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Jack Ma said for every fake sold Alibaba loses five customers

Siyang Wang

Alibaba has long been accused of allowing merchants to sell fake goods on its e-commerce platforms. In an interview with Xinhua News Agency on Monday, Jack Ma, the executive chairman of Alibaba Group, demonstrated Alibaba’s determination to rid its online shopping malls of counterfeit goods.

“Alibaba loses up to five users for each fake product sold on our trading platforms. Alibaba is also the victim of counterfeit products,” said Jack Ma, in response to the accusation that Alibaba built its empire by allowing the sale of counterfeit products on its e-commerce platforms.

Unlike Amazon, Alibaba does not possess any of the merchandise sold on its e-commerce platforms and therefore has little control over specific products offered for sale. The problem of counterfeit products has haunted the world’s largest e-commerce platform since its inception.

Photos from Baidu Image

Earlier this year, China’s State Administration of Industry and Commerce harshly criticized Alibaba for permitting the sale of counterfeit goods and said the company failed to protect consumer rights. According to SAIC’s random inspection results for the second half 2014, 62.75% of Taobao products were counterfeit.

The scandal caused Alibaba’s stock price to fall over 2% to $100.47 at one point. The company quickly responded by issuing a statement accusing the regulator of bias and misconduct. Alibaba’s current stock price is USD 68 per share, compared with an earlier high of USD 119.45.

“Fake goods are like germs in the air. The right way to deal with this problem is to first accept it and then defeat it,” Jack Ma said. In his eyes, fake goods existed long before online trading platforms were built. The existence of counterfeit goods has more potential to severely damage China’s manufacturing sector than it does any of Alibaba’s properties.

He believes that the effort to reduce and eliminate counterfeit products is not only a battle for Alibaba.“We need to rely on a well-established legal system to significantly increase the penalties for counterfeiters and to empower those with the capability to build their own brands.”

According to Jack Ma, Alibaba has made sincere attempts at clearing counterfeit goods from its trading platforms going back to 2008. So far, Alibaba has poured more than one billion RMB into this mission. The company uses big data to detect fake products and then hands over leads to its quality control department.

Ma said that the company aims to provide opportunities and resources for small businesses to build their own brands, so as to stop them from counterfeiting.

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