Alibaba Facing Counterfeiting Trouble: An Opportunity for Amazon Sellers

By: Rob Segall, Paralegal, AmazonSellersLawyer.comRobert Segall

Robert is a paralegal with Amazon Sellers Lawyer. He has a bachelor’s degree in business administration with a focus in finance and is currently pursuing his Juris Doctor at Maurice A. Deane School of Law. Robert’s financial background and experience provide him with unique insight into the needs of Amazon Sellers and allow him to efficiently identify and serve client’s needs.  

The U.S. Office of the Trade Representatives (USTR) issued a report this Wednesday (Dec. 21) which added Taobao, Alibaba’s third party marketplace platform to its list of “Notorious Markets” for counterfeit goods. This is a major step in the wrong direction for Alibaba, who has been lobbying American officials since 2012 to get the company removed from the list. Both brand owners, and consumers are growing tired of the counterfeiting problem and are demanding higher quality goods and protections.

What does this mean for Amazon sellers? It means take advantage. E-commerce law in China is developing exponentially and as consumers are growing increasingly frustrated, now is the time to make your mark in China with the Amazon platform. Over the last several years Alibaba claims to have been working towards eliminating the counterfeiting problems, however these efforts were clearly not enough to keep them off of the USTR list.

Brand owners are frustrated, and rightfully so; not only does Alibaba appear to be welcoming counterfeiters, but the platform does not have a proper system in place for rights owners to remove infringing products or to prevent further infringement. Despite efforts to limit the problem, counterfeiting and piracy levels on the platform are “unacceptably high” according to the USTR. Big names like Gucci and Yves Saint Laurent have already sued Alibaba in United States federal court claiming that the company encourages the counterfeit sales that plague the industry.

Alibaba is publically disclaiming the USTR decision, calling it counterproductive and suggesting that their placement on the list may have something to do with U.S. president elect Trump and the feelings he made public regarding his views on China.

Placement on the “Notorious Market” list has implications outside of China as well. Alibaba has been trying to work its way into other countries, including the US, but its tainted name is impeding upon that progress. This is even better news for Amazon sellers; Alibaba is beginning to feel the effects of its failed efforts to fight counterfeiters. More and more users (both buyers and sellers) are turning away from Alibaba and Taobao and looking towards other options. As a result, Alibaba, has been trying push users towards other services they offer, but those efforts are failing too. Consumers are tired of receiving counterfeit products and businesses are fed up with the lack of protections. So, now is the time to give the consumers what they want and take this opportunity to establish your brand and its products in China.

Alibaba also operates the Tmall platform in China, which essentially is a marketplace with more of a focus on larger sellers and big brands like Nike or Hasbro. While Tmall was also once a dominate e-commerce force in China, businesses on that platform are reporting losses as well, citing other websites and platforms as the cause. Other platforms like Amazon are simply outperforming Alibaba in terms of counterfeiting protection, consumers are noticing, and Alibaba is steadily losing its market share as consumers seek out new options for shopping online.

The bottom line is that Alibaba has not stepped up to the plate in terms of protecting its customers or its sellers. As the law in China is evolving and consumers are seeking out other options for e-commerce, Amazon sellers should seize the opportunity and begin to establish their brands in China. Registering your IP rights with the World Intellectual Property Organisation will allow you to enforce your rights in China (link to article), and the Amazon platform has worldwide recognition as a top-level e-commerce platform that will provide exposure for your products. Staying ahead of the curve, remaining educated and capitalising on this opportunity should ultimately prove not only to grow your brand, but also will put more money in your pocket.