Founded in 2016, Ceteris Paribus is A student-led economics and finance publication at Davidson College.

Tensions in China Rise as Counterfeiters Run Rampant

by Jim Hurson

 

Counterfeiters who flood online, international marketplaces such as Taobao, Alibaba, and JD.com with phony and low-quality goods are starting to feel legal pressure from both Chinese government enforcers and private firms. This enforcement is long overdue. Bona fide suppliers have been lobbying for increased surveillance of these international e-marketplaces for years, and only now are they seeing results. This article will examine the most recent developments in the anti-counterfeiting efforts of both the Chinese government and private firms. Pressure to address China’s problem with counterfeiting has reached new levels this week, and the Chinese government, despite its history of laissez-fair enforcement of Western manufacturers’ intellectual property rights, is starting to respond.

The Chinese government is now taking serious action to mitigate the exportation of counterfeit goods. Yibada, a Mandarin-language media outlet founded in San Francisco and based in New York City, reports on the Chinese government’s efforts to ameliorate the problem of phony goods being exported. Writing for Yibada, correspondent Manny Salvicion chalks up the Chinese government’s stricter stance to its fear of losing national reputability as an exporter. The article cites a staggering statistic: in 2014, China exported nearly $2.4 trillion worth of goods, making it the largest goods trader in the world for that year. In an effort to preserve the national reputation of China as an exporter, Chinese officials have seized an estimated $299 million worth of counterfeits and low-quality products. The article implies that China is doing its due diligence to curb the exportation of counterfeit goods. Salvicion emphasizes the claim of Liu Shiyuan, a government employee from the General Adminstration of Quality Supervision, Inspection and Quarantine, that “improving the quality will boost the reputation of ‘made in China products.’” Further, the article implies Chinese government action is approaching sufficiency. In the future, consumers need not worry about purchasing Chinese goods.

In addition to that taken by the Chinese government, action by private firms is creating a more hostile environment for counterfeiters. In an article published by American media firm Topix, Michael Katz, reporting for the sub-Topix forum, China Topix, highlights JD.com’s recent decision to shut down Paipai.com, its customer-to-customer marketplace. Katz implies the shutdown of Paipai will improve the integrity of the parent vendor, JD.com. Similarly, according to an article in The Australian, e-commerce giant Alibaba has taken measures to allow legitimate brands to more closely supervise the sale of their products. Alibaba, unlike JD.com, is fundamentally opposed to changing its peer-to-peer network of buyers and consumers. To replace this network—or to regulate it too heavily—will, according to CEO Jack Ma, undermine the ability of online entrepreneurs to sell their wares. The Australian highlights Ma’s stubbornness. The article’s tone implies Ma ought to be less set in his ways, which, undoubtedly, have allowed counterfeiters to prosper at the expense of legitimate brands.

These articles emphasize the efforts of both the Chinese government and private firms to reduce the exportation of fake goods. Such differences in portrayal of anti-counterfeiting efforts only lead the reader to question the motives of each publication. China wants to quickly redeem its status as an exporter of goods; Westerners want to deliberate on where to buy. In the ongoing battle against counterfeiting, one thing is for certain: Western firms, with their established brands and worldwide prestige, will always be embroiled in a fight with vending platforms to stop the spread of black-market knockoffs of their products, even if regulation persists.

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