Alibaba founder Jack Ma calls on China to jail counterfeit sellers（540 words）

By Louise Lucas in Hong Kong

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Alibaba founder Jack Ma has for the first time called directly on China’s government to ramp up efforts to erase counterfeiting, blaming modest penalties and lax laws for the scourge of fakes.

The appeal to delegates at this week’s National People’s Congress marks an escalation by Mr Ma, one of China’s richest men, and a reversal from his earlier comments that counterfeits are often better quality than the real thing.

It also follows a renewed crusade against fakes that followed the return of Alibaba’s ecommerce platform Taobao to the US blacklist of “notorious markets” for peddling counterfeit goods.

In an open letter to delegates of the NPC and The Chinese People’s Political Consultative Conference posted on China’s Twitter-like Weibo platform, Mr Ma called for counterfeits to be tackled in the same way as drink driving.

“If, for example, we imposed a seven-day prison sentence for every fake product sold, the world would look very different both in terms of intellectual property enforcement and food and drug safety, as well as our ability to foster innovation,” he wrote.

Highlighting laws that enabled 99 per cent of counterfeit activities to go unchecked and inappropriately small penalties for those fined, he said there was “a lot of bark around stopping counterfeits, but no bite”.

Turning the onus on to Beijing is a calculated gamble for Mr Ma. He has been under pressure to clamp down on fakes since the US Office of the Trade Representative blacklisted Taobao, both by overseas regulators and big brands, but his plea may not align with the government’s priorities, say observers.

While applauding Alibaba’s efforts, some lawyers pointed to an element of lip-service: Alibaba has come out with a string of initiatives since the USTR move, including working with police in Shenzhen and Swarovski to sue two merchants selling fake watches.

“What he is saying is valid: China needs to do more,” said Paul Haswell, a partner at Pinsent Masons in Hong Kong, “Alibaba is investing more in anti-counterfeiting, hiring more lawyers and going after people. But it still feels very much like showboating.”

Brands complain that merchants selling knock-offs that are closed down by Alibaba simply reappear under a different name a few hours later, and point to the swath of fake goods available across the platform.

Alibaba says it is harnessing big data, combining addresses and other information, to detect reincarnated merchants. But these efforts are undermined by laws, said Mr Ma.

Big data enabled Alibaba to pass on 4,495 leads to cases for offline investigations, which resulted in the successful criminal prosecution of 469 cases, he said — a hit rate of roughly 10 per cent.

Of the 200 counterfeit cases penalised by the Bureau of Commerce and Industry last year that Alibaba studied, the average fine was Rmb10,000. ($1,450). “This reality only encourages more people to produce and sell fake goods!” he wrote.

He said that manufacturers, rather than internet ecommerce platforms, were the root problem. “Counterfeit goods are being produced in a steady stream every day by illegitimate factories, just like the smog that comes from all directions and fills the streets . . . Manufacturers will always be the source of the problem; and the law has to be the root of the solution.”