Alibaba takes a fresh tack in counterfeit battle

Alibaba is working with manufacturers in China to try to persuade them to develop home-grown brands rather than counterfeiting others.

The controversial strategy is an attempt to convert the rogue manufacturers from adversaries to allies and help Alibaba sidestep a long-running counterfeit controversy that is damaging its reputation with international brand owners.

The effort is focusing initially on footwear manufacturers in Putian, a city in Fujian province that has become renowned as a hot spot for making knock-offs of big-name brands such as Nike, Adidas and Puma. Some commentators have suggested the city accounts for as much as a third of the global product of fakes.

Ni Liang, Alibaba's senior director of Internet security says that the approach is a key component of the company's anti-counterfeit strategy this year and will help tackle the problem at source by giving companies engaged in counterfeit production alternative sources of revenue, says Reuters.

A total of 17 companies have already made the switch, including Shuangwei Sporting Goods Co Ltd, one of the first to sign up for Alibaba's programme. Shuangwei is trying to build its Siweiqi line of canvas sports shoes into a Chinese brand with Alibaba's support. The online retail giant is now planning to extend it beyond footwear into other product categories.

Critics suggest the plan is misguided, however, as it will be very difficult to create new brands and - even if it scores some successes - those manufacturers who fail to do so will likely revert to their own habits.

It would be more advisable for Alibaba to continue its programme of taking down listings selling counterfeits on its e-commerce platforms, they say, although with yet another lawsuit filed against the Chinese firm from luxury goods group Kering SA it seems brand owners are losing patience with what they see as slow progress in the fight against the trade.

Brian Buchwald of consumer intelligence company Bomoda told IB Times UK that Alibaba is highly unlikely to take major steps to shut down grey or black market trade on its platforms "until there is an effective reason to do so."

For now, the controversy over counterfeits does not seem to be having much of an impact on Alibaba's business. Earlier this month, the company reported quarterly revenues up 45 per cent year-on-year to $2.8bn.