New law to fine Alibaba and JD for selling fakes

Alibaba’s annual maker festival showcases original designs sold on its Taobao marketplace / Photo credit: Alibaba

China has passed a new ecommerce law that makes online stores accountable for selling knockoffs.

The law, which began its legislative proceedings in late 2013, will take effect starting January 1, 2019.

Up to now, only individual merchants were held liable when caught selling fakes. The new rule requires ecommerce operators to take timely measures once a violation has been reported. Any failure to act promptly will subject the marketplace firms to penalties of up to US$30 million.

The move represents the authorities’ latest push to combat China’s online counterfeit problem, which persists despite ecommerce players’ ramped-up anti-piracy moves in recent years.

A highlight of the incoming law is its inclusion of unconventional online shopping channels like social media providers that are defined as “ecommerce operators.” That means WeChat and popular video app Douyin, which are both used to sell things, will come under the same scrutiny as Alibaba and JD.

Blacklisted

Alibaba said in May that it seized US$700 million worth of fakes in 2017, up 60 percent from the previous year. Meanwhile, takedown requests were down 42 percent. In January 2018, however, Alibaba’s Taobao marketplace was lambasted for the second year in a row by the US over suspected counterfeits listed for sale.

Alibaba’s main rival JD, which champions the authenticity of its goods sold from brands to consumers, was caught up in a relatively rare counterfeiting scandal of its own in March.

Pinduoduo, the rising challenger in China’s ecommmerce arena, was sued by a US diaper maker ahead of its recent New York initial public offering and probed by Chinese regulators over alleged piracy immediately after its floatation.

Tech in Asia has contacted Alibaba, JD, and Pinduoduo, but has yet to receive replies.

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