Gucci and Michael Kors quit the International Anti-Counterfeiting Coalition last week to express their discontent about Alibaba joining the group in April. Michael Kors called the e-tailer “our most dangerous and damaging adversary. Gucci has long blamed Alibaba for the proliferation of counterfeit goods in China, claiming it knowingly profits from and encourages their sale. Gucci is suing Alibaba along with several other Kering brands (e.g. Balenciaga), a move Alibaba is calling a waste. In response to member complaints and citing a conflict of interest over stock ownership, the IACC suspended Aliababa’s membership after just a month (along with several other retailers).


Despite the uproar over a retailer full of counterfeit listings joining an anti-counterfeit coalition, luxury brands are unlikely to successfully to win the fight against fake goods in China without Alibaba’s active participation. Previous efforts to limit counterfeit or gray market sales, such as opening up official Tmall flagship stores, have failed to make a dent in unauthorized listings. As shown in this graph from L2’s 2016 Luxury China study, just a few of the luxury brands that have opened official Tmall stores – Ports 1961, Burberry, Tommy Hilfiger – own more than 90% of their search results. And even those brands (with the exception of Ports 1961) have trouble standing out on the first page of brand search results when they are sorted by best sellers. (Utilizing Tmall as a branding rather than a commerce channel, Burberry appears in no search results when sorted by sales.)

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Furthermore, data from Alibaba’s C2C marketplace Taobao provides evidence that the e-tailer has made some efforts in cleaning up the gray market – especially in the Watches & Jewelry category. The number of listings tagged with the brands Chow Tai Fook and Tiffany & Co. have dropped to almost half between February and May 2016. The number of Omega listings have dropped by more than 100,000 (from 136,700 to 31,500) presumably as a result of coordination between the brand and Alibaba. Not all of the dropped or listed products are counterfeits, but all fall in the categories of authentic secondhand goods, unauthorized sales, or fakes.

Cleanup efforts appear significant, but thousands of counterfeit goods remain listed on Taobao and Tmall – especially for brands absent from the L2 graph. However, they are more likely to be regulated with Alibaba’s cooperation than isolated brand efforts.

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