Times on June 16, 2016, with the headline 'Chinese fakes better than originals: Alibaba'. Print Edition | Subscribe