E-COMMERCE: Alibaba Cranks Up the Anti-Piracy Pitch at NPC
Bottom line: Alibaba’s anti-piracy PR blitz during the National People’s Congress is aimed at getting attention during the high-profile event, but it will need to keep up its efforts to convince the public and officials its effort is sincere.
As the National People’s Congress (NPC) kicks into high gear in Beijing, e-commerce leader Alibaba (NYSE: BABA) is using the annual session of China’s legislature as a soapbox to make its case that it’s being tough in the battle against piracy. In the last 2 weeks alone, founder Jack Ma has made two high-profile declarations on the subject, one equating the problem to the drunk driving menace and the other calling for his country to create tougher laws to fight the problem. Lest anyone think Alibaba is trying to pass the buck, the company has also announced it has filed a lawsuit against a maker of counterfeit pet food.
Anyone who follows Alibaba closely will know that trafficking in pirated goods in its popular online marketplaces is its biggest Achilles heel. That fact owes to the open nature of those marketplaces, especially its C2C Taobao marketplace, which are populated by thousands of third-party merchants selling their wares. While most of those sell legitimate products, a significant number also sell counterfeit goods.
I’ve avoided writing about the company’s public relations push on the matter largely because it seems mostly comprised of talk, and periodic symbolic moves like this new lawsuit. But the fact of the matter is that public perceptions do play an important role to some extent, and Alibaba is trying to cast itself as both a victim of China’s rampant piracy but also one of the strongest advocates for reforming the system.
In terms of what’s at stake, one of the prizes is largely symbolic, namely removal from the annual US list of “notorious” marketplaces for pirated goods, which saw Alibaba’s name included this year after being removed several years ago. The company also needs to curry favor with Beijing, which criticized Alibaba on the matter a couple of years ago and is trying to show the world that China respects intellectual property rights.
All that said, let’s look at this latest flurry of Alibaba anti-piracy actions, and then later venture a guess as to what impact, if any, they might have on the company. We should start by saying that Ma and Alibaba are strategically making their noises as China focuses on the National People’s Congress, which tends to trump all other news in the country for about the first two weeks of March.
In the Spotlight
Ma is attending the NPC as an official adviser to the congress, and realizes full well that anything he says on piracy will get extra attention in the media at this time of year. He began his anti-piracy rhetoric in the week before the NPC, calling on legislators to toughen the nation’s laws and enforcement action . (English article) Days later as the NPC began, he called on the legislature to tackle the problem with the same zeal that China attaches to fighting drunk driving. (English article)
Rounding out the trio of tidbits was word from the company this week that it has filed a lawsuit against a Taobao merchant who was selling fake pet foods made by specialist Mars. (English article) Alibaba is asking for a relatively large 2.67 million yuan ($340,000) in damages, which would probably easily bankrupt the counterfeiter if a judge actually awarded that amount. But of course a Chinese judge will probably reduce the amount sharply due to the nation’s ineffectual laws where penalties are usually so small as to have no deterrent effect.
I’ll be the first to admit that Alibaba and Jack Ma certainly make a valid case that one company alone can’t solve China’s piracy problem. The fact of the matter is that China’s anti-piracy laws lack teeth, and enforcement officials outside big cities like Beijing and Shanghai often lack the resources and resolve to address the problem. Ma’s assertion that the nation’s anti drunk-driving campaign could be a model for the anti-piracy effort also seems valid enough, since all of my friends in China are petrified at the thought of getting behind the wheel after even just a single beer.
As to whether the PR blitz will persuade the US to remove Alibaba from the “notorious” list and reduce criticism of the company from Beijing, that’s another matter. Alibaba’s reputation for rampant trafficking in pirated goods wasn’t built in a day, and it will take more than a day to change that. But every journey begins with a single step, and we’ll have to watch to see if Alibaba can convince the world it’s continuing its battle even after the spotlight of the NPC is gone.
