JD.com to end Paipai.com to fight fakes
Print Edition
CHINA’S online retailer JD.com will shut down online customer-to-customer (C2C) market Paipai.com to fight fake goods.
JD.com said the decision to close Paipai.com, which was previously operated by Tencent but merged into JD.com after Tencent bought a 15 percent stake in the online retailer last year, came after countless efforts to fight counterfeits on the C2C platform proved futile.
JD.com said it has stopped accepting merchant applications to open stores on Paipai and its contracts with existing merchants will terminate on December 31.
Merchants who open stores on C2C marketplaces do not need to file with the country’s industry and commerce watchdogs and thus are not subject to thorough regulatory oversight. Selling pirated products on C2C marketplace bears almost no repercussions for merchants, JD.com said.
JD.com’s chief rival Alibaba has also faced protests and lawsuits from international brands and industry groups that alleged its C2C market Taobao.com tolerates merchants selling counterfeits.
Alibaba’s founder Jack Ma said the company is working to tackle piracy on its marketplace and has expanded its business-to-customer (B2C) market Tmall.com, where merchants face more stringent oversight from regulators and brands can sell directly to consumers.
In addition to cracking down on piracy on online marketplaces, Alibaba and JD.com have invited more brands to open stores on their B2C platforms to expand their presence online. Both have opened new platforms connecting Chinese consumers to products sold in other countries.
Such measures have led to an increased share of branded products on China’s online marketplaces. A study by consulting firm Bain & Co finds that the overall share of unbranded products on Alibaba’s Tmall and Taobao marketplaces have dropped 7 percent from 2011 to 2014.
By category, the consultancy found beauty and personal-care products had the biggest decline and the lowest share of unbranded products in the past four years. The share of unbranded products remained the largest in clothing, shedding only 6 percent in the same period.
“Online retailers have made the effort to tackle counterfeits, but this is a persistent problem in China,” said Ding Jie, a partner at Bain & Co.
“The encouraging sign is that Chinese consumers are getting more brand-conscious and their pursuit for quality over price will make counterfeits less popular,” Ding said.
Foreign brands have been slow to embrace the Internet in retail.
“Many foreign brands have very established channels in the physical world but as more Chinese consumers shop online, they haven’t made adjustments accordingly, thus losing market share to domestic and small firms adept at marketing online,” Ding said.
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