Alibaba really wants to clean up the counterfeit goods that populate the many bazaars on its online marketplaces. There's just one not so small issue, according to Alibaba CEO Jack Ma. The fakes are just so darn convincing.
Specifically, Ma notes that Chinese-made counterfeit goods today have gotten better than the genuine article in some cases, complicating the effort to root out fakes on the country’s largest online shopping services.
There is a high cost to manufacturing in China to save money, which is why those factories that have been manufacturing all those goods have gotten hip to the fact that there is a lot of money to be made selling their own products straight to consumers.
“The problem is that the fake products today, they make better quality, better prices than the real products, the real names,” Ma said in Hangzhou, China. “It’s not the fake products that destroy them, it’s the new business models.”
“The exact factories, the exact raw materials, but they do not use their names," Ma followed up.
Counterfeiting has been a big issue this year for Alibaba, or at least for its headlines. It saw its membership in the International Anti-Counterfeiting Coalition suspended after a mass exodus of other members. Tiffany and Michael Kors were among brands that said Alibaba and its marketplaces are part of the problem with international counterfeiting, and that the Chinese eCommerce giant does not seem sincerely motivated to be part of the solution.
Ma's comments have also drawn criticism within China
“It’s inappropriate for a person of Jack Ma’s status to say something like this,” said Cao Lei, director of the China E-Commerce Research Center in Hangzhou. “For some individual cases what he’s saying might be true, but it’s wrong to generalize the phenomenon.”
Alibaba argued that it uses the data, technology and desire to help keep fake brands off its online marketplaces and that it has aided in the arrest of over 300 people, the destruction of 46 places where counterfeits are made and the confiscation of $125 million worth of products.
“We would love to work with the branded companies,” Ma said, adding that the company had around 2,000 staff working on the problem. “We cannot solve the problem 100 percent because it’s fighting against human instinct. But we can solve the problem better than any government, any organizations, any people in the world.”
Alibaba handles more eCommerce than Amazon and eBay combined. It expects to reach 423 million online shoppers around the world this year, mostly through its Tmall.com and Taobao Marketplace sites.
It also wants more users, lots more, with sights on 2 billion consumers by 2036 and double gross merchandise volume to 6 trillion yuan ($911 billion) by fiscal 2020.