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Alibaba Enters 2016 Struggling with Knockoff Reputation


Cash-strapped Star Wars fans can collect  Darth Vader figurines and light sabers for as low as $4.59. On the National Football League’s store, Tom Brady jerseys go for about a 10th of those.For Just $107, a pair of red Beats Solo headphones can be purchased, about half of its official price.

It’s good deals galore at Alibaba Group Holding Ltd.’s Taobao, The EBay like a marketplace where shoppers meet up with the sellers. Chairman Jack Ma is struggling to shake the company’s reputation as a haven for inexpensive knockoffs and unapproved merchandise, 21 months after calling counterfeits cancerous, according to the report. After a bruising year that witness more than $50 billion rubbed off its market worth amidst lawsuits and criticism from Chinese and U.S  regulators, He is looking into  2016.

Cleaning up its appearance the coming year is important to Alibaba’s objective of winning the trust of sellers and shoppers in other countries, from where Jack Ma wants to get more than half the company’s income within a decade. 

A cooling Chinese economy makes that struggle even more persistent. JD.com Inc. is attracting customers fairly for the reason that it holds the inventory itself and sells directly to shoppers, like Amazon, a business model easier to police and control, according to an expert.

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Cyrus Mewawalla, managing director of London-based CM Research  stated, “By now, management should have eliminated this problem,” he added. “The fact that they haven’t is a worrying sign for investors.”

The Bigger Concern

The fakes and questionable products are part of a  larger issue in China and part of Alibaba’s fight. Where piracy is widespread and knockoffs of everything from DVDs to appliances display. Still, in time, the country’s increasing middle class will demand higher-quality goods, placing the responsibility on Alibaba to clean up its act.

By means of advertising profits, Alibaba makes money from Taobao, with 3rd party suppliers holding the products for sale, from food and toys to medical tools. Since the merchandises are not in Alibaba’s control, it’s tougher to validate if they are genuine. However, Alibaba states it’s trying to clear-out.

Taskforce for Fakes

The company said in an e-mailed statement Friday,  Alibaba “is committed to the protection of intellectual property rights and the fight against counterfeiting,” also added “Counterfeiting is an issue all global e-commerce companies face, and we are doing all we can to address and fight it.”

The business has a task group of above 2,000 checking for fake and removed 90 million merchandise listings before its 2014 initial public offering. To report infringements, product owners can use an online complaint platform, while those suspect of selling fakes have three days to prove false allegations with evidence or face delisting, according to Alibaba’s website.

Alibaba has also worked with products including Nike and Adidas to eradicate fake athletic shoes, watches and bags on Taobao and thousands of sellers have been punished.

Foreign Development

Michelle Ma stated, “In the next 10 years, they’re not just satisfied with the China market. They want to attract foreign merchants to sell to China,”.  

The company co-founded by Jack Ma lead into 2015 the toast of Wall Street after a record September Initial Public Offering (IPO).

Four months ago, China’s State Administration of Industry and Commerce delivered a so-called “white paper” blaming Alibaba of permitting merchants to choose famous brands and handbags and sell fake wine.

Although the company objected and the agency eventually said the paper didn’t have “judicial effect,” the influence on its shares was intense. The stock fell by more than 40% between the SAIC criticism and a record low in September.

Even though Alibaba is the largest operator in China, that’s also made it highly reliant on its home market, which produces over 80% of income. With the domestic economy  reducing, the ability to develop in the rest of the world will be crucial.

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