American Apparel sends open complaining letter to Chairman of Alibaba Group
U.S. clothing group issued an open letter to Jack Ma, chairman of Alibaba Group Holding Ltd., complaining about a lack of progress at the Chinese e-commerce giant in combating the sale of fake goods on its sites
The letter released on July 17, 2015 and reported in the WSJ Wall Street Journal, and it is orignially written by the American Apparel & Footwear Association, which represents more than 1,000 clothing and shoe brands, shows continuing frustration among brand owners over what they claim is rampant selling of knockoffs on Alibaba’s platforms. Counterfeit goods have long dogged the company’s online shopping business but the issue has become more public since Alibaba’s record-setting USD 25 billion initial public offering in the U.S. in September.
The letter of July 17, 2015 to Mr. Ma, which was signed by the apparel association’s chief executive, Juanita Duggan, said that despite years of discussions on the issue, no “meaningful” outcome has been achieved.
In particular, the Arlington, Virginia (USA) headquartered group said Alibaba’s procedures for handling complaints from brand owners are overly onerous and opaque. The company should be able to remove listings of counterfeit products more quickly when brands request it, the group said.
“What Alibaba does in response to brand owners complaints is not transparent. It is incomprehensible,” Duggan said in an interview.
An Alibaba spokesman said he couldn’t comment on the letter because the company had not seen it, but said Alibaba is dedicated to the fight against counterfeits and uses technology like data mining to scrub its platforms of counterfeits. “We work closely with our government partners, brands and industry associations to tackle this issue at its source,” he said.
In April, a company spokeswoman said Alibaba had been working with the U.S. clothing group since 2012 on how to address the issue.
The letter to Ma marks the second time in three months that the clothing association has publicly criticised Alibaba’s anti-counterfeiting efforts. In April, the group issued public letters to U.S. securities and trade officials urging the regulators to press the issue with Alibaba, saying the Chinese company tolerates fake goods on its Taobao e-commerce site.
Alibaba’s Taobao platform connects mostly small vendors with Chinese customers. It also operates the Tmall platform, where mostly larger companies run online stores.
Alibaba revamped its process for removing listings of counterfeit goods with a “good-faith take-down program” that took effect April 1. It allows global brands it deems to have been highly accurate in flagging fake goods to Alibaba to have their complaints processed in one to three days, instead of up to seven days previously.
However, the U.S. clothing group said its members weren’t seeing significant results from such efforts. “Our brands tell us that they are having a dramatic lack of success, and all you have to do is go on the website and see the proliferation of counterfeits every day”, Duggan explains.
Some brands have reported encountering “nightmarish problems” when trying to get Alibaba’s help in removing listings of fake goods, she said. The chief complaint is that the process requires burdensome documentation and applies seemingly arbitrary and inconsistent standards.
For example, brand owners often receive no response when they flag suspected counterfeits, leaving the onus on the owners to learn the outcome, Duggan said. Such follow-up inquiries, however, are sometimes deemed as duplicative, frivolous complaints that count against a brand’s credibility with Alibaba and hurt its chances of remediation, she said.
The group called for changes to the counterfeit-removal procedure that include shortening the processing time to mere minutes. It also suggested that brand owners should be allowed to preapprove authorized sellers and wholesalers.
In the letter, Duggan expressed hope that she would be able to meet with Mr. Ma on this matter. Citing remarks Mr. Ma made recently on Alibaba’s expansion plans, Ms. Duggan said that if the company doesn’t address the “systemic presence of counterfeits,” it will end up “proliferating counterfeits world-wide.”
Alibaba has faced increasing pressure this year on the issue of counterfeits. In January, a powerful Chinese regulator made public a report accusing the company of failing to crack down on the sale of counterfeits on its Taobao shopping site. The document was later removed from the regulator’s website, prompting Alibaba to claim vindication, while the two sides agreed to work together to address the issue.
In May, Paris-based Kering SA, which owns Gucci and Balenciaga and other well-known luxury brands, filed a lawsuit against Alibaba that alleged the company encouraged and profited from the sale of counterfeits on its platforms. Alibaba said the complaint had no basis.