Jack Ma, executive chairman of Alibaba Group Holding Ltd., said counterfeit products hurt Alibaba as well as China's economy.
In an interview with Xinhua, Ma said Alibaba was a victim of counterfeits as the sale of one fake product could lead to the loss of five customers.
"I don't believe success can built on dishonesty," he said, dismissing some comments that Alibaba took advantage of counterfeits.
Ma said the customer complaint rate was only 0.0116 percent, much lower than that of brick-and-mortar shops. Also customers can get refunds and compensation if they buy counterfeits and the shops concerned closed, he said, adding that Alibaba spends hundreds of millions of yuan each year on tracking and fighting counterfeits.
While admitting that the impact on Alibaba is limited, Ma said counterfeits could fundamentally harm the Chinese manufacturing sector.
"It leaves visible wounds on Alibaba, but it could severely affect the economic transition," he said.
Ma said the relations between Alibaba and the country's economy is like conjoined twins. There would be no Alibaba without a large number of small businesses and sellers, Ma said. If "Made in China" is shortsighted to make quick money, then Alibaba has no future; If it is sustainable and competitive, then Alibaba could has bright prospects, he added.
Ma said the fight against counterfeits is not a matter for Alibaba alone as they are sold everywhere. Only improved laws will help honest businesses to build competitive brands.
The counterfeit issue became more evident in wake of the financial crisis in 2008 as many original equipment manufacturers (OEM) began to sell goods on Taobao, Alibaba's business-to-consumer platform. The OEMs had high manufacturing quality, but they lacked brands and designs.
Ma said Alibaba monitored the sale of counterfeit items and kept the market watchdog informed. Alibaba also offered resources to OEMS to help them build their own brands, he said.
He said the counterfeit issue will only be finally solved with the help of Internet and big data.
"On the Internet, we have an evaluation system for the goods and also with big data, we can locate those who produce and sell counterfeits," he said.
"Through 15 years of efforts, we have built a credit system that we are very proud of," Ma said. "Credit is the cornerstone of everything."
