The Strategist

Kering takes Alibaba to Court for Selling Fakes

05/18/2015 - 15:29

The French holding group Kering SA, which owns a significant number of premium brands, on Friday filed a lawsuit against Alibaba in US federal court in Manhattan, accusing the Chinese Internet giant in sale of counterfeit goods on its trading platforms, writes The Wall Street Journal.

The lawsuit unites the claims of such Kering brands like Gucci, Balenciaga, Yves Saint Laurent (YSL) and others.

In July last year, Kering filed such a claim, but withdrew it within two weeks after the talks with Alibaba. At this time, the French company is pointing out that the site uses Alibaba algorithms that help consumers look for fakes, and that the company provides logistics and other services to sellers of counterfeit goods. For example, according to Kering, Alibaba sells to falsifiers keywords with the names of luxury brands. In addition, Alibaba’s search engine offers a swap for correct names (for example, Gucci) for the synonyms (cucchi or guchi), which displays the fakes, as well as working with queries with the word ‘replica’. Counterfeit Gucci handbags are sold on the platforms of Alibaba for the price starting from $ 2, while the price of the original product is not less than $ 795, complains Kering.

Alibaba announced on Monday that a new claim has no basis, and the company intends to contest it.

January 28 the company has responded to a similar lawsuit, saying:

 - We welcome the fair and just supervise, but oppose selective omissions and malicious acts. Biased conclusions drawn on the basis of an erroneous methodology, caused irreparable and grave damage to the online service Taobao and other Chinese Internet companies.
What exactly is a violation of procedure, which Alibaba suspected officials, the company did not specify.

Last spring, the company recognized that its efforts to combat the sale of counterfeits through its grounds were not always successful. The company, however, mentioned introducing the procedure for verifying the authenticity of goods sold and other measures to combat violations, so that US Taobao store is no longer included in the black list of sites - distributors of counterfeit goods.

Recall that since May 10, Daniel Zhang became the chief executive officer of the company, succeeding Jonathan Lu, who will remain vice chairman of the board of directors.

Commenting on the results for the last quarter Alibaba, Lu noted that the holding company has achieved significant growth in key operating indicators.
- We increased revenues and total volume of goods and the number of active customers, as well as confirmed our leadership in mobile technology. Our business continues to show good results, which underline the strength of our ecosystem and a solid foundation for sustainable growth both in China and abroad, - said the top manager.

Recall that for the quarter ended 31 December last year, the largest US hedge funds have significantly reduced their stakes in the shares of Alibaba, with some of the investors have decided to get rid of these assets. Changes in the market have been associated with the financial results of the company does not meet the expectations of analysts.

Alibaba’s IPO on the New York Stock Exchange in September 2014 to date remains the largest in history. At the end of the first trading session, the company's shares rose by 38%, which brought Alibaba in second place in terms of capitalization of Internet companies ($ 245.3 billion). The Chinese team was able to sell its shares to investors for $ 25 billion.