Jack Ma’s Counterfeit Comments Shed Light on Taobao’s ‘Legal’ Fakes

Jack Ma’s recent assertion that “fake” luxury goods made in Chinese factories have “better quality” and “a better price than the real product” was roundly criticized by the global luxury industry this week, being called “slanderous” and “irresponsible” by top French industry professionals.

Especially enraging to brands was his assertion that fakes are made in the same factories as the real labels, as he stated, “They’re the same exact factories, the same exact raw materials, but they do not use that (brand) name.” But it’s the second part about of this statement—that they aren’t using the brand’s actual name—that should be especially concerning to brands, as it’s referring to China’s legal, or off-brand fakes.

While Alibaba has highly publicized its efforts to fight counterfeits on its Taobao and Tmall platforms, these policies apply mainly to items with the actual logo of brands like Gucci or Louis Vuitton. While Ma specifically used the word “fake” products, he actually seems to be referring to off-brand items that look almost identical to branded luxury products but use a different name.

A search for common names like “Birkin” or “Chanel bag” brings up many of these items, which imitate famous handbag styles such as the iconic Hermès purse or Chanel’s quilted bags. For example, a Birkin-style handbag from a brand called “House of Hello: Bag of Parody” is selling for RMB800 (US$121) on Taobao, while the brand “Jyusze” offers a huge range of bags taking after Dior, Chanel, Hermès, Louis Vuitton, and more from around US$70 to over $100 on Tmall.

These off-brand fakes are legal and certainly nothing new in the retail world, as they’re also available on sites like eBay. In addition, accessible luxury and fast-fashion labels are known to sell handbags in the same style as more expensive brands. But Jack Ma’s claim that the Chinese bags are made in the exact same factories as major luxury brands is likely of particular concern for industry professionals, which must often contend with fakes claiming to be yuandan (原單), or “factory extras.” As security is often extremely tight at production facilities, experts believe that true yuandan goods are extremely hard to come by, and sellers are more likely to be hawking high-quality fakes made of real leather.

Ma’s claim not only throws support behind the “same factory” idea that fuels yuandan seller claims, but also sends the message to brands that they might have more competition from names like “Jyusze” or “House of Hello” on Alibaba’s platforms.

Despite worries of brand dilution, luxury labels generally don’t have to worry too much about these “legal” fakes, according to BorderX Lab Co-Founder Jonathan Li in Jing Daily’s recent report on online gray-market and counterfeit goods. He stated that the price point is “aiming for a different segment of Chinese consumers.” This makes sense, given the fact that those that can afford a real Chanel or Hermès bag probably won’t be rushing to buy an off-brand item on Taobao just because Jack Ma claims they’re as good as the real thing.

For more information on online counterfeits, download Jing Daily’s latest report on the topic

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