JD.com plans to terminate Paipai.com after it failed to curb the selling of counterfeit goods in the marketplace platform. (Photo : www.chinainternetwatch.com)
China’s online retailer JD.com is set to terminate the operation of online customer-to-customer (C2C) market Paipai.com in an effort to curb fake goods, the Xinhua News Agency reported.
According to the report, JD.com's decision to close Paipai.com came after countless efforts to fight counterfeits on the C2C platform failed. Paipai was previously operated by Tencent but merged into JD.com after Tencent bought a 15-percent stake in the online retailer last year.
The report said that JD.com said it has stopped accepting merchant applications to open stores on Paipai and will terminate its contracts with existing merchants on Dec. 31.
JD.com said that merchants selling pirated products on Paipai.com did not seem affected, since merchants who open stores on C2C marketplaces do not need to file with the country's industry and commerce watchdogs and thus were not subjected to strict regulatory oversight.
Alibaba, JD.com's chief rival, also faced protests and lawsuits from international brands and industry groups that claimed that its C2C market Taobao.com allows merchants to sell counterfeits.
Alibaba's founder Jack Ma has said that the company is working to curb piracy on its marketplace and has expanded its business-to-customer (B2C) market, Tmall.com, where regulators implement more stringent oversight and where brands can sell directly to consumers.
The report added that Alibaba and JD.com invited more brands to open stores on their B2C platforms to expand their presence online, in addition to cracking down on piracy on online marketplaces. The two companies have opened new platforms that connect Chinese consumers to products sold in other countries.
These measures have reportedly resulted in an increased share of branded products on China's online marketplaces. The overall share of unbranded products on Alibaba's Tmall and Taobao has dropped 7 percent from 2011 to 2014, according to a study by consulting firm Bain & Co.
The study found the biggest decline in beauty and personal-care products and the lowest share of unbranded products in the past four years. Unbranded products remained the largest in clothing, which declined only 6 percent in the same period.
"Online retailers have made the effort to tackle counterfeits, but this is a persistent problem in China," said Ding Jie, a partner at Bain & Co.
"The encouraging sign is that Chinese consumers are getting more brand-conscious and their pursuit for quality over price will make counterfeits less popular," Ding added.
The report said that foreign brands have yet to catch up with retail selling on the Internet.
