Counterfeit as a Challenge to Chinese E-Commerce Platform—the case of Alibaba

Abstract: With the development of Internet technology, e-commerce is becoming more and more popular nowadays. A tremendous number of small and medium size enterprises have emerged, selling goods in e-commerce platforms. However, the transactions of counterfeit products on e-commerce platforms are becoming more severe in global electronic commerce, particularly in Chinese online markets. Not only are consumers and brand-owners suffering the loss of money, but also the whole ecosystem of e-commerce is being damaged by counterfeit issues. Accordingly, e-commerce platforms, which serve as the third party of online businesses, have a significant role to play in this serious situation. How e-commerce platforms handle counterfeit problems can be quite urgent.This thesis chooses Alibaba as a special case to study, considering its e-commerce platform Taobao, which has a large market share or e-commerce market place and always suffers a bad reputation of counterfeits distribution, as the most suitable and representative e-commerce platform in China. The research uses both interviewing and documental data as different resources to study the case. Learning from the perspective of e-commerce platforms, combined with mechanism theory, principle-agent theory, trust system, reputation theory, and contestable market theory, this research wants to reach a deeper understanding of the challenge counterfeits have made in Taobao. What measures Alibaba has done and how these measures are going on are the research questions in this case.The results of this investigation shows that Alibaba did try several ways to combat against counterfeit problems such as building some specific mechanisms like “return-back system”, “Xiaoer” and “Mantianxing plan”, considering trust, reputation and information asymmetry factors. Many people show their appreciations and supports to Alibaba’s measures and the current situation of counterfeit in Taobao is eased by these measures. But there is still a long way to go and many more things could be done to face the counterfeit challenge.