I can't believe I'm saying this, but... Alibaba Group
Holding needs to hire more lawyers.
China's mammoth e-commerce operator has deployed its
legal eagles against two vendors it accuses of selling fake Swarovski watches
on the company's Taobao marketplace. It's exactly the kind of action Alibaba
needs to take more often.
In a case filed with a Shenzhen court, Alibaba is seeking
1.4 million yuan ($202 000) in damages from two vendors that it identified by
name in a press release Wednesday.
Selling fakes "puts inferior products in the hands
of consumers and ruins the hard-earned trust and reputation Alibaba has with
our customers," the company said.
That reputation has taken a beating over the years
precisely because of the fakes that Alibaba has allowed to flourish on its
websites, resulting in Taobao being labelled a "notorious online
market" by the US Trade Representative last month.
Alibaba complained about that label and accused the USTR
of playing to domestic nationalism, a gripe that I described as petulant
and childish given how easy it is to find fakes on Taobao.
Read also: Jack Ma pushes Alibaba into car business
Now it's time to give credit where it's due. The move to
put Alibaba's money and effort into suing counterfeit sellers is welcome: not
only for global brands, but for customers and in the long run for its
investors.
There's a saying in Chinese: You kill a chicken to scare
the monkeys.
Obviously, Alibaba can't track down and sue every seller
of fake products. Yet a critical mass of lawsuits will send a message to
vendors: not only is counterfeiting no longer welcome, but the chances of
getting caught and paying hefty costs aren't worth the risk.
Alibaba's long-term business needs to be built on a
reputation for selling quality products that will keep buyers coming back,
not merely as the online equivalent of the local night market.
To get there it needs to clean shop.
BLOOMBERG