China to curb counterfeiting on e-commerce sites

Persistent reports on fakes raise alarm amid booming online sales

Chinese authorities have vowed to crack down counterfeit goods sold online in the second half of this year, after the country's major online retailers were found to be selling fake luxury products and consumer goods, a senior official said Monday.

In the latest of a series of media reports uncovering sales of counterfeit cosmetics and luxury products on several of the popular e-commerce platforms, the China Central Television (CCTV) reported late Sunday that fake shampoo, which causes symptoms similar to allergies, was being sold on e-commerce shops.

Among the eight bottles of shampoo bought from online shopping platforms, including jd.com, yhd.com and taobao.com, only three could be confirmed as genuine by customer service hotlines of the shampoo makers, according to the report.

Another three were verified as fake and two could not be identified, the report said.

China will conduct a specific campaign against infringement and counterfeit products in the e-commerce industry in the second half of this year, Shen Danyang, a spokesman for the Ministry of Commerce, told a press conference on Monday.

The country has become the biggest online retailing market in terms of revenue, and sales of counterfeit products on e-commerce sites is a growing trend, he noted.

Official data showed that China's e-commerce revenue in 2013 surpassed 10 trillion yuan ($1.63 trillion), including 1.85 trillion yuan from online retailing.

In addition to cooperating closely with product makers to ensure supply of genuine products, it is also important for e-commerce platforms to supervise and manage their third-party shops by frequent product checks and signing warranty agreements, he said.

Although the CCTV report did not specify which e-commerce platforms the counterfeit products came, nor did it say whether the fake products were sold directly by the e-commerce platform or by their third-party shops, the report raised doubts among customers about the credibility of these platforms.

"I just bought shampoo from yhd.com because its price is one-third less than that in a supermarket," Chi Ye, a 28-year-old Beijing resident, told the Global Times on Monday.

But Chi also said that she bought the product directly from yhd.com as she could not trust any third-party shops on the platform for skin or hair products.

Yhd.com later checked and confirmed with CCTV that the two bottles of shampoo the reporter bought from yhd.com were both genuine, the e-commerce company told the Global Times Monday in an e-mailed statement.

Sales of counterfeit products have been rampant on e-commerce websites during the boom in online retailing in recent years, and have hurt both the brands and e-commerce platforms, Lin Yue, chief consultant with Guangdong-based Lynear Consulting, told the Global Times on Monday.

Amazon and Dangdang, two leading e-commerce platforms, shut down third-party online stores in March after the shops were found to be selling fake skin-care products.

US-listed JD.com Inc, China's second-largest online retailer by sales volume, also closed a third-party shop in July because it was selling counterfeit luxury products.

If customers buy products sold directly by the e-commerce platforms, they can ask for three times the price they paid as compensation if the products are found to be fake, Zhao Zhanling, a legal counsel with the Internet Society of China, told the Global Times on Monday.

Even if the fake products are bought from third-party stores, the e-commerce platforms are also partly responsible if they promised customers to provide genuine goods or they knowingly allowed the third-party shops to sell fake goods, he said.

More than 90 percent of 20,000 third-party stores on yhd.com have signed a warranty with the platform, which requires a store selling fake products to pay 1 million yuan as penalty, according to the statement from yhd.com.