Alibaba Group Holding Ltd Efforts to Stop Fakes Should be Acknowledged; Here’s Why

Alibaba is collaborating with different companies to implement new technologies in order to fight counterfeits.

Alibaba Group Holding Ltd Efforts to Stop Fakes Should be Acknowledged; Here’s Why

By: Abdullah Saeed Qureshi Published:
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Alibaba is collaborating with different companies to implement new technologies in order to fight counterfeits

According to a report published by the Organization for Economic Cooperation and Development, about half a trillion dollars’ worth of products were either fake and pirated back in 2013, with more than 84% of such goods originating in the mainland territory (including China and Hong Kong).

To counter the fakes issue, Eastman Kodak Company (NYSE: KODK) and a startup eApeiron are working to fight against the counterfeits with the e-commerce industry their main target. The companies are coming up with a technology “that places an invisible, digitally traceable marker on products to ensure they are authentic.”

Jeff Clarke, Kodak Chief Executive Officer, indicated that each and everyone knew that counterfeits are a problem. On the new technology, he said, “If you’re in charge of brand protection or you’re a security officer of a major brand, this means you’ve got a new tool.”

According to reports, eApeiron, a Miami based startup will be responsible for carrying out research, manufacturing, and engineering operations within Kodak’s business park located in Rochester, New York. Alibaba Group Holding Ltd., (NYSE:BABA), China’s e-commerce giant, which also holds a minority stake in the startup, will also sit on the board along with Kodak and will fully participate in the development of the latest technology.

According to an official statement released on eApeiron's website, Founder, Chairman and CEO of the startup Charles Fernandez, said, “We’re excited to introduce eApeiron to the world. Utilizing Kodak’s invaluable assets, talent, and over 100 years of leadership in materials, science and imaging technology expertise, eApeiron will be a game-changer for the e-commerce industry.”

Mr. Fernandez also added, “We look forward to leading the growth of science and technology in the rapidly accelerating field of e-commerce.”

Alibaba Group, which has long been under the limelight amid the counterfeit goods scandal, is also working hard to clean up its image. The latest technology could be useful for the Chinese e-commerce giant to further strengthen its fight against counterfeits. The company is also expected to increase its investment in the startup when “it appears to be a good fit.”

The Chinese e-commerce giant has invested heavily and devoted significant efforts to develop an unparalleled level of technology to put a stop to counterfeiting. The Chinese e-business goliath takes out full-bodied data processing and analytics to enable real time scanning of nearly 10 million new products a day by scrutinising key elements, such as valuing, trademarks, and purchaser and dealer personality. Notwithstanding such measures, the world's second biggest retail system is yet to satisfy its clients, exchange authorities, and in particular brand proprietors.

Even the company’s founder, Jack Ma, has opposed the trading of counterfeits on its e-commerce platforms, including Taobao and Tmall.com. For the past one year, Mr. Ma and his company have been striving hard to ensure that the fakes issue can be resolved quickly. Many international brands have criticized the Chinese e-commerce giant’s lack of efforts in dealing with the issue.

However, Mr. Ma has consistently denied such allegations and has said, “Failing to protect original designs, trademarks, and technology is akin to thievery, and it is detrimental not only to innovation but also to the integrity of the marketplace, and Alibaba will never forgive any act of stealing.”

Mr. Ma also emphasized that international cooperation was essential if a complete elimination of fake’s goods issue was desired. According to him, it is a long term crusade to fight against human greed with no short term fixes or easy ways out.

In addition, the results of the report highlighting that about 84% of globally traded fakes came from China and Hong Kong puts a significant question mark on the role of Chinese government. Many analysts have criticized the government of not taking a firm stand against the issue and doing little to resolve the issue other than a few warnings to the local e-commerce retailers. In fact, Mr. Ma has proclaimed that the Chinese government cannot ban his company even for two hours due to its significant economic importance. We believe that there are solid reasons as to why the Chinese government can do very little to take action against Alibaba. Mr. Ma has also claimed that Alibaba would become the fifth largest economy in the coming years, though many analysts have termed the claim insignificant.

In general, analysts have been keeping their own view on whether Alibaba is correct or wrong. Be that as it may, Mr. Ma never misses a chance to demonstrate that his organization buckles down every day to guarantee that its partners are ensured and its purchasers are not tricked by disgraceful fake items. He has also stated that to totally dispose off the issue, worldwide help is essential.

On the other hand, several industry experts have raised questions over Alibaba's respectability, demonstrating that the Chinese e-business monster should quit tricking brand proprietors, speculators, exchange authorities, and clients. "Credibility of the item is of key significance and Alibaba ought to give back its partners a good reaction or get prepared to lose clients."

China's e-commerce market has grown ten-fold driven by a significant increase in the consumption power of the country's white collar class and the spread of the Internet in the nation's rustic zones. As indicated by the report distributed by a leading research firm, Kantar Health, e-business deals of fast moving consumer goods (FMCG) in China have grown at a faster pace in the past few years. In 2015, the development was assessed at 37%, contrasted with 34% in 2014.

According to Alizila, in 2015, about 419 million people in the Mainland shopped online, mostly from Taobao and Tmall.com. With such rapid development in the retail market and with international brands eager to enter the Chinese e-commerce industry, it is important that Alibaba, which is the country’s largest retail platform, should clean itself from the stain of the counterfeit goods scandal.

Alibaba’s official blog Alizila says: “Alibaba offers these brands an ecosystem of related services from marketing to cloud computing to logistics in order to better target and engage consumers.” Companies like Pfizer, Unilever, and Hershey’s have all partnered with the Chinese e-commerce giant to enter and expand their operations in the world’s second largest economy.

However, we believe that Alibaba Group's latest efforts to eliminate counterfeits deserve international acknowledgement. Despite facing stiff criticism from both, the local and international community, the company is still able to hold its position as the market leader in the e-commerce industry, with many leading brands looking to it when they want to enter the Chinese e-commerce industry.

The fake goods issue should be given time to settle down. Instead of blaming Alibaba, international brands would do better to work along with the Chinese e-commerce giant and help it counter the trading of counterfeit goods on its leading online stores.