In recent history, China has had an unflattering reputation related to counterfeit production and intellectual property rights (IPR) infringement. This culture within China has even been embedded in the term “Shanzhai” and underlines the relaxed attitude towards this area. Since 2001, when China joined the World Trade Organization (WTO) progress has been made. Now the country is bound by the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, but the country still needs to work further protections to be enforced.
However, leading Chinese E-commerce giant Alibaba Group have recently unveiled a new online system that should increase the rate of success in detecting counterfeit goods being sold through their platforms. Previously the firm had come under significant pressure from foreign brand owners who believed the company were not doing enough to prevent sales of counterfeit goods.
While the chief platform governance officer Zheng Junfang at Alibaba conceded the company was unable to effectively detect all counterfeit products on the platform, she stated the ‘only choice is to join forces to fight counterfeit products’. Hopefully with the introduction of Alibaba’s new system, the authenticity of products should be easier to identify and if there is an infringement determined, it will be brought to the groups attention.
The new system also goes a step further, and will work in partnership with the owners of brands if there are suspicious products identified. Currently over 180 different brands, including Panasonic and Louis Vuitton have agreed to be part of the project.
In recent times, Alibaba Group has received large amounts of criticism globally for failing to actively manage counterfeits being sold on their platform. In May, Alibaba Group was suspended as a member from the International Anti-Counterfeiting Coalition, an organization that acts as a watchdog for the retail industry. Furthermore, other companies such as Kering (the French fashion company owning Gucci and many other brands) have previously filed lawsuits against Alibaba, insinuating they encourage counterfeit and knock-off goods as the e-commerce site profits from these sales.
While this new initiative can only be regarded as a positive move, the problems of IPR go much deeper than online e-commerce platforms. Currently it can be extremely difficult for a foreign brand owner to enforce their IPR if their products are being ripped off in China. Assuming the company has correctly registered their trademarks with the China Trademark Office, difficulty can still arise in receiving enforcement action. This can be partly due to the differentiation between what is considered a knock-off and what is considered to be a counterfeit. If a company is purposely creating counterfeits, defined as a product purposely trying to imitate another aiming to be passed off as authentic. Whereas a knock-off is mainly a refined product based on the original design, with many Chinese citizens not considering it to be stealing.
Before this issue is tackled effectively further change is going to be required and it must come from a level higher than the e-commerce companies. There are too many failings in the eyes of foreign firms in regards to the enforcement by Chinese authorities. There is also a culture issue, with many Chinese citizens not regarding knock-offs as a form of theft, which is ingrained within the countries culture and showcased by the previously mentioned term “Shanzhai”. While there has been plenty of evidence recently that the country is increasing its dedication to combating counterfeits, there is still a distance to go before foreign firms are completely satisfied.