E-commerce Platforms as Nests for Counterfeiters: A Case Study

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The growth of e-commerce in China has not gone unnoticed: in fact, along with it comes a
renewed and sophisticated way for counterfeiters to enlarge their businesses, as guest contributor Dr Paulo Berconcini, consultant at CARROLL, BURDICK & McDONOUGH LLP explains using a case study example…

After conquering Western countries as a quicker, more effective and convenient way of shopping, e-commerce has landed in China where it is undergoing an overwhelming development. Indeed, thanks to the continuing improvements in online credibility, payment services, express delivery, and to the efforts promoted by the 12th Five-Year Plan and aimed at increasing the contribution of e-commerce to the national economy, e-commerce is definitely becoming a key-player in enabling more and more transactions and purchases of goods to happen in the Chinese market. However, the growth of e-commerce has not gone unnoticed: in fact, along with it comes a renewed and sophisticated way for counterfeiters to enlarge their businesses.

From small shops selling fake goods in local markets to well-organized and branched companies carrying on counterfeiting activities worldwide: these are the new actors who distribute counterfeit goods through all the main online retailers despite the various provisions that, in China like in other countries, follow one another in the attempt to crack down one of the most problematic issues affecting fair trade. A recent example is given by the company Xiang Peng Heng, whose trafficking of fake goods has just been discovered. Active on many online retailer markets, from JuMei to Jingdong, from Amazon to Gome online, this company would provide the Chinese market with counterfeit luxury goods, claimed to originate from overseas famous brands, like Armani, Burberry, Prada, and others, by forging authenticity statements, making fake goods available online at quite low prices, pretending to offer after-sale customers service.

The referred case may be regarded as a piece of evidence showing the intensified dangers online counterfeiting can cause. In fact, counterfeiters may now be able to access a far wider market being their goods purchasable by any consumer using the internet and clicking the relevant link, which would both expose consumers to frequent risks of coming across poor-quality products, and exacerbate the violation of the rights of the actual owners of brands. Moreover, it would enhance to problem of successfully identifying counterfeiters, who could have their headquarters and factories scattered anywhere and whose localization would be thus more difficult to determine.

Therefore, the Xiang Peng Heng case cannot but invite to reflect on the available means and the desirable strategies to resort to in order to react to the known, much discussed, but still present and persistent phenomenon of counterfeiting.

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