They say a leopard can’t change its spots, and it seems that neither can Jack Ma!
Despite making regular promises to support brand owners in helping them police the sale of counterfeit items on marketplace sites such as TaoBao, Alibaba’s Ma has now claimed that many counterfeit goods are better than the real deal. “The problem is the fake products today are of better quality and better price than the real names. They are exactly the [same] factories, exactly the same raw materials but they do not use the names.”
It would be very easy to fume on behalf of brand owners about this statement; the deep-rooted culture of the acceptance of counterfeiting within Alibaba at an executive level, and the total disregard for national and international intellectual property law. You could also argue that Jack Ma’s statement is in some ways an official acceptance that counterfeited products have an executive-sponsored place on his websites – but let’s look past that. There are wider criminal, consumer and social issues that come from the sale of counterfeit goods.
Ma’s statement indicates that counterfeiters are producing good quality and safe products that are simply more competitive than the branded equivalent – comparable to the supermarkets’ ‘own brand’ products. However, whereas supermarkets need to meet the same stringent quality controls as branded goods, no such controls are placed on counterfeiters.
A UK-based daily newspaper investigation found fake make-up containing up to 200 times the safe limit of chemicals – including arsenic, lead, mercury, copper and cadmium.
Further, supermarkets add economic value back into the global economy by hiring taxed employees, renting production facilities and equipment, managing distribution and sales networks, and, in most instances, paying corporate tax. Counterfeiters are criminals who operate outside of standard financial processes based on cash transactions where labor is exploited and tax is avoided, thus adding very little to the gross domestic product or international trade.
A 2015 study by Havocscope estimated that counterfeiting and piracy cost the UK, German and French economies a total of £58 billion a year, and 85,000 jobs.
Let’s also explore the mistaken belief that these counterfeits are being produced in an honest, entrepreneurial manner. Whilst the same factories may be being used, the people who are controlling the counterfeit overrun are very different. Unfortunately, the link between organized crime groups and counterfeit goods is very well established.
1,260 organized crime gangs involved in counterfeiting were broken up in China in 2013 alone.
A recent OEC report estimated the global benefit of counterfeiting to organized crime at $250bn a year.
In a recent report by INTERPOL, Secretary General Ronald Noble showed evidence demonstrating that intellectual property crime, such as counterfeiting, is becoming the preferred method of funding for a number of terrorist groups.
So whilst Jack Ma would like you to believe that you’re simply buying a ‘brand inspired’ quality product that’s safe for the consumer, that’s been produced under regulated conditions meeting acceptable corporate social responsibility standards, and where the only victim is a multinational conglomerate, the reality is very different.
The IP Crime Group annual report (2014) found that 90% of consumers see counterfeiting as morally wrong. So what’s the corollary? Perhaps we should conclude that 90% of consumers will deem trading with Alibaba as morally wrong? Jack Ma take note.