Chinese e-commerce behemoth Alibaba has been widely criticized for turning a blind eye to the rampant sales of fake goods on its online platforms. In May, French luxury goods maker Kering sued Alibaba, accusing it of profiting from the sale of counterfeit items.  However, the company’s founder and Executive Chairman Jack Ma argues that Alibaba itself is a victim of counterfeiting.

Alibaba Itself Is A Victim Of Counterfeits, Says Jack Ma

Fake goods hurt Alibaba as well as China

In an interview with the state-run Xinhua news agency, Ma said fake products hurt the Hangzhou-based company as well as the Chinese economy. The sale of one counterfeit product could lead to a loss of as many as five customers. Earlier this month, the American Apparel and Footwear Association (AAFA) urged the U.S. Trade Representative to put Alibaba’s Taobao marketplace back in the U.S. government’s list of “notorious markets.”

The AAFA officials have accused Taobao of intellectual property violations even though Alibaba has vowed to restrain and prohibit fake goods on its platforms. Taobao was first put on the list of “notorious markets” in 2011, but was dropped from the list a year later as the Jack Ma-led company worked with brands to clean up the platform. The company uses QR codes, conducts random checks, uses big data, and offers an online complaint forum to eliminate fake goods from its sites.

Alibaba’s customer complaint rate is just 0.0116%

Ma told Xinhua that the customer complaint rate at Alibaba was at just 0.0116%, much lower than that of brick-and-mortar retailers. What’s more, the company offers refunds and compensation to customers if they buy counterfeit goods and shops in question get closed. Ma said the company spends hundreds of millions of yuan every year to identify and remove fake listings.

Though Jack Ma admitted that counterfeits have had a limited impact on Alibaba, he warned that it could “fundamentally harm” the Chinese manufacturing sector. Only improved laws could help honest businesses build competitive brands. Ma believes that the fight against fake goods is not a matter for Alibaba alone because counterfeits are sold almost everywhere.