Combating counterfeit sales

Chinese online sales platforms leading the way… or are they missing a simple trick?

In this article Stuart Adams examines some of the ‘best in class’ steps that leading Chinese online sales platforms are taking to tackle the supply of counterfeits. But are even the most active missing a trick? Why is the demand side of the problem – customers – not being fully addressed?

Efforts by sales platforms in China

Among the seemingly never ending stream of white noise that passes through my inbox, a couple of gems stood out a few days ago. Both emanating from China. Links here if you want to see the full text:

Fighting China's counterfeits in the online era

Online platforms fight fakes

The first, from China Economic Net, actually dates back to September last year and is a short piece highlighting Alibaba’s efforts to keep counterfeits off their platform. It sounds very impressive:

They say they have a team of shoppers making test purchasers. Not just a few – they claim about 100,000 purchases per annum, spending over $15m. And crucially, these are not random purchases – these are, they claim, targeted purchases, using their own data on things like product ratings and consumer disputes to try to make purchases from sellers about whom suspicions are raised for whatever reason.

Alibaba go even further, they say, by co-operating with various law enforcement agencies to assist in getting after some of the organized gangs involved in the trade in counterfeits.

This is all very laudable.

The second, also from China Economic Net, but quoting China Daily as it’s source, commented on the efforts being made by several of China’s online retailers. The article comments favourably on the efforts of Alibaba/Taobao (and others) and quotes some very interesting statistics. Standout for me was the claimed speed at which complaints from rights holders about listings are now dealt with (under 24 hours in 95% of cases) which is a massive improvement on just a couple of years ago and must involve a huge investment in staff and systems. There is also a very interesting claim to having a fund of over $20m available to reimburse consumers who purchase counterfeits.

Regarding another platform – JD – the article says they have positive vetting of all vendors, coupled with regular checks to ensure quality. Again, this must require significant investment.

The China Daily piece contrasts the lauded efforts of Alibaba, JD and others with an online discounter called Pinduoduo. Pinduoduo have been the subject of a highly critical report from the State Administration for Market Regulation, who have concluded that they not doing nearly enough to manage their platform and has referred them to the Shanghai AIC for further investigation. It’s very encouraging to see “bad” sites being called out like this.

But what about raising consumer awareness to stifle demand?

In amongst all of that commentary on these platforms in China – all of which is about making life difficult for the supply side - what really caught my eye was a couple of statements from Alibaba’s Vice President, Sun Jungong. Having noted that Alibaba’s own analysis shows that some consumers purchase counterfeits knowingly (shock, horror!) Sun opines that raising awareness among consumers is essential to fight counterfeiting.

I could not agree more!

But what Sun doesn’t say, and I’d have loved it if he had, is that Alibaba, and all the major sales platforms, are ideally placed to play a massive role. It’s via their sites that so much of the trade in counterfeits is conducted, with every screen and every click providing an opportunity to get a suite of anti-counterfeiting messages in front of consumers. It can’t be beyond the wit of the platforms, in conjunction with rights owners and rights owners’ organisations, to come up with, and regularly refresh, such a suite of messages aimed at dampening demand. And all for a fraction of the sums being invested in making life difficult for the suppliers.