Alibaba Blames Poor Laws, Enforcement For Spread of Fakes

BEIJING, China — China's Alibaba Group Holding Ltd on Monday blamed ambiguous laws and lax penalties at the root of its difficulties in enforcing laws against counterfeiting, as the firm lobbies to be taken off a US blacklist of marketplaces notorious for fakes.

In a statement, the e-commerce giant said it reported almost 4,500 leads on counterfeiting operations to authorities in 2016, but they resulted in just 33 convictions, a vast majority of which secured probation.

"Ambiguities in the law have meant that enforcement officers have found it difficult to classify and quantify cases of counterfeiting, let alone commence legal proceedings," the firm said.

The minimum value limit for reporting an illegal counterfeiting operation is 50,000 yuan (5,860 pounds), it added.

Alibaba ramped up its anti-counterfeit campaign after its top e-commerce platform, Taobao, was returned to an annual U.S. Trade Representative blacklist of "notorious marketplaces" in December, following a four-year absence.

The firm sued two vendors in January who allegedly sold fake Swarovski watches on Taobao, marking its first legal action against counterfeiters, in which it claimed 1.4 million yuan in contract and goodwill violations.

Monday's appeal was not aimed directly at Chinese lawmakers, an Alibaba spokeswoman said. "It's an appeal to the public at large, since counterfeiting is a society-wide issue," she added.

Alibaba, which has an active user base of around 500 million, has said it wants to tap China's entire $4.8-trillion retail economy by developing data-driven management tools for retailers and brands.

China's e-commerce market is expected to average around 18 percent annually until 2020, according to consultancy Bain & Company, compared with an average rate of 35 percent during the preceding four years.

By Cate Cadell; editor: Clarence Fernandez