Blacklisting Alibaba: What Does It Mean For Online Sellers?

Picture of Alibaba marketing material to accompany blog post about blacklisting Alibaba
The USTR finally got around to blacklisting Alibaba.

That’s right, Alibaba’s Taobao flea-market boomeranged back onto the U.S. Trade Representative’s Notorious Markets List, a Scarlet-A register of websites and marketplaces accused of cozying up to counterfeiters.

Is the news a shock? Not really. Capitol Hill has been grumbling — loudly — about the site’s perceived piracy problems for years. (Actually, this is the second time Alibaba made the list.)

Alibaba: We Do A Lot To Fight Counterfeiting

Predictably, Alibaba isn’t thrilled. A company president admonished:

“We are far more effective and advanced in [intellectual property rights] protection than when the USTR took us off the list four years ago. The decision ignores the real work Alibaba has done to protect IP rights holders and assist law enforcement to bring counterfeiters to justice.”

Last year, Alibaba did expand anti-counterfeit efforts. And as it happens, because of those efforts, people are questioning this latest development (which we’ll get to below). But, according to the USTR, the company hasn’t done enough, explaining:

“While recent steps set positive expectations for the future, current levels of reported counterfeiting and piracy are unacceptably high.”

Will Alibaba’s Spot on the Notorious Markets List Affect Online Sellers?

So, what does “blacklisting Alibaba” mean for FBA and other online sellers? Very little, actually.

Yes, the Notorious Markets List is a government production — and we use the word “production” purposefully, because it’s really just a political theater prop; listed parties don’t suffer sanctions. Essentially, the Notorious Markets List is the USTR’s version of Santa’s naughty list.

That said, it is a reputation blow. If customers grow leery of regional products, it could effect folks who manufacturer products in China, or buy from Alibaba vendors.

Blacklisting Alibaba: Fair or Shortsighted?

Not everyone is praising the USTR’s decision.

On Forbes.com, Michael Zakkour explained why the decision might have been wrong.

He reasons:

While the designation does not carry any official sanction or penalty[,] it does have the effect of muddying the truth about Alibaba’s marketplaces and the important role the company is playing in the evolution of cross-border commerce and the re-imagination of the retail model.

First we must clarify that Alibaba has two major platforms for selling brands to Chinese consumers. Taobao is a platform for individuals and third party companies to sell merchandise on a C2C basis. The company’s B2C marketplace, Tmall, is the platform where global and Chinese brands create flagship stores to sell direct to consumers. Tmall, the more important platform to global retailers and brands, is virtually counterfeit-proof.

Zakkour also outlines his three arguments for why the USTR erred in blacklisting Alibaba.

  1. Online counterfeits are a global scourge that brands from all over the world have to combat on a daily basis.
  2. [Listing Alibaba on the Notorious Markets List is akin to] Cutting off the nose to spite the face.
  3. Alibaba has made a massive and sincere effort to eliminate fakes from Taobao.

Zakkour’s article is worth the read for anybody involved in cross-border e-commerce. For similar news, head to our online retail section.

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