Tim Lince

Chinese digital retail giant Alibaba has been met with a barrage of criticism following comments from its chairman that fake goods are often “better than branded products”. However, while not great PR for a company trying to legitimise its anti-fake credentials, Jack Ma’s comments – which have subsequently been clarified for World Trademark Review – highlight a reality for those on the anti-counterfeiting frontline: counterfeits are improving in quality.

Alibaba Group recently saw its membership of the International Anti-counterfeiting Coalition (IACC) suspended after a brand owner backlash, a blow to its attempts to align itself with those tackling the sale of fake products on its digital platforms. Nonetheless, Alibaba’s president Michael Evans spoke at the coalition’s spring conference last month to promote the company’s commitment to fighting alongside governments and trademark owners in the “war being waged” against counterfeits – and he was adamant that its access to big data and technology will be an important weapon in the fight. On the surface, the speech ticked many of the boxes that IP owners wanted to hear. But barely a month later a more senior company representative made some less well-received remarks.

During a speech yesterday at Alibaba's headquarters in Hangzhou in China, it has been reported that Ma surprised the attending media with his comments on fake goods. He is quoted as saying that “the problem is that the fake products today, they make better quality, better prices than the real products, the real names”. China Central Television (CCTV) reported that Ma claimed that the selling of unbranded versions of internationally famous goods is not “intellectual property infringement”.

Of course, the claim that ‘fake goods are better quality than branded products’ will be unpopular for many in the anti-counterfeiting community. Indeed, Canada-based PR counsel Bob Pickard reacted on Twitter that “the king of double-standards strikes again”. Rob Holmes, CEO of IPCybercrime.com and an IACC member, told World Trademark Review that Ma’s statements “are no surprise”. He expanded: “He might as well have said, ‘If you make it, we'll fake it’. Ultimately, Chinese counterfeiting will not stop unless it is unprofitable to do so. The attitude that perpetuates counterfeiting is among the most mainstream and powerful in the Chinese business world. Just as the Chinese government has done over the last several years, Alibaba has put on a good show – but their efforts are as inauthentic as their cheap handbags.”

World Trademark Review today received “updated” comments from the speech, which place the emphasis more on OEMs than counterfeit goods. In the revised comments, Ma opens by stating that Alibaba is “the world’s leading fighter against counterfeits” and that the company will “do everything we can to stop fakes”. He added, though, that the company has witnessed “an important shift” in its efforts: “As overseas exports decline, Chinese manufacturers must find new ways to survive. E-commerce has given manufacturers an opportunity to sell directly to consumers. Today, the quality of OEM goods is improving. Sometimes they are even better than branded products, and they can sell at better prices. This is simply my observation of the issues facing brands and OEMs.”

Alibaba has broached on the sale of OEM-made goods before, by offering resources to such entities to help them build their own brands. While the clarified statement places less of an onus on counterfeits, he does state: “Counterfeiting is not a quality problem; counterfeiting is an intellectual property problem. We need to work collaboratively with brands and the entire industry to fight it.”

So perhaps Ma’s comments were lost in translation. However, while some brand owners will be frustrated at his reported words, there are commentators that feel he is making a point worth observing. Cao Lei, director of the China E-Commerce Research Center in China, told Bloomberg that, while “it is inappropriate for a person of Jack Ma’s status to say something like this… for some individual cases what he’s saying might be true”. So while bad quality fakes will always exist, manufacturing technology is consistently improving, and so too are the infringing goods that are brought to market.

The takeaway of Ma’s comments could alternatively be ‘high quality fakes are making the fight against counterfeits harder’, and this is a sentiment that many brand owners – especially in the luxury and technology sectors – would agree with. The bigger question is whether more meaningful action can be taken to counter their prevalence in the market.  

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