Alibaba Group Holding Ltd’s Latest Attempt To Fight Fakes Triggers Controversy

Alibaba has been criticized by almost everyone from the Chinese state regulator to popular Western brands for rampant sales of fake goods on its e-commerce platforms. Earlier this month, French luxury goods maker Kering, which owns brands like Gucci, Puma and Bottega Veneta, filed a lawsuit against Alibaba for “encouraging” the sale of fake goods.

Alibaba to help build local brands

The Hangzhou-based online retail behemoth has taken a series of steps to curb counterfeits, but it’s nowhere close to getting rid of fakes on its sites. In its latest attempt, Alibaba has teamed up with 17 shoe manufacturers in the Chinese city of Putian to help cultivate home-grown brands online. It will offer “would-be counterfeiters” an alternative source of income, reports Reuters.

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Alibaba’s director of Internet security, Ni Liang, described it as a “key anti-counterfeit initiative.” The company plans to expand the initiative to toys, home appliances, bags, and other industries. The e-commerce giant believes that if it can help small manufacturers build local brands, they would turn away from fakes and serve as legitimate brands. Putian is known as the capital of fake shoes business.

Alibaba has helped shoe manufacturers on marketing and quality control, and trained them in online business. It has also organized promotional campaigns for these shoe brands. However, the initiative has drawn criticism from experts. Critics argue that the whole scheme is “misguided” and Alibaba should better focus on identifying and eliminating counterfeit listings from its own sites.

Alibaba is only trying to make a show

Shaun Rein, the managing director of CMR China, said that the company’s initiative is unlikely to be successful because it’s not easy to create a brand out of nowhere. Alibaba is only trying to “make a show” that it is trying to curb the sales of fakes, Rein added. He said that Alibaba makes money on the sale of legitimate as well as fake goods sold via its marketplaces.

The American Apparel & Footwear Association (AAFA) said the Chinese e-commerce giant should make it easy for brands to get listings of counterfeit goods taken off Alibaba sites.

Alibaba shares fell 1.60% to $91.77 at 1:18 PM EDT on Tuesday.