Chinese e-commerce company Alibaba is under fire for allegedly allowing the sale a range of fake luxury goods through its sales platforms,
despite the launch yesterday of its Korean sales platform in Seoul, with members of the Korean government in attendance.
Legal action has been brought forward by Kering Group, a French luxury goods holding company that owns brands such as Alexander McQueen and Gucci. The action was filed in New York and claims, "[Alibababa and other companies] knowingly encourage, assist, and profit from the sale of counterfeits on their online platforms.”
Kering also alleges that Alibaba and others “make it possible for an army of counterfeiters to sell their illegal wares throughout the world."
Alibaba has angrily refuted the claims, telling the media, “Kering has chosen the path of wasteful litigation instead of the path of constructive cooperation. We believe this complaint has no basis, and we will fight it vigorously."
The legal action represents the second time that the two companies have found themselves at legal loggerheads over the counterfeit issue. In 2014, Kering filed a similar suit, though later withdrew it after talks.
The fresh controversy came as Alibaba chief Jack Ma visited Seoul to debut his company’s Korean operations, where he met with senior members of the Korean government, including Deputy Prime Minister Choi Kyung-hwan.
Ma told journalists, “"The Korea Pavilion is Alibaba's first official country pavilion. We will continue to work with overseas governments to launch similar pavilions in the future in order to satisfy the needs of our Chinese consumers."
Ma also announced that Alibaba will debut an internship program that will see about 100 Korean graduates the opportunity to gain work experience at Alibaba China.
However, Alibaba is now also facing domestic pressure after a damning report issued by the Chinese government accused the company of a “lax approach” to the stem the sale of counterfeit goods.
Alibaba also hit back at these allegations, stating that the government report showed evidence of misconduct and has "inflicted serious and irreparable damage” to “Chinese online businesses." Alibaba also said it planned to lodge a formal complaint against the government body that issued the report, slating its authors for jumping to “biased conclusions”.
However, Alibaba has previously noted that the issue of counterfeit sales has dogged the company, and that its efforts to stem the sale of fake products are “far from complete.”
A report late last year stated that Alibaba had spent some US$160 million on its anti-counterfeit sales efforts in the period 2013 to 2014. The company currents employs somewhere in the region of 2,200 workers tasked with putting an end to counterfeit sales, but critics have slated the Chinese firm, alleging that it appears to be fighting a losing battle.
Meanwhile, Alibaba has also found itself in hot water in Taiwan after the country’s Investment Commission ordered the company to pay a fine of about US$8,000 and ordered the company to cease its Taobao operations for failure to secure the required trading permits for a non-Taiwanese based company. Under the ruling, Taobao now has six months to wind up its Taiwan operations or face further legal action.
The ruling is a major setback for the Chinese e-commerce giant, although Taiwanese customers will still be able to place orders through the mainland China site.
By Yeon Choul-woong
