Counterfeit goods seized by the U.S. government are displayed at the National Intellectual Property Rights Coordination Center in northern Virginia. (Photo : www.uk.reuters.com)
Alibaba Group Holding Ltd. would have to face up to issues of counterfeit goods that could upset its plan to expand worldwide within a decade, the Wall Street Journal reported.
According to the report, business groups and brands have become increasingly cautious of AliExpress as they worry that it will send fake products from factories in China directly into consumers on a global scale.
"There are substantial concerns among brand owners that expanding Alibaba's AliExpress platform will result in a very significant increase in the sale of counterfeit and otherwise infringing goods unless more safeguards are imposed," Paul Kilmer, founder of the Trademark Working Group, a collective of U.S. companies and organizations, said.
Alibaba, however, said that all e-commerce companies face the problem of counterfeiting and consumer complaints about fakes account for only a small portion of the total transactions.
"Like all global companies in our industry, we must continue to do everything we can to stop these activities," an Alibaba spokesman said. He added that brands with a record of legitimate requests for the removal of infringing listings with Alibaba have been given a simplified system to expedite take-down claims.
Through AliExpress, global consumers get connected with Chinese wholesalers and manufacturers, including small and mid-sized businesses.
AliExpress sites are available in English, Russian, Spanish, Bahasa Indonesia and other languages. Alibaba earns commissions from sellers on transactions as well as for advertising on their platform.
The report said that AliExpress generated $6.6 billion in gross merchandise value, a measure of total transactions on the platform in the fiscal year that ended March 31.
Alibaba's international growth was led by the platform. In March this year, revenue from overseas retail rose by 88 percent to $285 million from the year ended March 2014, which was nearly 2.5 percent higher than the previous year.
The company also said that the number of shoppers, particularly in Russia, Brazil and the U.S., has increased rapidly.
In May, French luxury group Kering SA filed a lawsuit against Alibaba, claiming that AliExpress "knowingly provides a marketplace for merchants engaged in the sale of the counterfeit products."
Alibaba, however, said that they will fight the lawsuit as the complaint has no legal basis.
In September, the U.S. Chamber of Commerce said that AliExpress is a source of concern.
"AliExpress is expanding into the U.S. and offering translation services in multiple languages," the chamber said in its submission, and neither the rights holders nor the government has the resources to stop a flood of counterfeits coming in one small package at a time.
Alibaba said that it has built relationships with governments and industry bodies to help combat counterfeiting as it continues to improve its own monitoring system.
