Alibaba trying to break away from counterfeit reputation

By

Cassidy Mantor

Published
May 12, 2016

Alibaba has consistently been in the hotseat for trading counterfeit goods on its site. However, with its new membership in the International AntiCounterfeiting Commission (IACC), the Chinese online marketplace is trying to create a new image of trustworthiness.

In the past 3 years, Alibaba has spent over $160 million in litigation regarding the sale of counterfeit goods on its site. CEO Jack Ma has said counterfeiting is “a cancer we have to deal with.”

Alibaba has been proactively trying to change its image of selling fakes, through creating programs such as MarketSafe, where the product has to be authenticated before it appears for sale.

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In response to MarketSafe, over 5,000 online sellers have been banned, and over 180,000 products have been removed because they were fakes. Taobao and Tmall are 2 other platforms operated by Alibaba, both of which will also require increased verification of luxury good authenticity starting this month.

Last month, the IACC extended an invitation to Alibaba, causing controversy in the luxury and fashion worlds. IACC president Robert Barchiesi announced that Alibaba’s application was unanimously approved, particularly because of the concrete results MarketSafe has shown in fighting fakes. Barchiesi noted, “[t]he IACC is committed to lean into the future and lead a coalition of the willing.”

The IACC is a nonprofit comprised of 250 member brands, such as Adidas and Burberry who are frequently the targets of knockoffs. The IACC’s mission is to stop counterfeiting and piracy of goods and intellectual property.

Luxury retailers are not supporting the decision for Alibaba to join the IACC. Michael Kors wrote a letter to the IACC cancelling the brand’s membership when Alibaba was accepted. Specifically, Kors wrote that Alibaba is “our most dangerous and damaging adversary.”

Gucci also has left the IACC for that same reason, with a number of brands privately supporting the decision to leave now that Alibaba is a member.

Alibaba answered the criticism, saying forming partnerships with groups like “IACC allow us to work even more closely with brands and the industry to aggressively and proactively enforce intellectual property rights. The war against counterfeits can only be won when all industry players join forces.”

Time will tell whether Alibaba can clean up its business, or whether it will remain a hotbed for selling counterfeit goods.