Chinese regulators put Singles Day merchants on notice over counterfeit sales

Dive Brief:

Regulators at China’s State Administration for Industry and Commerce have met with Alibaba, JD.com, Amazon.com Inc, Baidu Inc, Tencent Holdings and several others to warn them against selling fakes, touting false sales figures, or other dubious moves during the upcoming Nov. 11 Singles Day sales event, according to several news outlets.
"The SAIC will strengthen market supervision ... monitor and manage online marketplaces according to law, and together with the majority of industry players jointly create an online market environment of fair competition and an environment for online consumption that is safe and secure," the agency said in a statement posted on its website on Tuesday, the Financial Times reports.
An Alibaba spokesperson told the FT it is “the industry leader in combating unfair and illicit practices” and that it never tolerates “malpractices by merchants on our marketplaces.” A JD.com spokesperson said its “commitment to quality products and service has always been a key differentiator for us in this market and we employ additional resources for major sales to keep that promise even during the busiest periods.”

Dive Insight:

The SAIC has been critical of Alibaba and other Chinese e-commerce ventures for the copious amount of counterfeits sold on their marketplaces. Despite Alibaba's ongoing assurances, the issue has continued unabated, with the U.S. Securities and Exchange Commission, the U.S. trade office and several brands keeping the heat on.

U.S. and European trade groups recently called on the U.S. trade representative to return Alibaba to its blacklist, due to what brands say has been ineffective processes and results when it comes to curtailing sales of fake goods and pirated content. Last year, Alibaba didn't make the list, but its online marketplaces Tmall and Taobao were singled out as needing to work harder to excise counterfeits. Brands continue to report that Alibaba Group’s enforcement program is too slow, difficult to use and lacks transparency.

Speaking in June at at Alibaba Group's first investor day conference, executive chairman and founder Jack Ma did himself no favors when he said many knock-offs available on the company’s marketplaces are of better quality than the authentic products they mimic. Ma nevertheless pledged the company would continue to crack down on sales of counterfeit goods across its platform.

This year, Alibaba has stretched the blockbuster Singles Day sales event to include several weeks of promotions leading up to the Nov. 11 sale, which is expected to surpass even last year’s massive $14 billion in sales; that easily toppled its previous year's record of $9.3 billion. At a press conference in Hong Kong attended by dozens of representatives from global brands, including Macy’s, Costco, Metro, Watson’s, Swisse, Kanebo and eMart, Alibaba CEO Daniel Zhang called Singles Day “the global retail benchmark over the past seven years.”

But those massive sales included plenty of fakery, too, with reports of prices artificially raised ahead of the sale, resulting in fake discounts, and with counterfeit goods rampant.