Chinese e-Retailer Alibaba Finally Cracks Down on Counterfeits, Sues 2 Vendors

The marketplace model of online retailing is not a new concept, but it has helped Chinese retail and technology company Alibaba become the second largest retailer in the world by GMV (Gross Merchandise Volume), at $463 billion for the last full fiscal. For comparison, Wal-Mart posted $482 billion during the same period.

But despite its size – or, possibly, because of it – and the way Alibaba works, it is been a favorite haunt for sellers of counterfeit goods. The problem is age old, but after Alibaba was removed from the International Anti-Counterfeiting Coalition (IACC) in May, 2016, this is the first time the company is taking public legal action against counterfeiters.

The alleged sale of fake goods came to light when a “test-buy purchase program was conducted” on Taobao, one of Alibaba’s e-commerce portals. The goods, which purported to be Swarovski watches but were later confirmed by Swarovski to be counterfeit, were being sold by two vendors, who are now under the judge’s gavel for 1.4 million yuan ($201,671, £163,419) in damages.

Alibaba in a statement said that it would continue to pursue counterfeiters, and that it was already in possession of a list of possible suspect vendors:

“We want to mete out to counterfeiters the punishment they deserve in order to protect brand owners”

A mere two weeks ago, Alibaba was put on the United States’ “notorious markets” list, but it is unclear whether the legal action was a direct result of this move by US retail watchdogs.

In November, 2016, Alibaba had its biggest Singles’ Day shopping event and moved $17.8 billion worth of merchandise on that one day alone, breaking all previous records for 24-hour sales volume.

The event is officially called the 11.11 Global Shopping Festival, and is based on a 1990s practice of Chinese youngsters to celebrate an “anti-Valentine’s Day” for young singles. In 2009, Alibaba started using this “made-up” holiday to launch a shopping phenomenon that has now become the biggest of its kind in the world.

The United States being its biggest potential market, any negative action by consumer groups would not bode well for the Chinese retail giant. As such, the pressure brought to bear on Alibaba of late will, hopefully, force the company to clean up its vendor base and weed out sellers of fake goods.

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