Counterfeits continue to haunt China's e-commerce industry, consumers
When Chinese consumers believe they've got good bargains from cross-border online shopping, they might just have brought home fake goods made domestically. With the Black Friday Shopping Spree ringing down its curtain and bumper harvest being reported, several cross-border e-commerce platforms in China have been suspected of selling fake foreign brands, according to a survey by an e-business research body.

China's exploding middle class has brought surging demand for international consumer brands, with cross-border e-commerce platforms playing bigger role in the year's Single's Day and Black Friday shopping bonanzas.

Along with surging sales, complaints lodged against the platforms have also doubled compared with the previous month. Some major players like xiaohongshu.com, one of China's most popular online dealers of international brands and jumei.com, an online cosmetics dealer, are suspected of selling fake foreign brands.

The survey conducted by the Chinese E-commerce Research Center (CERC) is based on collection and analysis of all complaints lodged between November 1 and 30 through online submission, email, WeChat, and Weibo.

Chinese media have also previously exposed the foul play of shoe manufacturers colluding with couriers to sell fake sneaker brands like Adidas, Nike and New Balance.

It was reported by CCTV, China's national broadcaster in May, the branches of all the six major couriers including SF Express were helping manufacturers of fake brands forge express documents in Putian, a city in eastern China's Fujian province.

The couriers had gone as far as building phony logistics inquiry websites, fabricating shipping information to make fake brands look like coming from Hong Kong, the US or some other countries.

Besides sneakers, many international brands of cosmetics, luxury goods and even maternal and infant supplies purchased by Chinese consumers through cross-border E-commerce platforms are actually high-quality counterfeits, according to the report. Common consumers could hardly detect the difference because the role played by couriers convinced them they've bought authentic and discount merchandise from abroad.

And fabricating express documents is not the only trick. Some manufacturers of counterfeits would first sell their products to countries with lax regulation and then have them mailed back to China just to obtain consignment voucher and entry permit they want. Overseas Chinese with close connections with the fake brands may set up trade companies just to buy in the dummies.

It's known to many avid online buyers that some shops on platforms dealing with second-hand goods specialize in retrieving outer packaging, tins and bottles of branded cosmetics and foreign-made milk powders. The illegal manufacturers would then fill the authentic containers with fake products.

And the “industrial chain” is providing a full package of services. The unscrupulous manufacturers and traders are capable of fabricating English shopping receipts. According to people familiar with the “industry”, a receipt in English is sold for 15 yuan and a machine producing the fake receipts is sold for a little over 1,000 yuan. When some skeptical buyers ask why the prices are not as high, they would say they're cheap because they are from bordered warehouses.

Ubiquitous counterfeits in China's cyber world affect both domestic and foreign brands. Back in 2015, the Chinese E-commerce Research Center analyzed the culprits behind the rampant problem. “It's difficult to provide proof, file a lawsuit, go through legal processes and finally get compensated,” said a report by CERC.

Based on Chinese law, the one who prosecutes is required to put forward proof. It is an almost impossible mission for common consumers because they need to devote large amount of money and time.

The infringed domestic brands are hesitant because for most times it's difficult to identify parties that should be held responsible. They may need to first take legal action against online shopping platforms in a bid to acquire information on fake brand sellers. However, most platforms fail to implement stricter controls and sellers register with false information.

Even if the brand companies initiate legal proceedings against the sellers or manufacturers of dummies, they're concerned about the process and their trade secrets may risk being revealed. And the long process of lawsuits against so many involved guilty entities in most cases cannot bring them satisfactory compensation.

Currently, there are no specific rules regulating those online shops that have no brand licensing. Once they're found to be selling counterfeits, industrial and commercial regulators could at most shut down the stores. The low cost of breaking laws has led more and more small businesses into the lucrative “industry”.

Liu Qiangdong, the founder of JD.com, China's second-largest e-commerce platform by sales, cited intellectual property problems in the country as the main hindrance for development of national consumer brands.

“If people think that making and selling fake products could make more money, they would join the group driven by interests,” he said, noting the damage rampant dummies have inflicted on brand makers and producers. “The only way for them (brand companies) is to lower prices by lowering quality. Finally, they would lose brand premium, and then consumers. And Chinese people would have to find high-quality products abroad.”

Apparently, this has formed a vicious spiral because the lawbreakers are fabricating both domestic and foreign brands, harming interests of brands, online buyers, and the country's e-commerce.

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