In a blow to Alibaba's overseas expansion, China's most popular consumer shopping website, Taobao, has been returned to the United States' blacklist of "notorious marketplaces" known for trading counterfeit goods and IP violations.
The United States on Wednesday returned Alibaba’s Taobao, China’s most popular consumer-to-consumer shopping website, to its blacklist of “notorious marketplaces” known for the sale of counterfeit goods and violations of intellectual property rights.
The move by the US Trade Representative’s office against the online bazaar run by Alibaba Group Co Holding Ltd followed complaints from US and international trade groups for apparel and luxury goods that Taobao was not doing enough to police sales of fakes and pirated products.
Inclusion on the blacklist does not carry any direct penalties but is a blow to Alibaba’s efforts to shed perceptions its websites are riddled with fakes – a key to gaining a bigger international customer base and taking market share from global competitors such as eBay Inc and Amazon.com.
The company expressed disappointment with the move.
Taobao was put on the USTR blacklist in 2011 but removed in 2012 after it made efforts to address the concerns of intellectual property rights holders and committed itself to cutting the number of pirated and counterfeit goods on its website.
In unveiling its 2016 list, USTR acknowledged that Alibaba had taken steps to combat piracy, including addressing the misuse of brand keywords, blurred trademarks in product images and developing technology to prevent banned counterfeit sellers from reopening under new names.
“We question whether the USTR acted based on the actual facts or was influenced by the current political climate”
USTR said, however, that current levels of reported counterfeiting and piracy were “unacceptably high,” with such goods posing a “grave economic threat” to US creative and innovative industries and posing public health threats in some cases.
“One large motor vehicle manufacturer reported that at least 95% of the merchandise bearing its company’s brand names and trademarks found on Alibaba platforms is suspected to be counterfeit,” USTR said.
Alibaba Group President Michael Evans said in a statement the company was “very disappointed” to be put back on the list as it was far more advanced in protecting intellectual property rights than was the case four years ago. He added that the decision ignored Alibaba’s work to remove more than twice the number of product listings this year than in 2015.
“We question whether the USTR acted based on the actual facts or was influenced by the current political climate,” Evans said.
Alibaba touts Taobao as China’s largest online shopping destination by gross merchandise volume and as being among the top five websites in China and top 15 globally.