Ali Baba and the Chinese Thieves

Trump says one of China’s most notorious thieves of American IP is a “great, great entrepreneur”
By Gwynn Guilford

Making America great again with thieves

Right now, a “Make America Great Again” hat will set you back $25 on the official merchandise site for president Donald Trump. 

Vendors on Taobao—the Chinese online marketplace run by e-commerce giant Alibaba—will sell you one for as little as $0.50.
This is exactly the kind of Chinese intellectual property violation that Trump decried on the campaign trail. 

With good reason, it seems: Two weeks ago, the US government accused put Taobao back on its “Notorious Markets” list for rampant counterfeiting.
But if this came up when the president met with Jack Ma, the head of Alibaba, at Trump Tower earlier today, neither said.
“It was a great meeting,” Trump said in a press conference after the meeting. 

“Jack and I are going to do some great things.” 

He praised Ma as “a great, great entrepreneur, one of the best in the world.”

Instead of counterfeiting, the headline-grabbing topic was Ma’s vow to create 1 million American jobs over the next five years. 

The “Alibaba job boom,” is how Sean Spicer, Trump’s pick for press secretary, dubbed it.
The meeting makes Trump look good—like his much-vaunted negotiation skills forced “China” to come to the table and invest in American prosperity. 

“Yet again, President Donald Trump started another day by creating millions of jobs for Americans,” crowed Townhall, a pro-Trump news site.
But this was already in the making: Ma unveiled a similar-sounding US job-creation plan in June 2015, at an event in New York. 

He claimed at the time that all these new jobs would come from the full-time employment of small businesses—particularly farmers and boutique clothing designers—selling to Chinese customers via Alibaba’s e-commerce platforms.
As for Alibaba, its shares jumped 1% on the news of the Trump meeting. 

Ma’s meeting with Trump also was some free lobbying with the US government, on which the company has spent $2.4 million since 2012 (paywall).
And Alibaba could definitely benefit from a warmer relationship with the US government.
One priority is getting Taobao off the US government’s Notorious Markets list; though the list doesn’t directly penalize companies, it damages their credibility.
There’s also the investigation by US Securities and Exchange Commission into whether Alibaba’s accounting is violating federal laws.

It’s worth noting that Trump’s nominee to head the SEC, Jay Clayton, led Alibaba’s record-breaking $24-billion IPO on NYSE in 2014, as a lawyer at Sullivan & Cromwell LLP representing the IPO’s underwriters.

Empire of Fakes

Alibaba's counterfeit woes won't stop any time soon
By Adam Minter

It's hardly a happy new year for Alibaba Group Holding. 

Just before Christmas, the US Trade Representative added Alibaba's Taobao e-commerce site to a list of "notorious markets" that traffic in counterfeits.
That's an unseemly place for a publicly held company: Other members include a Chinese shopping mall that specialises in counterfeit leather goods and a Paraguayan border market rife with organised crime that hawks everything from fake Ray-Bans to knockoff DVDs.

Spot a fake: Ray Gordon, manufacturing director at Decor, with a real Decor product.

Alibaba isn't keen to be associated with this motley group. 

But like Amazon.com, eBay and other online marketplaces dependent on Chinese manufacturers, it has struggled to maintain its integrity against an onslaught of counterfeiters. 

Without an aggressive crackdown by China's government, these marketplaces won't stand much of a chance against the fakes.
By many measures, counterfeiting is one of China's leading industrial sectors. 

A study by the US Chamber of Commerce found that it brings in about $US396 ($543) billion annually, representing some 12 per cent of China's total exports and 1.5 per cent of its gross domestic product. 

Last year, when just one Chinese province decided to crack down, it shut 417 "manufacturing and sales locations" with stock worth more than $US200 million.
This large-scale criminal enterprise has surprisingly staid origins. 

The global outsourcing boom that started in the 1980s brought foreign factories and expertise to China. 

Workers at those factories excelled at making iPhones and other consumer goods, but also learnt how to knock them off.
These days, it's not unusual for a new product to face counterfeit competition in China within days of its release – or, in the case of the iPhone 6s, days before its release. 

In some instances, as with last year's hoverboard craze, the knock-offs proliferate so quickly that the original patent and brand owners are forgotten in favour of generic "made in China" versions.
This parallel economy is no secret. 

Last year, Alibaba co-founder Jack Ma bluntly told a gathering of retailers that counterfeiters use exactly the same factories and raw materials as legitimate manufacturers. 

Local governments tend to look the other way – or worse. 

A 2009 diplomatic cable released by WikiLeaks reported that China's economic downturn at the time was weakening efforts to enforce intellectual-property protections. 

