Pindoduo admits fakes problem, but says its fighting back

Chinese discount marketplace Pindoduo has acknowledged that it is battling with counterfeit sales on its platform, but is “consciously and vigorously taking steps to improve,” according to chief executive Colin Huang.

The company – which is hoping to become a rival to online retail giant Alibaba – had only completed its initial public offering (IPO) on the Nasdaq when it emerged it was under investigation by the Chinese authorities over the presence of fake listings from third-party vendors a few weeks ago.

Huang took the opportunity afforded during its second-quarter results call to insist that the company has “zero tolerance for counterfeit products … and are the first and one of the few platforms in China that have insisted on a 10 times penalty” for counterfeit listings.

He went onto say however that “there is still quite a lot to do on eliminating infringement offenses on our platform.”

Looking at its recent track record, Huang said Pindoduo had proactively removed 10.7m “problematic products” and blocked a further 40m links that “raised infringement issues.” The number of listings removed was 125 times the number of complaints received, he told investors on a conference call.

Running through additional numbers, Huang said Pindoduo had agreement in place with more than 400 brand owners to collaborate on tackling counterfeits, and in just one week – between August 2 and 9 – had closed 1,128 storefronts, removed 4.3m suspect product listings, blocked 450,000 suspicious links, and reported 36 cases to “the local market regulatory authority.”

According to its IPO filing prospectus, Pindoduo had 1.7m active merchants on its platform in the 12-month period ended June 30, 2018. The company has also set up a $22m fund to deal with after-sales disputes.

“What happened was a good reminder for us to speed up our efforts to help more merchants establish their own brands with the support of our data,” said Huang.

“With the volume and the supply chain capability many merchants and manufacturers have [through Pindoduo], they don't need to infringe,” he asserted.

Like Alibaba, Pindoduo is also planning to invest in technology to tackle the counterfeiting issue, including upgrading search algorithms to steer customers towards official brands rather than knock-offs, and improving  its ability to spot infringing images.

It also says its upgrading the procedures used by third-party merchants to start using Pindoduo and will integrate with public security authorities to authenticate merchant identities.