China's Taobao fights piracy as it courts foreign partners

By Owen Fletcher, IDG News Service |  Legal

Taobao.com, a fast-growing e-commerce hub in China where pirated goods are sometimes sold, has fought harder against fake goods sold on its platform in recent months as it seeks partnerships with foreign companies, analysts said Thursday.

The remarks came as Bestseller Fashion Group announced it would open a flagship store for its popular Danish clothing brand Jack & Jones on Taobao, which is owned by Alibaba Group. Dan Friis, cofounder of the clothing group, also told reporters at a briefing that Taobao has strengthened its stance against counterfeit goods, though the sale of those goods may have helped boost the site's growth in past years.

Taobao lets users sell items at auction or in online retail stores. The site, like its sister operations including business-to-business platform Alibaba.com, is booming as more Chinese users get online. It reported a transaction volume equivalent to US$11.8 billion in the first half of this year, nearly twice the volume from one year earlier.

Chinese users in the past have turned to Taobao to buy knock-off products ranging from clothes to Xbox games, though the same items are also widely sold on street corners and in shops across the country.

Alibaba Group has shown an ambition to expand overseas and understands that association of its brands with counterfeit goods is a threat, said Dave Carini, founder of technology consultancy Maverick China Research. While Taobao has never been a primary source for pirated goods in China, cracking down on them will help it gain the trust of foreign companies, Carini said.

Taobao has closed hundreds of member shops for selling knock-off items this year, a step up in enforcement from the past, said Liu Ning, an analyst at Beijing research company BDA.

Taobao chief financial officer Daniel Zhang has said the company aims to expand abroad in the long term but that it is currently focused on introducing more foreign brands to its China platform. A group of Alibaba Group senior executives visited the U.S. earlier this year to discuss potential partnerships with companies including eBay, Google and Amazon.com.

Taobao immediately removes auction items when contacted by a brand owner who presents evidence that the items are pirated, a Taobao spokeswoman said. The site also screens new listings itself, but 300 million items are for sale on Taobao at any time, and fake products still appear.

"I can't say that it has been eliminated," said Carini. "I don't think it will be eliminated any time soon. This is China, after all. But it is slowly improving."

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