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Online sale of fake goods 'running wild'

By Wang Xin (China Daily)
Updated: 2010-03-24 11:10
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Online sale of fake goods 'running wild'

Taobao has designated 2010 as 'The Year of Consumers' and earmarked 100 million yuan to fight counterfeit goods. [China Daily]

As Taobao eyes global crown, person-to-person sales portal battles widespread counterfeits

More than 90 percent of netizen respondents agree that counterfeiting on the Internet is "wild", according to an online survey conducted by Tech.qq.

Nearly 19,600 Internet users had participated in the voting by March 16, with the vast majority saying rampant illegal sales are tarnishing the reputation of online transactions.

"Counterfeit commodities sold on e-commerce platforms harm the interests of both consumers and brand manufacturers, and meanwhile poison the growth of online retailing," Xinhua cited CEO of Lu Zhaoxi as the saying.

Total trade on Taobao, a subsidiary of Alibaba Group and Asia's largest shopping website, surpassed 200 billion yuan in 2009, a surge of 101 percent over the previous year.

Taobao's trade volume is expected to double and surpass eBay this year, the First Financial Daily cited John Spelich, vice-president in charge of international corporate affairs at Alibaba, as the saying.

Yet as the homegrown person-to-person portal grew with breathtaking speed, it became a major marketplace for faked goods.

"The majority of the 7,000 complaints about online transactions we have received are against shops operating on," Huang Xiangru, who heads a group campaigning against faked goods, told the Beijing News.

"As a sales platform, Taobao itself is the biggest victim of faked goods, because it is the first target for consumer anger after they found themselves cheated by counterfeit goods from online sellers," said Ma Yun, chairman of Alibaba Group's board.

Infringement campaign

Ma noted the portal has cracked down on counterfeit goods and will continue the effort.

Last year the company cooperated with branded manufacturers to deal with 8,210 infringement cases on the website involving nearly 3.38 million pieces of goods.

The company has designated 2010 "The Year of Consumers" and began a security program in mid-January with 100 million yuan earmarked for compensation to online shoppers.

In early March, the company together with renowned brands like Adidas announced its determination to fight faked goods in Hangzhou, Zhejiang province.

Some business analysts relate Taobao's recent high-profile campaign against counterfeiting to its preparations for a public stock offering, noting that the company is building up good will to gain the confidence of potential investors.

The company said the specific time for its initial public offering has not yet been scheduled.

Online sale of fake goods 'running wild'

National values

Like Taobao, e-commerce giant eBay also faces infringement claims.

A French court ordered eBay to pay damages to luxury goods manufacturer LVMH for doing "too little to stop the sale of counterfeit goods over the Internet", according to the New York Times.

Yet the US-based Internet giant claimed victory in a legal battle with jewelry maker Tiffany Co on its home turf, the Business Week reports.

"The difference in rulings in France and the United States seem to reflect different legal philosophies in the two countries," Huang Yong, law professor with the University of International Business and Economics, told China Daily.

US courts focus more on contract and market freedom while the French judicial system appears to emphasize more social responsibilities, Huang said.

"The United States prevails in the Internet industry and related technologies globally partly due to the nation's tolerance and encouragement of innovative industry."

"In contrast to developed countries, our e-commerce still has enormous potential to tap," he said.

Yet the current Chinese legal system lacks specific regulations on the obligations of e-commerce portals in transactions of faked goods, Huang said.

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He noted that satisfying consumers is itself a market mechanism that encourages quality, while overregulation could bring undesirable results.

"It involves multiple interests balanced over a broad range including development of the Internet, management and promotion of new commercial models, competition and employment. It will be determined by our final values on these factors."

"But no website should serve as a platform for selling faked goods," the professor said.