JD.com Counterfeit Scandal Kickstarts Consumer Rights Day in China

JD.com, China’s second-largest e-commerce company, has long admonished competitor Alibaba for its multitude of fake goods. The company’s chairman and CEO Liu Qiangdong once famously claimed if one wanted to combat fakes, it “would take a programmer only a day to do it”, implying Alibaba’s was deliberately allowing them to boost its sales. JD.com, which has more of a business to consumer model, as opposed to Alibaba’s Taobao, which is consumer to consumer, is typically thought to better ensure product authenticity.

Just days before Consumer Rights Day on March 15, however, a counterfeiting scandal has become a nightmare for the company.

On March 13, Liu Liu, a renowned Chinese novelist published a post on her Weibo and WeChat accounts accusing JD Worldwide’s stores of selling a fake pillow product to her friend.

Launched in 2015, JD Worldwide is JD.com’s cross-border e-commerce marketplace, which sells goods from abroad to Chinese consumers hungry for high-quality foreign brands. On the homepage of the marketplace, it states it sells 100 percent authentic products and is willing to pay ten times the listed price for any fakes it sells.

Liu Liu says her friend ordered a Comfort U pillow from the United States, which is priced at 1,489 RMB ($236) on JD Worldwide. But what she received was a Contour U pillow, which, according to the brand’s official website, sells for just $34. Liu Liu and her friend concluded that JD Worldwide had attempted to charge full price for a cheap knockoff, and requested a full refund as well as the tenfold compensation advertised on JD Worldwide. Chat history posted by Liu Liu online shows that the seller first denied that the product was different from what was listed on the site. After seeing evidence presented by buyers, they agreed to a refund but insisted that they had simply mailed the wrong product by mistake.

Liu Liu’s Weibo post quickly gathered over 50,000 likes and 30,000 comments. On WeChat, it was liked by more than 22,000 readers and was viewed over 100,000 times.

Responding to the accusations on Weibo, JD.com went on the offensive, issuing an official statement on March 14. It wrote that the customer had received the wrong product, not a fake. It also claimed that Liu Liu presented misleading information which seriously damaged the public image of the company, and that they would reserve the right to pursue legal action.

This isn’t the first time JD.com has been charged for selling fakes. In January 2017, Beijing Chaoyang People’s Court revealed that a Chinese consumer sued JD.com for selling a fake Zenith watch. He said he paid nearly 15,000 RMB for it, but the government authentication center concluded that it was a fake. The same year, Chinese domestic media reported that the e-tailer sold a pair of “Gucc” sunglasses, advertised as Gucci, for 1,900 RMB.

JD.com has quickly expanded into the luxury sector, partnering with British luxury e-tailer Farfetch and launching its own luxury-dedicated sales channel Toplife. A big draw for them in attracting luxury brands has been their stated respect for intellectual property rights. They’ve inked deals with big luxury players such as Saint Laurent, Kering Eyewear, and Chopard in recent months, but more slip ups and the negative publicity that comes from poorly responding to them could cause luxury brands to reconsider the relationship.

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E-Commerce, Trending in China