Controlling Alibaba's Problem with Counterfeits

China's rising middle class has increasingly sophisticated tastes and the money to spend on gratifying them. Willing to pay for high-quality brands, these consumers are growing more savvy about rejecting the counterfeits goods that have long plagued Alibaba's retail platforms, especially Taobao.Black-market sites where counterfeits are rampant are experiencing a decline as China's newly wealthy young consumers flex their muscle and choose to shop where they can place their trust.

Problems with counterfeits at Alibaba caused U.S. trade officials to place Taobao on its watchlist of "notorious markets" starting 2012. Alibaba responded with efforts to combat fakes by hiring a staff of 2,000 and enlisting 5,000 volunteers to help identify counterfeit goods, setting aside almost USD 22 million to buy and test suspected fakes and designing algorithms that help spot fakes by monitoring data such as price. The company invested in a USD2.4 million lobbying effort in Washington to seek removal from the list, and a reprieve was finally granted.

In 2016, however, the U.S. Trade Representative returned Taobao to its blacklist, and again in 2018. The designation itself carries no official consequences and hasn't shown any significant signs of impeding Alibaba's growth. But for a company that aims to aggressively expand into U.S. markets, the counterfeiting problem is something that Alibaba must resolve.

Alibaba has become more aggressive in addressing the issue. It has become more aggressive addressing the issue. It has been taking to Chinese courts to sue vendors for selling fake goods. It has been using data analytics and working more closely with brands and law-enforcement to weed out the problem.

In its annual intellectual property protection report to begin in 2019, Alibaba has claimed success, reporting that only 1 out of every 10,000 transactions is now suspected of being counterfeits goods. Their claim is not without sceptics, however, in its most recent report, the World Trademark Review still found Taobao to be the platform where fake goods could be most easily found.

Based on the discussion of SIX (6) Hofstede's cultural dimensions differences between United States of America (representing the government of USA) and China (representing Alibaba), discuss of how data/information on each of this dimension can help Alibaba to make wise decisions to overcome this counterfeits goods issue.