Alibaba founder Jack Ma visited Trump Tower this week. This was not the only instance of a foreign business tycoon cozying up with the President-elect. During the meeting, the Chinese business leader promised to help create 1 million U.S. jobs by allowing small businesses to sell goods on Alibaba. However, experts who have spent several years tracking Chinese online commerce and the e-commerce giant are not buying Ma’s pitch, according to CNBC.
Ma is saying what Trump wants to hear
Harley Lewin, a partner at New York law firm McCarter & English, says, “Jack Ma is great at PR and Trump is a sucker for anybody who kisses his whatever. Ma is going to say that because those are the buzzwords that appeal to the incoming administration.”
The notion of a U.S.-based entrepreneur making a product and using Alibaba to distribute in a country with about 1.3 billion consumers is appealing, but the reality is not that simple, notes CNBC. To do business in China, U.S. companies face a lot of challenges, including the cost of moving goods, government subsidies for domestic products, and, worst of all, piracy.
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Why the Alibaba founder should not be believed
According to Ma, he is here to assist, but there is a problem. Alibaba’s platform is a haven for counterfeits. Taobao, the retailer’s consumer website, was put back on the “notorious marketplaces” blacklist in December by the Office of the United States Trade Representative. It was eliminated from the list in 2012 after it made efforts to protect intellectual property rights holders; however, the current levels of piracy and counterfeiting are unacceptably high, the USTR said.
After a popular product is introduced to Chinese counterfeiters, they can begin selling pirated products worldwide on eBay, Amazon or Alibaba. This means that Chinese counterfeiting is a problem that can spread beyond China, notes CNBC.
According to Rob Dunkel, founder of 3PM Marketplace Solutions, a question that Trump should ask Ma is, “Why should we believe you now?” as “the problem that Ma’s created has cost the U.S. millions of jobs.” Counterfeiters destroy about 750,000 jobs in the U.S. and cost domestic companies about $250 billion a year, according to the Counterfeit Report.
Nevertheless, the meeting between Ma and Trump was an initial one, and nobody can predict how much of this anti-China trade rhetoric morphs into policy until the President-elect takes office on Jan. 20.