1 DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
January17,2017
Alibaba’s Anti-Counterfeiting Alliance is Positive for its Outlook
AlibabaFormsAnti-CounterfeitingAllianceWithLuxuryBrandsOnJanuary16,2017,AlibabaannouncedtheformationofaBigDataAnti-CounterfeitingAlliancewithinternationalbrandstosupportitseffortstoremovefakegoodsfromitsplatforms.AccordingtoAlizila,Alibaba’sofficialmediaarm,theAlibaba-ledanti-counterfeitingalliancehasabout20members,includinginternationalbrandssuchasLouisVuitton,SamsungandMars.Thealliance—whichwillleverageAlibaba’sbigdatatechnology,combinedwiththeindustryandtechnicalknow-howofeachpartner—isconsistentwithAlibaba’slong-termstrategytoriditsplatformsoffakegoods.
Alibaba’sCapabilitiesinCombattingCounterfeitsTheAlibaba-ledBigDataAnti-CounterfeitingAlliance,definedbyaconcertedpushagainstpiratedgoodsfromallpartners,addsafurtherdimensiontoAlibaba’seffortstocombatcounterfeitproducts.Theallianceisdefinedbythefollowingcharacteristics:
• Bigdataandmachine-learningcapabilities:Alibaba’scounterfeit-detectioncampaignispoweredbyalgorithms,artificialintelligence(AI),machinelearningandbigdata.Alibaba’sAIbotsscanentireplatformsinrealtimetodetectcounterfeitgoods.Thesetechnologiescandetectanomaliesincustomerreviews,productlistingsandspecifications.
• Enforcementcapabilities:Alibaba’seffortstodetectpiratedgoodsarealsosupportedbyregulatoryefforts.InJuly2016,thecompanylaunchedajointeffortwithChineselaw-enforcementauthoritiestoseizeandarrestpeopleallegedlysellingcounterfeitKingstonandSamsungchipsonAlibaba’sTaobaoplatform.Thejointoperation,whichranbetweenAprilandJuly2016,culminatedinthearrestsof32suspectsandtheseizureofUS$207millionworthoffakegoods.Fromalegalperspective,AlibabaalsofiledalawsuitinJanuary2017againstmerchantssellingcounterfeitSwarovskiwatches.
2 DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
January17,2017
• Synergiesfromthisalliancewithbrands:Bypartneringwithinternationalbrands,Alibabacaneffectivelyleveragetheknow-howofitspartnersandreceivepromptfeedbackfromthem.Inourview,anacceleratedfeedbackloopandsupportofinternationalbrandsareparticularlycriticalforAlibabainitseffortstosustainitsstrategyasthego-toplatformforallmerchantsandconsumers.
PositiveImplicationsforAlibaba’sBusinessOutlookSource:FungGlobalRetail&TechnologyThisconcertedpushagainstcounterfeitgoodsisinlinewithAlibaba’slong-termstrategytobecomeaglobalplatform,andwebelieveispositiveforthecompanyfortworeasons:1)itsolidifiesitscredibilityamongstinternationalbrands;and2)allowsittofurtherpenetrateintoChina’sincreasinglyaffluentconsumermarket.
• Solidifiesitscredibilityamongstinternationalbrands:Alibaba’santi-counterfeitsstrategyisinlinewithitslong-termmissionofprovidingthebestbusinessenvironmentforglobalmerchantsandcustomers.Webelievethecompany’sintensifyinginitiativesagainstcounterfeitswillalleviatetheconcernsofbothbrandsandgovernmentsoverpotentialuncompetitivepracticesandopenupthepotentialtoattractmoresellerstoitsplatform.
• AllowsittofurtherpenetrateintoChina’sincreasinglyaffluentconsumermarket:WebelieveAlibaba’scampaigntocombatcounterfeitsbodeswellforitsgrowthinChina,particularlyincementingitsstatusasago-toplatformforcrossbordere-commerceimports.China’srisingmiddleclasshascausedaseismicshiftinconsumptionpatterns,whichwebelievewillleadtoasustainablepreferenceforhigh-qualityimports.Crossbordere-commerceimportsareexpectedtoincreaseto¥1.9trillion(US$285billion)in2018,from¥0.9trillion(US$136billion)in2015,accordingtoiResearch.Alibaba’slong-termgrowthtargetisforitsshareofrevenuefromoverseastoexpandover50%by2025from4%in2015,accordingtoitschairman,JackMa.
WhiletheformationofthealliancehasclearbenefitsandisonepositivestepforwardforAlibaba,werecognizethatexecutionremainscriticalandwillcontinuetomonitortheprogressoftheinitiative.
3 DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
January17,2017
Figure1.EventsRelatedtoAlibaba’sAnti-CounterfeitingInitiatives,2013topresent
Time Event ImpactonAlibaba
January,2017 Alibabaformsanalliancewithabout20internationalbrands,includingSamsung,LouisVuittonandothers,tocombatcounterfeitgoods.
+
December,2016 TheUSputsAlibabaonthecounterfeitblacklistagain. -
December,2016 AlibabacollaborateswiththeZhejianggovernmentonoperationCloudSword,anofflineanti-counterfeitinginitiativethatculminatedintheseizureofUS$207millionoffakegoods.
+
July,2016 Alibabalaunchesthe‘IPJoint-ForceSystem’. +December,2015 AlibabaestablishesthePlatformGovernancePanel
tofightfakesandIPinfringement. +May,2015 Keringfilesthesameallegationagain. -January,2015 China’sStateAdministrationforIndustryand
Commerce(SAIC)launchesallegationsagainstAlibaba.
-July,2014 KeringSAfilesallegationsagainstAlibabafor
knowinglyallowingcounterfeiterstosellonitsplatforms.Gucci,YvesSaintLaurentandotherbrandsarehousedundertheportfolioofKeringSA.
-
December,2013 TheUSremovesAlibabafromthe“NotoriousMarkets”list. +
May,2013 Alibabalaunches‘MarketSafe®’,ananti-counterfeitprogram,withtheInternationalAnti-CounterfeitingCoalition(IACC).
+
Source:FungGlobalRetail&Technology
4 DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
January17,2017
DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.comEsmePauAnalystZaneYangResearchAssistantHongKong:8thFloor,LiFungTower888CheungShaWanRoad,KowloonHongKongTel:85223004406London:242-246MaryleboneRoadLondon,NW16JQUnitedKingdomTel:44(0)2076168988NewYork:1359Broadway,9thFloorNewYork,NY10018Tel:6468397017FungGlobalRetailTech.com
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