Tech

Tim Culpan is a technology columnist for Bloomberg Gadfly. He previously covered technology for Bloomberg News.

I can't believe I'm saying this, but... Alibaba Group Holding Ltd. needs to hire more lawyers.

China's mammoth e-commerce operator has deployed its legal eagles against two vendors it accuses of selling fake Swarovski watches on the company's Taobao marketplace. It's exactly the kind of action Alibaba needs to take more often.

In a case filed with a Shenzhen court, Alibaba is seeking 1.4 million yuan ($202,000) in damages from two vendors that it identified by name in a press release Wednesday.

Selling fakes "puts inferior products in the hands of consumers and ruins the hard-earned trust and reputation Alibaba has with our customers," the company said.

That reputation has taken a beating over the years precisely because of the fakes that Alibaba has allowed to flourish on its websites, resulting in Taobao being labeled a "notorious online market" by the U.S. Trade Representative last month.

Alibaba complained about that label and accused the USTR of playing to domestic nationalism, a gripe that I described as petulant and childish given how easy it is to find fakes on Taobao.

Genuine Promise
Taobao's contribution to transaction turnover on Alibaba's e-commerce platforms is declining as its brand-focused Tmall gains more momentum
Source: Bloomberg
Note: Data is for Alibaba's fiscal year.

Now it's time to give credit where it's due. The move to put Alibaba's money and effort into suing counterfeit sellers is welcome: not only for global brands, but for customers and in the long run for its investors.

There's a saying in Chinese: You kill a chicken to scare the monkeys.

Obviously, Alibaba can't track down and sue every seller of fake products. Yet a critical mass of lawsuits will send a message to vendors: not only is counterfeiting no longer welcome, but the chances of getting caught and paying hefty costs aren't worth the risk.

Alibaba's long-term business needs to be built on a reputation for selling quality products that will keep buyers coming back, not merely as the online equivalent of the local night market.

To get there it needs to clean shop.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Tim Culpan in Taipei at tculpan1@bloomberg.net

To contact the editor responsible for this story:
Matthew Brooker at mbrooker1@bloomberg.net