Alibaba: poor laws, enforcement undermine counterfeit fight

Chinese e-commerce giant Alibaba says low conviction rates are the main reason why anti-counterfeiting efforts lack teeth.

The company says it forwarded 4,495 leads on suspected counterfeits to enforcement agencies last year, all of which exceeded the statutory threshold of RMB 50,000 (around $7,300) needed to justify a criminal prosecution. But only around a quarter were taken forward, leading to just 33 convictions, and in almost 80 per cent of convictions criminals were granted probation.

"Ambiguities in the law have meant that enforcement officers have found it difficult to classify and quantify cases of counterfeiting let alone commence legal proceedings," said Alibaba in a statement issued ahead of a press conference in Hangzhou today.

The online retail giant says it is issuing "a public appeal calling for developments in the law and heavier penalties against individuals involved with counterfeiting."

The press conference signals that Alibaba intends to fight back against strong criticism of not doing enough to tackle counterfeit listings its e-commerce platforms, including TaoBao which has just been re-listed as a 'notorious market' on the US Trade Representative (USTR) Special 301 document after a four-year absence.

Last week, it accused intellectual property (IP) protection agencies hired by global brands of filing false complaints about the presence of counterfeit goods on the platform, with the intention to "badger and blackmail merchants." And it insists it is stepping up its own legal efforts against counterfeiters, launching lawsuits against recently for allegedly selling fake Swarovski watches on TaoBao.

Whilst insisting this was not a sideswipe at Chinese lawmakers but a general comment for governments and the public worldwide, Jessie Zheng, chief platform governance officer for the Alibaba group, said: "The current regulations are no longer able to cope with the need to fight counterfeiting."

"Criminals can escape any legal consequence leaving law enforcement agents and consumers feeling helpless, and society bearing the damage.”

Zheng would like to see strong awareness campaigns similar to those used to fight against drunk-driving.

"A clear message was sent to society that there will be serious legal consequence to drunk-driving, creating an effective deterrent to this criminal behaviour. The same should apply to counterfeit."

Pointing to what can be achieved, Alibaba cited an enforcement operation last year called Cloud Sword which resulted in the seizure of 150,000 counterfeit Kingston and Samsung memory chips valued at RMB 120m and 16 arrests.