Page 28 - Forbes India (December 2015)

powerful people jack ma

of consumer goods sprouted from was charged with any wrongdoing. alone in 2014, from 2,731 different
the country’s rice paddies. Since the That same year, Alibaba shut down shops. (An Alibaba spokesman
government paid little attention to a passel of counterfeiters on the counters that the Kering complaint
protecting intellectual property—and site, sparking a protest by hundreds “has no basis”.) In an October study of
the Chinese public developed a get- of people organised by the sellers marketplaces globally, the Trademark
rich-quick fervour—China became outside of Alibaba’s headquarters. Working Group, whose 25 anonymous
a haven for the production of fakes. “We are probably the only company members include several major
According to the US Department of in China [where] senior management US companies, identified Taobao
Homeland Security, nearly $1.1 billion takes responsibility,” Ma told as “still the largest online platform
worth of counterfeit goods from China Forbes in his first interview after the for the sale of counterfeit goods”.
and Hong Kong were seized entering scandal. “People think, ‘Jack, you Even the Chinese government,
United States in fiscal 2014—88 do too much’. I mean, too drastic. which usually turns a blind eye to
percent of the total it uncovered. But I believe China needs this.” counterfeiting, has pressed Ma to
Alibaba faced down a big scandal Alibaba began working more tackle the problem. In January, the
in early 2011, when it was revealed closely with brands to tackle State Administration for Industry
that some 100 Alibaba sales-people counterfeits, and that was enough to & Commerce, a government regu-
knowingly set up fraudulent sellers convince the US Trade Representa- latory agency, released a survey it
who accepted payments for but tive’s office to remove Taobao from its had commissioned that revealed that
never delivered popular consumer blacklist in 2012. But the company’s only 37 percent of the goods it ex-
electronics like laptops and flat-screen steps weren’t enough for a host of amined on Taobao were authentic.
monitors. Ma gathered his senior Western brands. Kering first sued Then the agency posted to its website
executives in a bar in Hangzhou for Alibaba for trademark infringement notes from a 2014 meeting it held
some soul-searching, along with an and trafficking in counterfeits in 2014, with Alibaba executives in which it
investigation into what happened. but withdrew the complaint after reportedly criticised the company’s
The take was small, maybe $2 million, the two companies agreed to discuss anti-counterfeiting efforts and other
but it involved more than 2,300 fake a settlement and a plan to combat business practices. Alibaba, the report
storefronts. “The company was at risk counterfeiters. Within less than a charged, was facing a “credibility
of developing a culture of pursuing year, however, the talks had gone crisis” as a result. Alibaba contests
short-term financial gain at all cost,” nowhere, and Kering decided to sue these studies. During an earnings
said Savio Kwan, the lead investigator. Alibaba again. The second lawsuit call with investors, Joe Tsai, its vice
Alibaba.com’s CEO, David Wei, and alleges, among a litany of complaints, chairman, lambasted the product
Elvis Lee, its COO, left in the wake that 37,000 counterfeit Gucci bags survey for being “flawed” and
of the scandal even though neither were sold on Taobao in one month “based on arbitrary methodology”.
The government eventually yanked
LonG LiVE ThE kinG the meeting notes from the web.
At 85, the world’s third-richest man shows no signs of slowing down. In August, his Though Alibaba claimed victory, it
Berkshire Hathaway unveiled its biggest acquisition ever, a $37.2 billion deal for industrial also agreed to cooperate with the
equipment maker Precision castparts. Berkshire’s massive reach (2014 sales: $195 billion) agency to better combat fakes.
includes businesses making everything from railroads to underwear—and the Oracle of Juanita Duggan, CEO of the
Omaha remains one of the world’s most respected experts on both making money… and
giving it away. American Apparel & Footwear As-

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gOVeRnment & POLicy PHiLantHROPy & ReLigiOn Finance & inVestment Business cRime & teRROR

28 | FORBES INDIA DECEMBER 11, 2015