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Amazon China Unit Closes Vendor After Report of Fake Cosmetics

The China unit of Amazon.com Inc. (AMZN), the world’s largest e-commerce company, closed a third-party online store after state media reported that fake cosmetics were being sold.

The shutdown was in response to customer complaints and the company will immediately close any stores selling fakes, Amazon’s China unit said in a posting on its verified microblog yesterday. China Central Television said on March 19 the company was among operators with counterfeit or questionable products for sale.

Amazon and rival Alibaba Group Holding Ltd. have adopted tougher management of fake products on their websites in China as the government pledges to crack down on breaches of intellectual property rights. The world’s most populous nation accounts for more than half of international trade in counterfeit goods, according to Organization for Economic Cooperation and Development estimates.

Authorities arrested 59,000 people and seized more than 9,000 tons of fake and shoddy products last year in cases worth 172.9 billion yuan, a Ministry of Public Security official said Jan. 21.

China is host to a number of markets known for “prominent and extensive availability of counterfeit merchandise,” the U.S. Trade Representative said in a February report. It cited Beijing’s Silk Market as an example.

Alibaba’s Taobao Marketplace, which links individual buyers and sellers, targeted 87 million listings that may have breached intellectual-property rules on cigarettes, clothing and medicine. That action helped get the company removed from the USTR’s Notorious Markets list in 2012.

Online retailer E-Commerce China Dangdang Inc. (DANG) can’t provide any certificates to prove cosmetics it sold are authentic, CCTV said. Three calls and an e-mail to Dangdang seeking comment weren’t answered yesterday.

To contact Bloomberg News staff for this story: Nicholas Wadhams in Beijing at nwadhams@bloomberg.net

To contact Bloomberg News staff for this story: Li Liu in Beijing at lliu255@bloomberg.net

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