Alibaba Hires Ex-Apple Investigator To Tackle Its Counterfeit Goods Problem

20 Jan 2016 | Author: | No comments yet »

Alibaba Hires Ex-Apple Investigator To Tackle Its Counterfeit Goods Problem.

Matthew Bassiur is leaving his current role as Vice President, Deputy Chief Security Officer at Pfizer to take up the position of Vice President, Head of Global Intellectual Property Enforcement at Alibaba in January.Cash-strapped Star Wars fans can pick up Darth Vader figurines and light sabers for as little as US$4.59, Tom Brady jerseys go for about a 10th of those on the National Football League’s store, a pair of red Beats Solo headphones can be had for just US$107 —- about half its official price.The post-1980s generation is becoming the backbone of the Chinese economy, not only because of its growing contribution in the workforce, but also because of the money it spends online, according to a study.Alibaba has hired a former counterfeit investigator for Apple to lead its charge to wipe out fake goods from its e-commerce platforms amid ongoing criticism from regulators.

Billionaire chairman Jack Ma (馬雲) is struggling to shake the company’s reputation as a haven for cheap knock-offs and unauthorized merchandise, 21 months after calling counterfeits cancerous. Those aged between 26 and 35, commonly referred to as Generation Y, have established themselves as the main driving force of the increasingly consumption-driven economy, according to the study jointly produced by the online marketplace Taobao and CBN Data, a business data research centre attached to the financial news outlet China Business Network. Bassiur will lead a team that works with international brands and retail partners, regulators, law enforcement and other organizations to help Alibaba’s anti-counterfeiting and intellectual property rights protection efforts. “We will continue to be relentless in our long-term commitment to protect both consumers and intellectual property rights owners, and we call on all companies in our industry to join our fight against bad actors,” Jack Ma, executive chairman of Alibaba, said in a press release. Bassiur, a former Pfizer Inc. vice-president and computer crimes prosecutor at the US Department of Justice, will oversee intellectual property protection at Alibaba from New York and work with global brands to fight infringement starting January, the company said in an e-mailed statement.

Clothes, light sabers, action figures, key chains, stormtrooper pillows, and Darth Vader masks are all being sold for prices—the action figures go for $2—that suggest they are not official goods from Disney DIS -0.95% , the franchise’s owner. He heads into next year after a bruising year that saw more than US$50 billion wiped off its market value amid lawsuits and criticism from Chinese and US regulators. Those aged under 28 accounted for 40 per cent of the transactions on Taobao, which is owned by Alibaba, and the proportion is rising, the researchers said. As Senior Director, Global Security & Counsel for IPR Enforcement at Apple, Bassiur headed up the U.S. company’s investigative program into theft, fraud, leaks, threats and cybercrime.

Cleaning up its image next year is crucial to Alibaba’s goal of winning the trust of merchants and shoppers overseas, from where Ma wants to get more than half the company’s revenue within a decade. Xia Ji, Taobao’s marketing director, said “getting younger” is a key theme in Chinese online shopping and that even senior citizens are buying more products “that can make them look younger”. The issue of counterfeits was largely cast aside in Alibaba’s runup to an initial public offering in New York last year, when Western investors were assured the problem was under control. Bassiur, who joined Pfizer four years ago directly after a two-year stint at Apple, formerly taught IP law at Renmin University in Beijing under the Fulbright program. Taobao, which reported online transactions worth more than 1 trillion yuan (£101 billion) last year, said that its online sales of perfume, hair dyes products and outdoor sports gear has grown particularly rapidly, including among shoppers aged 50 to 70.

The company was warned last week by the US Office of the Trade Representative that it had to do better to stay off the “Notorious Markets” blacklist it escaped only in 2012. JD.com Inc is winning customers partly because it holds the inventory itself and sells directly to consumers, similar to Amazon.com, Inc, a business model easier to police and regulate, Bloomberg Intelligence analyst Michelle Ma said. “By now, management should have eliminated this problem,” said Cyrus Mewawalla, managing director of London-based CM Research. “The fact that they haven’t is a worrying sign for investors.” Alibaba’s struggle with fakes and questionable products is part of a larger issue in China, where piracy is rampant and knock-offs of everything from DVDs to appliances flourish. Alibaba makes money from Taobao through advertising revenue, with third-party merchants holding the products for sale, from toys and food to medical equipment.

Overall, these shoppers spent the most online, while those aged 45 and below remained the biggest spenders in terms of the average amount on each online order, preferring to buy pricier, big-ticket items such as home appliances, furniture and even wealth management products. Earlier this year TaoProtect – its intellectual property reporting system – was released in English to make it easier for Western retailers to report knock-off goods to Alibaba.

As Forbes recently reported, Alibaba has sophisticated software and a 2,000-strong team focused on shutting down shop owners peddling fraudulent goods, but Alibaba does also allow many Chinese sellers to continue to make money from selling fake items, so there’s a compromise. Huang Lei, the head of CBN Data, said by digging into Taobao’s vast customer database his company can provide valuable information to decision-makers, such as about online shopping preferences by each age group. But last week the same office issued a warning to Alibaba to upgrade its processes for brand rights’ holders to issue complaints about counterfeits being sold on Taobao or it intimates it risks going back on the “Notorious Markets List.” It called on Alibaba to simplify the process for brands to complain about fakes, make public its takedown procedures and quicken the process of removing fakes.

Brand owners can use an online complaint platform to report infringements, while those accused of selling frauds have three days to refute allegations with evidence or face delisting, according to Alibaba’s Web site. Alibaba has also worked with brands, including Nike and Adidas, to remove fake athletic shoes, watches and bags on Taobao and thousands of sellers have been penalized. Chen Xiaonyu, 30, a white-collar worker, told China Daily she now buys more products online than offline. “Apart from clothes and consumer electronics for myself, I buy a lot for my parents online too,” she said, describing her annual spending on Taobao as “shockingly high”. Bassiur joins from Pfizer, where he oversaw the company’s anticounterfeiting operations and investigations into criminal activity, physical security and crisis management for the Americas.

Before joining Pfizer, he was a senior director at Apple, overseeing investigations into cyber-related crimes and developing Apple’s anticounterfeiting program. Bloomberg just published a story titled, “Alibaba Heads Into 2016 Struggling With Knock-Off Reputation.” The last time Alibaba attracted so much attention for fakes was this spring, when Paris-based Kering SA PPRUY -1.58% , which owns luxury labels Gucci and Yves Saint Laurent among others, filed a lawsuit against Alibaba, alleging the company’s search engines steered customers who input keywords like “cucci” to counterfeit Gucci bags selling on Alibaba’s platforms for around $5 compared to the listed $795 price. While it did not relist Taobao, the USTR’s recommendations included simpler processes to register and request enforcement, and reduced timelines for taking down listings and issuing penalties. Rejoining the name-and-shame list would damage Alibaba’s reputation in the US, where its shares trade and the company is trying to cultivate relationships with retailers and entertainment companies. While Alibaba is the largest operator in China, that has also made it highly dependent on its home market, which generates more than 80 percent of revenue.

The Star Wars merchandise on Taobao is proof that Alibaba’s problem with fakes hasn’t gone away since its record-setting IPO and, as Taobao continues growing, is probably bigger than ever.

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