Brands mull lawsuits over sales of counterfeit goods
The suspension of Alibaba Group's membership of one of the world's largest anti-counterfeiting groups could be a setback for the e-commerce giant as it tries to shake off its negative reputation, analysts said over the weekend.
The International AntiCounterfeiting Coalition (IACC) said in a letter to its members on Friday that following the expression of concerns by various IACC members, the board had decided to suspend a newly created category, under which the Chinese Internet mammoth was granted membership in April.
The suspension also affected two other U.S. e-commerce companies, The RealReal and wish.com.
In response, Alibaba said in a statement sent to the Global Times Sunday that the suspension will not affect the existing relationship or joint initiatives between Alibaba and the IACC.
"If Alibaba could be accepted by the IACC's members, its commitment to cracking down on counterfeit goods would be more widely acknowledged, which would improve its image," said Ala Musi, director of the Policy and Law Committee of the China E-commerce Association.
In addition, membership of the IACC could help with deeper cooperation with many well-established brands, which would allow Alibaba to remove counterfeits from its sites more efficiently, Musi told the Global Times Sunday.
The IACC has more than 250 members - such as Apple, Estee Lauder and Pfizer - from over 40 countries and regions. The IACC MarketSafe Program jointly created by the IACC and Alibaba in 2013 has helped crack down on nearly 5,000 sellers of fake goods on Alibaba's online marketplaces to date, according to information on the IACC's website.
"In an era of booming online retail, companies like Alibaba are important for solving counterfeiting problems," said Musi.
Alibaba's online marketplaces handled a merchandise volume worth $485 billion during the year ending March 31, 2016, which analysts estimated is more than Amazon and eBay put together.
Musi noted that sooner or later global brands including members of the IACC would have to cooperate with e-commerce sites to find an effective and efficient way of clamping down on fake goods.
Further communication is necessary for Alibaba to address the concerns of IACC members and win their support in its anti-counterfeiting efforts, Lu Zhenwang, founder of Shanghai Wanqing Commerce Consulting, told the Global Times on Sunday.
Members' concerns
The IACC said the suspension would allow for further discussion and consideration, according to a post on the coalition's website on Friday, but it offered no details of when and whether the suspension would be lifted.
Following on the heels of Gucci America and Michael Kors, Tiffany & Co on Wednesday became the latest high-profile luxury brand to reportedly quit the Washington DC-based IACC. Tiffany did not give its reasons for leaving the coalition in an e-mailed letter to the IACC on Wednesday, according to media reports.
A letter sent to the IACC by Michael Kors was quoted by the Wall Street Journal in late April as saying that the admission of Alibaba to the coalition provided "cover to our most dangerous and damaging adversary," with many international brands also considering filing lawsuits to force the e-commerce powerhouse to remove counterfeits from its online marketplaces.
There was also an anonymous letter circulating widely via media outlets on Wednesday, threatening a mass withdrawal from the IACC unless Alibaba was pushed out, due to various concerns including connections between Alibaba and the coalition's president, Robert Barchiesi, who has held shares in Alibaba since its listing in New York in 2014, the Associated Press reported on Friday.
The IACC told members that it had failed to communicate the conflict of interests involving Barchiesi to the board of directors "because of a weakness in our corporate governance procedures." Alibaba did not comment on this.
Alibaba has claimed that it has been beefing up efforts to crack down on sales of counterfeit goods on its platforms.
One of its latest efforts was announced on May 4, requiring vendors on its consumer-to-consumer site Taobao to upload proof of authenticity of luxury commodities, such as authorization letters from brands, from May 20.
However, a search of "Gucci purse" on Taobao on Sunday yielded about 100 pages filled with items ranging in price from 1,000 yuan ($153) to nearly 91,800 yuan.
Both the Chinese authorities and e-commerce companies like Alibaba have come up with many measures to fight against counterfeiting in the past, but insufficient punishments have greatly reduced the effectiveness of the initiatives, said Lu.