In one passage, it described how Apple's effort to shut down a MacBook counterfeiting line was rebuffed because it would threaten "100 local jobs."
That's pretty sizeable for a knockoff operation. 

I've visited counterfeit iPhone "manufacturers" in Shenzhen that consisted of only a handful of family members. 

They would expertly assemble parts into reasonable facsimiles for sale via online marketplaces such as eBay, Lazada and Taobao. 

Though none of these marketplaces welcome counterfeiters, they do welcome small Chinese manufacturers – and distinguishing between the two is often difficult.
Amazon, for instance, has tried to fight off a growing problem with fakes, but in doing so has risked disqualifying legitimate small retailers, who use the site to sell everything from paper clips to pillow covers directly to consumers worldwide. 

Such entrepreneurs reduce costs for customers and constitute an important and fast-growing segment of Amazon's online marketplace.
As a China-based company, Alibaba has greater exposure to counterfeiting than Amazon does, given that Chinese are generally quite price-sensitive and less averse to purchasing fakes. 

But it isn't helpless. 

For one thing, it could simplify its procedures for brand owners to report instances of counterfeiting. It could also use its global profile and political leverage to push the government to prosecute more counterfeiters.
Although that might be risky for Alibaba, the alternative is to resign itself to a reputation befitting a notorious flea market – not one of the world's most influential e-commerce companies. 

Given the choice, Alibaba shouldn't hesitate to prove it is a little better than the counterfeiters.

Mapoleon, Emperor of the Fakes

Empire of Fakes

China's Alibaba back on US counterfeits blacklist
BBC News

Chinese empire of fakes

Chinese e-commerce giant Alibaba is back on the US's "notorious markets" list over counterfeit goods sales.
Alibaba was taken off the list four years ago, but US authorities say the firm's online platform Taobao is used to sell "high levels" of fake goods.
The company has rejected the allegations, insisting it polices its market place better than in the past.
The firm also suggested the "current political climate" in the US might be why they are back on the list.
US President Donald Trump had, during his campaign, repeatedly accused Chinese firms of stealing intellectual property.
Alibaba Group President Michael Evans said he was "disappointed" by the decision and questioned whether it was "based on actual facts or was influenced by the current political climate."
The Chinese online retailer and its market place Taobao have long been accused of being a platform for counterfeit goods.

Alibaba was suspended from the International Anti-Counterfeiting Coalition in May

Taobao fake goods

Taobao said earlier this year it had tightened controls on its sale of luxury goods, requiring sellers to show proof of authenticity.
In May though, Alibaba was suspended from the International Anti Counterfeiting Coalition (IACC) watchdog over piracy concerns.
More than 250 members, including Gucci America and Michael Kors, had threatened they would leave the IACC in protest at Alibaba's membership.
Alibaba -- by far China's biggest online retailer -- floated on the New York Stock Exchange in September 2014 and broke records by raising $25bn.

Nation of Fakes

More Trade Groups Want Alibaba Back on USTR’s Piracy List

By Kathy Chu

Alibaba staff?

A dozen trade groups are joining the call for Chinese e-commerce giant Alibaba Group Holding Ltd. to be put back on a list of global marketplaces known for counterfeit and pirated goods.
In a letter to the U.S. Trade Representative Wednesday, these trade groups—including the Federation of the Swiss Watch Industry, the Council of Fashion Designers of America and the Travel Goods Association—said they were making the request because an “enormous amount of counterfeits” remain on Alibaba’s sites, especially its flea-market-like Taobao shopping platform.
The USTR’s annual list highlights physical and online markets “notorious” for fakes.
While 18 trade groups signed Wednesday’s letter to the USTR, a handful— including the American Apparel & Footwear Association and France’s Unifab—had already submitted individual comments to the agency, saying Alibaba needed to do more to address fakes on its platforms.
“This is the largest collection of organizations that have been willing to stand up and say, enough is enough” with counterfeit-goods sales, said Rick Helfenbein, chief executive of AAFA. 

The trade group for about 1,000 brands is leading the effort.
“Alibaba has had plenty of opportunities to make it right,” Mr. Helfenbein said.

Alibaba is preparing for its largest online-shopping day of the year on Nov. 11, the Chinese equivalent of Cyber Monday in the U.S. 

Alibaba’s online-shopping platforms are among the largest in the world, with merchandise volume of $485 billion in the fiscal year ended March 2016.

In 2012, the USTR removed Alibaba’s bazaar-like Taobao platform from the agency’s list of offending marketplaces, citing improvements Alibaba made in monitoring counterfeit goods on the platform.
But the agency said last year it had grown “increasingly concerned” about the sale of counterfeit goods on Alibaba’s platforms and would look for signs this year that Alibaba has taken steps to address the problem.