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Alibaba Being Sued By Luxury Manufactures For Selling Counterfeit Items

AlibabaAlibaba is the biggest online retailer in the world and does more transactions on its website than Amazon and Yahoo put together. The billion dollar Chinese company has been on a mission to expand its international operations as it looks to build more revenue generating opportunities under the guidance of newly appointed CEO Daniel Zhang.

Alibaba has an amazing supply chain and distribution network that allows it to sell an amazing variety of products. Most of these products are invariably manufactured in China which is the biggest manufacturing hub in the world. Some of the biggest luxury brands in the world source their products from China at low prices and then sell them overseas at inflated prices.

Recent reports suggest that a number of luxury counterfeit products are being sold internationally by Alibaba and as a result has affected the sales of these luxury brands.

Kering, the parent company for Yves Saint Laurent (YSL) and Gucci has stated that a number of their products have been counterfeited and then sold in the United States by Alibaba. Kering decided to file a lawsuit against Alibaba as it believes that Chinese company has not taken sufficient measures to weed out fake products and put a stop to them. Kering initially decided to sue Alibaba over counterfeit products back in July 2014 but in the end decided to drop the case and work things out with Alibaba. Those efforts have apparently been in vain as Kering has decided the best course of action against counterfeit sales would be the legal way.

In a statement, a representative from Alibaba said

We continue to work in partnership with numerous brands to help them protect their intellectual property … Unfortunately, Kering Group has chosen the path of wasteful litigation instead of the path of constructive cooperation. We believe this complaint has no basis and we will fight it vigorously.

It is no secret that counterfeit goods are manufactured in large numbers throughout China and then sold for cheap prices. The counterfeit goods industry is a massive industry in China and Alibaba has reportedly spent over $160 million since 2013 in an effort to track and eliminate counterfeit products from its website.

Reports suggest that if Kering wins its lawsuit against Alibaba, then the Chinese based company would have to pay Kering close to $2 for every product its merchants sell on the Alibaba platform. Alibaba will fight the case by hiring some of the best corporate lawyers and continue to crackdown on counterfeit products.

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