Alibaba puts numbers behind anti-counterfeiting success claims

Chinese e-commerce giant Alibaba is shouting about the "significant strides" it has made in protecting intellectual property rights in its fight against fakes on its online marketplaces.

According to its platform governance annual report for 2016, the marketplace has proactively taken down 26 times more product listings than its reactive takedowns that have been in response to complaints by right holders.

The e-commerce firm says it also provided a total of 1,184 information leads to law enforcement agencies last year, which resulted in the arrests of 880 suspects, and assisted in the shutdown of 1,419 manufacturing locations. More than RMB 3bn ($440m) worth of merchandise was seized as a result of the information sharing, which was twice the amount of the previous year, it says.

The company also spotted a new trend in the counterfeit market where fake products manufactured overseas, mainly in Asia, have been found to infiltrate China's industrial supply chain to be sold domestically.

Last year, a task force within Alibaba's Platform Governance department helped police dismantle a counterfeiting ring that was importing lubricating oils produced overseas through various ports, and selling them through a variety of channels nationwide across China.

Alibaba claims the success of its anti-counterfeiting measures is down to its enhanced use of big data and analytics, which it believes will be one of the main tools in the fight against fakes. The firm is using a variety of technologies, including complex algorithms, machine learning, optical character recognition and mapping technologies, to identity conmen and scan 10 million product listings a day. The firm is using the tech for proactive monitoring and screening that targets infringing listings before they are posted online.

The company has also increased its product-quality spot checks through its test-buy programme, spending more than RMB 87m ($12.7m) on this test-buy program in 2016, sampling a total of 84,000 orders made.

Indeed, the firm notes that consumer satisfaction levels are continuing to improve as a result of its anti-counterfeiting efforts, while the rate of refunds on suspect products has decreased. In 2016, refunds for dodgy Taobao-purchased products declined by 32 per cent.

The e-commerce firm says its use of big data to fight fakes will improve through the collaboration with brands and rights holders and the sharing of IP information with Alibaba's system, which can then be shared with the authorities to help stop counterfeits at source.

"Maintaining the health of any ecosystem, online or offline, requires the contribution of all stakeholders involved. Brands, e-commerce platforms, and law enforcement personnel must work closely together for a healthy business and social environment," the report says.

Alibaba's increased efforts to crackdown on counterfeits follows continued criticism that the platform allows fakes to persist. At the end of last year, the firm's Taobao platform was relisted as a notorious market by the US Trade Representative.

Keen to be showing that it is anti counterfeits, Alibaba has introduced a number of new initiatives including the Platform Governance Department, which was established at the end of 2015 to oversee the policies that govern business practices on the marketplace, ensuring the integrity of merchants and protecting intellectual property rights.

In 2016, the online marketplace strengthened its proactive monitoring and takedown system and introduced dynamic, real-person identification to authenticate identities of sellers before they open a storefront.

Last year, Alibaba also ramped up offline cooperation with law enforcement, established new policies and mechanisms to root out repeat offenders, and introduced programmes that encourage closer IP enforcement collaboration with rights holders, such as the IP Joint Force System and the Alibaba Group Big Data Anti-Counterfeiting Alliance, as well as strengthened collaboration with trade associations.

In addition, Alibaba has also started filing civil lawsuits against counterfeiters, with the goal of improving the legal and judiciary environment in China to better protect brands and consumers.

The company says in the report that it is "committed to preserving the trust that consumers and merchants place in Alibaba" and stresses that its e-commerce environment is based on the respect for intellectual property rights, fair and just practices and quality merchandise.

"As the first company to introduce the concept of "platform governance," Alibaba Group has consistently demonstrated its willingness to innovate and invest resources to provide industry leadership and come up with new and improved ways to govern its platforms, such as the creation of the Good Faith Program, and the IP Joint Force System," the report says.

"However, as an internet enterprise, Alibaba has limited power by itself to maintain the overall health of global online commerce. It is a top priority for Alibaba to not only continue this fight against counterfeits on our platforms, but also get to the root causes of this global problem. Legal protection, government involvement, and collaboration with rights holders are all essential to safeguarding the development of a healthy and sustainable business environment."