Alibaba: Fakes Are Now Better Than Real Products

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At its first ever investor day event in Hangzhou, Alibaba tried to shore up investor confidence amid the slowing Chinese economy and the recent SEC investigation. Jack Ma said he expects to double the transaction volume on its e-commerce platforms to a record 6 trillion yuan ($912 billion) by 2020, almost double the 3.09 trillion yuan in FY2016. Alibaba expects to have 2 billion active users worldwide by 2036, up from 423 million in 2016.

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Alibaba vows to keep fighting fakes

Addressing concerns about rampant sales of fake goods on its platforms, Jack Ma said the company would do “anything to stop the fake products.” He showed his willingness to work with brands to fight counterfeits. The online retailer has about 2,000 employees dedicated to identifying and removing counterfeits from Taobao and Tmall. However, Ma emphasized that Alibaba “cannot solve the problem 100%.”

Jack Ma told investors that a major part of the problem was that the Made-in-China fake goods have gotten better than the real products. It complicates the effort to root out counterfeits. International brands contract manufacture their goods in China to boost margins. But the same factories have gained enough experience to make similar or better quality products, and sell them to consumers over the Internet.

Such a statement from Jack Ma was ‘inappropriate’

“They make better quality, better prices than the real products,” Ma said. International brands have long criticized Alibaba of profiting from the sale of fake goods. Last month, the company was kicked out of the International Anti-Counterfeiting Coalition (IACC) after several members of the non-profit organization objected to its entry into the group. Failing to remove fakes from its platforms could alienate shoppers and merchants abroad.

Ma’s comments could irk international brands and Chinese authorities that have been trying to improve the country’s image abroad. Cao Lei, director of the China E-Commerce Research Center, told Bloomberg that such a statement from a person of Jack Ma’s status was “inappropriate.” He may be true for some cases, but he can’t generalize the phenomenon.

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