IP PROTECTION IN CHINA ’ S E-COMMERCE INDUSTRY
• A vast , easy-to-access market : counterfeiters benefit from exposure to tens of millions of consumers and from the lower costs associated with e-commerce .
• A lack of accountability : counterfeiters seek to exploit the fact that buyers cannot check products prior to purchase , and that – as the vendor – they are often difficult to trace later .
The problems with counterfeit goods go further than harming brands ’ revenues and reputations . Typically , they are of poor quality and can pose safety risks . Moreover , consumers who buy branded products rightly expect that what they see online is the legitimate item , which means platforms that facilitate the sale of those items have a responsibility to ensure that is the case .
In addition , the sale of counterfeit goods harms reputable platforms like Alibaba , JD . com and Pinduoduo . The sale of fakes damages a platform ’ s brand , undermines consumer trust in its reputation , and diminishes the confidence that quality brands have for that outlet . In a market as competitive as China ’ s , trust is central to a platform ’ s business , which is why each is so serious about combating counterfeits .
As this paper will show , China ’ s top e-commerce platforms have put in place a range of measures aimed at minimizing IP infringements . Some of their measures are similar , while others differ due to the characteristics of their respective business models :
• Pinduoduo is a third-party platform that is recommendation-based , aggregating demand through team purchases so users can see which products are popular with their friends and family rather than having to search to find options . The firm has put the issue of combating IP infringement at the center of its operations since it opened in 2015 , and to that end spends large sums annually on technological solutions . Central to this focus is that Pinduoduo must retain its customers ’ faith : it relies on customers to convince friends and family to buy on its platform , and that means they must trust that what they purchase is legitimate .
• Taobao is predominantly a site through which vendors sell their goods and services , and where users search for items they want . As a subsidiary of Alibaba – whose initial goal was to become an online directory for China ’ s manufacturers and sellers , and which continues to expand its product offerings – it has a strong offline workflow in combating IP infringements , and a long history of cooperating in this area with law enforcement .
• JD . com positions itself as more a retail firm than a marketplace , 11 with about a quarter of the inventory sold through its platform ( as measured by GMV ) from the company ’ s inventory . 12 This , coupled with its endto-end logistics approach , makes it easier for JD . com to verify its suppliers , giving it greater control over goods sold . 13 11
In-Depth Report : How JD Tackles Counterfeits Part Two : The Quality Guarantee , JD . com ( March 26 , 2020 ). See : https :// jdcorporateblog . com / in-depth-report-how-jd-tackles-counterfeits-2 / 12
Figure derived from the company ’ s press release on its full-year 2019 results . GMV was RMB2,085,4bn and net product revenue was RMB510.7bn . See : https :// ir . jd . com / news-releases / news-release-details / jdcom-announces-fourth-quarter-and-full-year-2019-results 13
In-Depth Report : How JD Tackles Counterfeits Part One : JD . com ’ s Beginnings and its Business Model , JD . com ( February 26 , 2020 ). See : https :// jdcorporateblog . com / in-depth-report-how-jd-tackles-counterfeits /
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