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 Ni Liang, who runs the Hangzhou, China-based company's
anti-counterfeiting operations, was speaking to Reuters days after
Gucci, Yves Saint Laurent and other luxury brands owned by
Paris-based Kering SA <PRTP.PA> sued Alibaba in New York, alleging
the e-commerce giant had knowingly made it possible for
counterfeiters to sell fakes.
Ni said brands had a better chance of succeeding in clamping down on
the pervasive counterfeit trade if they talked to Alibaba, instead
of suing it.
The company has been dogged for years by accusations that it doesn't
do enough to fight intellectual property rights violations and also
listed counterfeits as a risk before its record-breaking $25 billion
IPO in September.
"I strongly believe that spending money on lawsuits could result in
a completely different outcome than cooperating with us," Ni said in
an interview during a rare visit by the media to Alibaba's internet
security headquarters.
"If a brand doesn't cooperate with us we'll still fight fakes for
them... But when we cooperate we can fight better."
Alibaba employs some 2,000 employees to battle counterfeits. At its
internet security command centre, a computer screen covering an
entire wall tallies in real-time attempts by vendors to list
suspected counterfeits and shows which brands they were trying to
sell. Vendors known to have attempted to sell fakes are also
tracked.
Another 5,000 "volunteers" around the country, including sellers and
buyers, help identify vendors of phony goods, Ni said, adding that
Alibaba spent about 100 million yuan ($16 million) last year to
covertly buy products and check their authenticity.
Ni said this figure could rise to 150 million this year. "I believe
we spend more than any platform or company in the world on
anti-counterfeit efforts," he added.
REAL-TIME
Alibaba's two popular platforms are Taobao, on which consumers buy
and sell goods to each other much like they do on the marketplace
run by U.S.-based eBay Inc <EBAY.O>, and Tmall, an online shopping
mall that vendors use to sell their products, similar to Amazon.com
Inc <AMZN.O>.
The company, founded by Jack Ma, controls 80 percent of all online
retail in China, handling goods worth about $97 billion in the
quarter ended March 31.
Alibaba has so far signed more than 1,300 memoranda of understanding
on cooperation with brands, including Microsoft, Apple and Louis
Vuitton, to fight fakes, Ni said.
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Overall, Alibaba's platforms have seen a drop in the number of
counterfeits as a percentage of goods traded, Ni said, but added the
number of fake products discovered by the company rose two-thirds to
130 million last year from 80 million in 2012.
Counterfeit goods can be found on all Chinese e-commerce platforms,
despite efforts to fight them, because of the sheer scale of the
problem and the huge demand for these products.
No pictures of the internet security war room are allowed. An
Alibaba spokeswoman told Reuters they could not name any of the
brands being targeted by fraudsters but data on the tracking screen
showed more than 5,000 attempted listings of suspected fake products
had been detected and removed by noon.
A search for "Gucci" and "Guggi" on Alibaba's eBay-like Taobao site
also highlights the complexity of the problem.
Ads appear for products that look like genuine articles as well as
clear knock-offs. Ni said determining authenticity from photos is
notoriously difficult, and products that bear a likeness to the real
deal may not infringe upon intellectual property rights.
Brands and industry groups have complained that Alibaba makes it
difficult to remove suspect product listings. Ni said last year his
team removed 12 million listings after receiving complaints
involving about 20 million, but the process can be lengthy.
About 40 percent of all items flagged were either genuine or it was
impossible to conclude that they were fake, he said.
"We have to have an audit mechanism for complaints made by brand
holders, and this audit mechanism increases the time it takes to get
fake products pulled down," he said, adding that Alibaba intends to
double the number of cases it sends to the police for prosecution
this year.
(Additional reporting by Jane Lee in SHANGHAI; Editing by Miral
Fahmy)
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