Jack Ma, the founder of the Chinese internet giant Alibaba, recently said that the counterfeit problem so many brands are dealing with today is primarily a result of the fact that the fakes are actually better than the originals. Of course this set off another furious round of critiques from large brands and industry groups. This is quite a significant attempt to blame shift. Some companies estimate that between 20% to 80% of the products sold under their name through some of Alibaba’s companies are actually counterfeits. That’s a pretty staggering amount.
Back in April, Gucci and Michael Kors withdrew from the International AntiCounterfeiting Coalition (IACC) after it granted membership to Alibaba. I’m sure there were some other members who weren’t all too pleased with the new arrival either. The membership did not last long. In May the IACC suspended Alibaba’s membership in response to its members’ concerns, among other things.
In the same statement regarding the superiority of fakes, Mr. Ma also noted that it is the same factories using the same materials that produce the goods, only they do so without using the brand name. This seems to be an attempt to sow some confusion in an effort to give that blame shifting some legs. What he is describing, the same factory making the same goods from the same materials under a different name, is not counterfeiting at all but a common and legal practice. These products are generally known as off-brand, white label, private label, store brand, or generic goods (varying slightly in how they are marketed and sold). Those Green Giant vegetables may possibly come from the same farm and factory as your off brand green beans.
That really isn’t a problem. People accept this as a common legal practice and as a way to save some cash sometimes. It’s a bit cheaper to go with the store brand or generic because they don’t advertise and can pass those savings on to you. Sometimes those green beans are inferior and were purchased at a discount. If you are concerned you buy a brand that you know and trust to have a commitment to a certain quality. That is essentially a very basic function of a brand.
What is a problem, and the issue that Mr. Ma is trying obscure and confuse, is when a source passes its product off as that of another. That is the essence of counterfeiting and infringement. Not only are the brand owners losing out on sales, but they lose control of the products sold under those names. Obviously this can harm the brand owner’s reputation, but it is also a problem for consumers who purchase a product relying on that brand name for any number of things, from quality and price to sustainable practices, fair labor practices, or commitments to certain social issues.
This all appears to be a red herring. If those factories are producing goods using the same materials but under different names, then what we have is good old fashioned competition (absent some other IP theft). New brands enter the market all the time. But putting another brand’s name on your product to make sales is counterfeiting, even if the product might be superior.