Alibaba Group Holding Ltd had, in the past, faced intense scrutiny for selling fake products on its platforms. But the company worked hard in the run up to its September IPO to remove more than 90 million fake goods that may have violated intellectual property rights, reports Bloomberg. According to Alibaba’s Chief Risk Officer Polo Shao, the counterfeit product listing were removed across the company’s platforms through September this year.
Alibaba needs to maintain its credibility
The Hangzhou-based company revealed that it spent $160.7 million from early 2013 through November this year to block fake products and enhance consumer protection. The crackdown is part of Alibaba’s plan to build its reputation. Reducing the sales of pirated and fake goods will help the company maintain its credibility. It will also limit the risk of potential lawsuits.
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China’s largest e-commerce company raised $25 billion in its New York IPO. Its stock has gained more than 60% since going public. According to a report from the Office of the U.S. Trade Representative, China has a number of markets known for extensive availability of fake merchandise. Forecaster Research analyst Vanessa Zeng said that a good this about Alibaba is that it has set up a system to raise complaints about fake products.
Alibaba penalized more than 130,000 sellers
To safeguard against violations, Alibaba requires vendors to make deposits. It helps the company ensure that their products are genuine, letting customers and sellers rate each other. As of Sept.30, the Chinese company had penalized 130,000 sellers. It also teamed up with law enforcement agencies in tackling counterfeiting cases, which led to more than 400 arrests.
The company is also trying to attract Western brands. It has assured them of strict action against gray market or unauthorized selling once the brand opens its store on Alibaba platforms. High-end brands have expressed concerns that unauthorized sellers could damage their brands’ reputation and erode their pricing power.
Alibaba shares fell 0.10% to $108.66 in pre-market trading Tuesday.