Taobao getting tougher on fakes

PUBLISHED : Wednesday, 09 May, 2012, 12:00am
UPDATED : Wednesday, 09 May, 2012, 12:00am

Taobao, China's biggest online shopping services provider, aims to ramp up its crackdown on counterfeit goods, particularly fake watches, sold on its trading platforms.

According to an industry source, the Taobao group of companies was working with Swiss watchmakers Tissot, Omega, Rado and Longines to help mainland police bust online vendors selling knock-offs of their products.

Taobao has also removed 77 million products that infringe intellectual property rights (IPR) from its websites in the past two years.

'While we cannot discuss the specifics of our relationship with any company, it is true that we are co-operating with many brands, including luxury leather goods makers and Swiss watch companies, to take steps to protect their IPR from counterfeiters who attempt to use our platforms to traffic their wares,' said John Spelich, vice-president at Taobao parent Alibaba Group.

Spelich said Taobao expected 'stronger co-operation with IPR owners' to help drive the crackdown this year. Alibaba also controls Hong Kong-listed, the world's biggest business-to-business e-commerce firm.

Founded in March 2003, Taobao consists of three companies. Taobao Mall runs an online shopping portal where international brands and major retailers sell directly to consumers, while Taobao Marketplace is responsible for small consumer-to-consumer transactions, the Juhuasuan group-buying portal and social networking website Taojianghu. The eTao unit provides the online advertising platform and the shopping search engine that helps users scour the internet for products and services.

The combined revenue of the Chinese-language Taobao retail platforms is forecast to reach 1 trillion yuan (HK$1.27 trillion) this year, according to Alibaba's estimates. About 98 per cent of sales made on Taobao Mall, which has more than 50,000 online merchants, and Taobao Marketplace, with more than 370 million registered users, are to consumers on the mainland and in Hong Kong, Macau and Taiwan.

Taobao and Swatch Group brand Tissot started working together on IPR in February after two buyers filed separate complaints with Taobao against two online stores that allegedly sold fake Tissot watches, according to the industry source.

Taobao found the two online accounts were both registered to a vendor named Li Aizhong, from Jiangsu province, who shipped the goods from Guangzhou, in Guangdong province. Tissot joined Taobao in reporting the offending merchant to the Guangzhou police after confirming the watches were counterfeit.

Police arrested Li on February 24 and charged him last month with selling fake goods. Taobao found that Li, who is awaiting trial, had sold 600,000 yuan worth of fake Tissot watches from his two online stores. The legal counsel of Swatch's mainland arm declined to comment.

Spelich said Taobao had a multi-faceted approach to the IPR issue, including enforcement, education, consultation, and gathering feedback from customers and IP owners to improve its platforms. 'We are doing this because it's the right thing to do,' he said.

In a report in March last year, the Office of the United States Trade Representative included Taobao in its Notorious Markets List of 33 websites and physical sites that were the subject of enforcement action over counterfeiting and piracy.

But the agency, which develops US trade policy, recognised in its December Notorious Markets report that Taobao had made 'significant efforts' to remove IPR-infringing products and vendors from its trading websites.

In a filing with the US trade representative last February, Spelich said Taobao should no longer be part of that list because of its initiatives against IPR violations.

Taobao, for example, established an information safety department charged with barring the sale of counterfeit goods on its trading platforms. There is also a rating system for consumers to provide feedback on online merchants.

Last year, Taobao worked with 89 international brands in what it described as 'a covert clean-up operation' at its trading websites, including with Louis Vuitton and Levi's.

-- Additional reporting by Sophie Yu


Number of phony goods Taobao says it has removed from its websites over the past two years