Beijing's Alibaba move signals shift on IPR

Subject

Alibaba's involvement in trade in counterfeit goods, and the authorities' response.

Significance

At nearly 300 billion dollars in annual sales, China has the largest online retail market in the world. Some 80% of it is handled by the Alibaba Group. In September 2014, Alibaba launched on the New York Stock Exchange (NYSE), raising 25 billion dollars in what became the world's largest ever initial public offering (IPO). Four months later, Chinese regulators went public with allegations implicating Alibaba in the sale of vast quantities of counterfeit goods, sending its share price falling and bringing one of China's most prominent private firms into public confrontation with the government.

Impacts

• The government and Alibaba will seek a mutually face-saving exit from their confrontation.
• The government will want to avoid critically undermining Alibaba, whose operations provide jobs for millions of people.
• The transition to a consumption- and innovation-led economy will require ever-greater protection of IPR.
• Retailers and wholesalers will need to review their business to minimise possible involvement with counterfeit or sub-standard products.