Dive Brief:

• A week after Alibaba Group executive chairman and founder Jack Ma said that many knockoffs available on the Chinese e-commerce giant's marketplaces are of better quality than the authentic products they mimic, he is now seeking to walk back and clarify his remarks.

• In an opinion-editorial published Wednesday in the Wall Street Journal, Ma said the press had taken his words out of context, explaining that he was simply describing changes in manufacturing and direct sales from manufacturers, and not defending those changes.

• Ma also stated unequivocally that Alibaba is making every effort to combat the sales of counterfeits.

Dive Insight:

Ma's speech last week at Alibaba's first investor day conference further rankled brands that have been crying foul over sales of counterfeit goods on its sites, forcing him to clarify his remarks. Ma now says he meant that the internet and the changing manufacturing landscape in China (where many factories are shuttering or shrinking in the face of declining demand as operations move elsewhere) are leading some manufacturers to “innovate” and produce their own, often high-quality goods to sell directly to consumers.

“Many of these firms have developed their own online-only brands with quality products for Chinese consumers,” Ma said. “What I said last week was that these trends may challenge the business model of some established brands. That’s reality.”

Ma went on to call counterfeit goods "absolutely unacceptable," and said brands and their intellectual property "must be protected,” adding “Alibaba is only interested in supporting those manufacturers who innovate and invest in their own brands. We have zero tolerance for those who rip off other people’s intellectual property.”

But Ma's message is now muddled, as he seems to have acknowledged. And it's further complicated by the fact that Alibaba and its marketplaces continue to sell a high volume of counterfeit goods despite his repeated vows to crack down.

Alibaba has been under pressure for years—from brands as well as officials in the U.S. and China itself—to improve its record in counterfeit sales. Last year, Alibaba assisted authorities in the arrests of 300 people, the takedown of counterfeit-making factories, and the confiscation of fakes worth $125 million, according to Alibaba president Michael Evans. Last year Alibaba itself also purchased more than $15 million suspected fake goods, Evans said, adding that its Alipay payments unit froze suspected counterfeiters’ accounts to the tune of $72 million. In addition, Alibaba customers who bought fakes were refunded some $12 million last year, Evans noted.

Even so, brands continue to report that Alibaba’s enforcement program is too slow, too difficult to use and also lacks transparency, according to a report last year from the U. S. Trade Representative. “Brand owners continue to report Alibaba platforms, particularly Taobao, are used to sell large quantities of counterfeit goods,” according to that report. 

A Tech in Asia editorial published Thursday said that counterfeit goods were a lot easier to find through Alibaba eight or nine years ago, but are still rife on its sites, and far easier to find than on Amazon or eBay. “The day Alibaba can clean things up to the point that it’s difficult for me to find fakes across a variety of item types like this, I’ll agree with Jack Ma’s editorial,” Tech in Asia editor C. Crust wrote. “But when that day comes, Jack Ma won’t need to write an editorial about fake items any more than [Amazon founder] Jeff Bezos needs to. The true sign that Alibaba has conquered fakes may be that it stops having to defend itself against criticism about them.”